Tough measures to fine applicants up
to £10,000 for bringing frivolous claims to employment tribunals aim to head
off business concern. But will they work?
Over the past few years there has
been growing business concern that Britain is now suffering from a
“compensation culture”. How else do you explain the 32 per cent rise in
applications to employment tribunals that occurred last year?
So employers’ bodies were duly
pleased last week when the Government decided that it agreed with them.
“There are too many weak cases in
the system,” said Stephen Byers, the Secretary of State for Trade and Industry,
as he announced new penalties on “spurious” claims. These could potentially
mean that applicants will be fined £10,000 if their
cases are found to be “frivolous or
vexatious”.
It is understandable they should
feel this way. But it is interesting to note that many influential people who
are intimately acquainted with the world of employment tribunals are more
sceptical.
Take Acas, for instance, the state’s
guarantor of harmonious relationships at work. Chairwoman Rita Donaghy says,
“It would not be for us to get involved in political issues, but if the
question is whether there is a big feeling in our regions that applicants are
trying it on, then the answer is no.”
Few frivolous claims
Barry Mordsley, one of Britain’s
longest-serving tribunal chairmen and a partner in law firm Salans Hertzfeld
and Heilbronn, does not think it is true either.
“I do not think there are a large
number of frivolous or vexatious cases,” he says. “There are some, but I would
say they are few.”
Nor, for that matter, does the CIPD.
Employment relations adviser Mike Emmott says, “The phrase ‘frivolous or
vexatious’ represents a kind of moral judgement on applicants, which I don’t
think is fair.
“But I think there are a significant
number of cases from individuals who feel wronged, but who don’t actually have
strong cases under the law.”
The TUC, which has been angered by
the Government’s move, thinks the DTI has misunderstood the nature of the issue
and is rolling over at the behest of business in advance of the next general
election.
“There is a political agenda here,”
says Sarah Veale, the TUC’s employment rights specialist.
“The real problem is the absence of
proper personnel procedures in small firms.
“What we want is for employers to
make fewer mistakes.”
However, the TUC also points out
that this attempt to discourage “weak” claims could all amount to a fuss about
nothing.
Tribunal chairs have in the past been
very reluctant to award costs to employers for “unreasonable” behaviour by
claimants. Increasing their powers does not mean they will use them more.
“Many appeals to tribunals come from
low paid or unemployed people who often do not have a representative, and the
tribunals have understandably not wanted to penalise poor people for enforcing
their rights,” explains Veale.
So will tribunal chairmen use their
new powers more? Mordsley says there has been “a slight shift in culture”
towards chairmen awarding costs over the last couple of years, and that it is
not likely to be affected by the Government’s announcement.
Much will depend on how the
forthcoming regulations define “unreasonable”.
Draconian cost orders
But he argues that coming to a
decision on what is a “weak case” before hearing the full evidence can be very
difficult.
“Chairmen will be nervous about
draconian cost orders and will not want to be seen to penalise applicants,” he
says.
“I believe that on the whole the
tribunal system works very well. The best way to improve it would be to tightly
manage directions hearings.
“Chairmen should make it clear to
parties that they must make the issues come out and that if they do not pursue
their arguments in the tribunal then costs will be awarded.”
It is for this kind of reason that
the CIPD believes the new reforms – which the organisation supports – will not
have much bearing on the day-to-day lives of personnel professionals.
The reforms seek to affect the process
of administering workplace justice, but that will not stop employees from
bringing cases in the first place.
However, there is also the risk that
by leaning on the judiciary in a bid to cut down on red tape, tribunal chairmen
may be sufficiently irritated to assert their independence from government even
more.
If it turns out that these measures
have little impact, says Jadine Riley, senior policy adviser on employee
relations for the CBI, the issue will have to be revisited. “The ball is in the
judiciary’s court to make it work better,” she says.
Good news
The slight glimmer of good news in
all this is that the most recent figures from Acas show that the rise in the
number of applications seems to be levelling off.
In the last six months, the number
of tribunal applications has increased by 3 per cent – a significant flattening
of the 32 per cent leap we witnessed last year.
Acas believes it is too early for
any firm conclusions, but it is possible the level of use of individual
employment rights could be settling down.
In the meantime, the basic problem
that afflicts many personnel departments will doubtless continue.
“We get a lot of cases that go to
the wire and then are suddenly withdrawn at the eleventh hour,” says Terry Gorman,
president of the Society of Chief Personnel Officers. “It can be a very
significant cost.”
By Stephen Overell
www. acas.org.uk
The proposed new rules
are:
1. Increase in costs for unreasonable or
vexatious behaviour from £500 to £10,000
2. Power to strike out ill-founded
claims that have no real chance of success
3. Raising deposit on weak cases from
£150 to £500
4. Strengthening the management of
cases by tribunals
Alternative arbitration scheme
The Acas
alternative arbitration scheme will finally be laid before parliament by
mid-December.
The scheme,
which the conciliation service has been working on for several years, seeks to
reduce the number of cases which go to a full tribunal hearing through binding
arbitration carried out by one of about 100 experienced arbitrators.
The system
will only apply to unfair dismissal hearings – some 43 per cent of the total
number of claims concern unfair dismissal.
Formally
proposed in 1998, the alternative arbitration scheme has been delayed because
of legal concerns about whether it is compatible with the access to justice
provisions of the Human Rights Act.
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“It is not
going to be quite as informal as Acas would have hoped,” says Rita Donaghy, the
Acas chairwoman. “The applicants will have to sign a waiver agreeing they can’t
back out of it and there will have to be legal monitoring to make sure the
right cases are going through the scheme.”
Because a
significant number of claims to employment tribunal are made under several
different laws, the organisation estimates it will hear about 1,000 cases in
the first year of operation.
