Hunting compensation culture demons that were never there

Employers are so busy complaining about the culture of
compensation, they have failed to notice that tribunal claims have been in
freefall for some time

Leviathan is a sluggish beast. The various tentacles of government are
normally the last to wake up to important social trends, but when they do,
those trends instantly assume a significance that they never had before.

True to form, the Better Regulation Task Force has suddenly decided to
investigate the presumed ‘compensation culture’ at work (see Personnel Today
News, 22 July), to the delight of the CBI and chums. It hopes to answer what
sounds like a very leading question: whether litigation is the most effective
and efficient tool for making amends.

So I have a better one: why on earth now? The time for a probe into tribunal
applications, awards and settlements was in 2000. Claims that year leapt by
almost 30 per cent. If only the taskforce’s chairman David Arculus had waited a
few days before announcing his inquiry, he could have had the benefit of
perusing the annual report from the Employment Tribunal Service (ETS) – and
what a revelation that would have been.

The ETS annual report confirms the number of people hauling their employers
before tribunals has now been falling for two consecutive years. A total of
98,617 applications were submitted in 2002-2003, as opposed to the peak of
130,408 in 2000-2001. There have been significant drops in all the major claim
areas, except disability discrimination and failure to consult on redundancies.

Obviously, this goes against the popular perception. From all those
newspapers reports about City of London superwomen taking on the pinstriped
brethren over equal pay, one would assume they represented a growing phenomenon
– the papers often purport to examine why more women are complaining about
unfair pay.

Alas, it is not true. The number of equal pay claims has more than halved
since the year 2000 to just 3,077. A mere 8,128 people complained primarily of
sex discrimination in their applications last year. And it is perhaps worth
reciting another little appreciated tribunal factlet – just 13 per cent of
claims make it all the way to a hearing (38 per cent are settled beforehand, 32
per cent are withdrawn and the rest fall by the wayside).

All those pious inquiry-sitters doubtless like to think they are unswayed by
the swirls and sallies of the public mood, preferring the vocabulary of cold,
hard fact. Nope. They have been succoured by the business lobby’s hyperactive
spin machine. The taskforce will be investigating something that briefly
exploded and now seems to be ebbing away towards a long-term trend.

Of course, the chances are that the total number of applications will rise
once more. New anti-discrimination laws on religion, sexual orientation and age
coming up towards 2006 may see to that. But the crucial point of the ETS
figures is that they cast doubt on the very existence of a burgeoning
compensation culture.

Despite the multiple changes to employment rights since 1997, the idea of an
inexorably rising tide of claims from embittered workers has been shown to bea
fiction of the paranoid employer’s imagination.

The truth about tribunals is more prosaic. If employees can move easily into
other jobs, the chances are not that many will pursue the immense emotional
hassle of a tribunal claim, even if they ought to in the interests of justice.
Tribunals have far more to do with the economic cycle than any mass pathology
of revenge. And so it follows that the best way to reduce them is to ensure a
highly competitive, mobile labour market.

As I’ve said before in this column – to bouquets of abuse, naturally – I
think employers have made a disproportionate fuss about the growth of
individual rights cases. Some 100,000 or so workers submitting complaints to
tribunals out of a workforce of getting on for 28 million does not sound like a
compensation culture running amok. That is a point often made by the
conciliation service Acas. It is no good a society having batteries of new
employment laws and then furiously protesting when people decide to use them.

And then the expansion of individual rights needs to seen against the
background of the decline in the relevance of collective rights.

Employers are no doubt pleased that industrial relations are now employment
relations; the critical productive relationship is between employer and
employee, rather than employer and trade union. Increasing use of individual
rights is surely an eminently reasonable price to pay for the decline in the
use of collective rights. Seeking an utterly cowed, compliant workforce may be
the secret desire of some employers, but to me, it sounds suspiciously like
having one’s cake and eating it.

Yet if the taskforce could do with being less dopey, and the CBI with
disciplining its urge to spin, the true shame from the dip in tribunal cases
must be belong to the Department of Trade and Industry.

Much of the Employment Act 2002 was aimed at dissuading employees from
pursuing applications, by encouraging them to trust in the untested justice of
internal grievance procedures instead. But if tribunal claims have now fallen
significantly of their own accord, wasn’t it all a complete waste of time?

All the resources of the state have been put to the task of exorcising the
demons of a compensation culture that were never there in the first place.
Sedating the lowest common denominator in the business lobby became, briefly, a
political priority. Taxpayers are the ones who should be compensated.

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