With tribunal costs on the increase, it’s imperative that workplace disputes are sorted before they get to court. Ross Bentley reports.
There's little doubt that many workplace disputes result in costly litigation. And it's HR's job to ensure those costs are kept as low as possible. There were more than 189,000 applications for employment tribunals in the year up to April 2008, according to the Tribunals Service, the government body that administers all tribunals. This figure is up by a third on the previous year.
During that time, the average compensation award for cases involving unfair dismissal, race discrimination and sex discrimination was £7,974, £14,049 and £10,052 respectively. Factor in associated expenses – legal costs, lost management time, the expenditure of recruiting new employees – together with such intangibles as the damage to a firm's reputation and staff morale, and it becomes clear that trying to reduce the cost and impact of workplace disputes is a pressing issue for employers.
At law firm Stevens and Bolton, employment partner Paul Lambdin calculates the overall average cost to an employer of an employment tribunal is £15,000-£20,000.
"A small business only has to face three tribunals in a year and that's the annual profit margin swallowed up," he says.
The rise in the cost of employment tribunals could be attributed to a number of factors. Employees are more aware of their rights and have become more litigious while the increased technicality of employment law has led to more complex cases, which take longer and are therefore are more expensive to resolve.
"Not too long ago, a tribunal panel would rattle through three to four cases in a day, but today it's not unusual for one case to be heard over a number of days," Lambdin says.
Equal pay claims are the most financially crippling, he says. "They can become very technical because often you are comparing apples with pears." The same is true of disability discrimination cases, where frequently expert advice is sought on whether an employer has made a reasonable adjustment to accommodate an employee, as required by law.
But what can employers do to minimise costs and avoid a dispute going to tribunal in the first place?