The boom in employment tribunals cases is welcome news for some. It has sparked a colourful and diverse new service economy to cater for employers’ needs
At the end of last year, His Honour Judge Harold Wilson, a visiting judge on the Employment Appeal Tribunal, retired after a long and distinguished career. New projects beckoned.
From the start of this year he will be putting his expert skills and experience to good use through casual work in what has to be one of the country’s most modish service industries – witness training.
Bond Solon, believed to be the only witness training company in Britain, started up in 1992, training people to give evidence in criminal trials. Six months ago, it began a course aimed at helping employers cope with being cross-examined in employment tribunals, getting them to see how they might be perceived – Mr Arrogant, Miss Concession, Mr Apology – how not to seem defensive or be put off by lawyers’ tricks. It has caught a mood. More than 300 people have graduated.
“This is a boom area,” reflects director Mark Solon, a lawyer turned trainer. “Few people think about being prepared for an employment tribunal. But a bad performance at a tribunal can come as a real shock to both profit and share price.”
The company is doing well. Some 47 of the FTSE top 100 have been clients, willing to pay £700 for a three-hour session and up to £3,000 for a full day with one of the firm’s trainers, such as Judge Wilson.
Bond Solon is far from being alone in seeing the upside of the employment law boom. Some 250 miles north, Dr John McMullen’s office stands as a monument to opulence, all shooshing lifts and acres of shag pile. His eyrie commands a hawkish view across the glittering rooftops of Leeds city centre, an aspect befitting his position as something of a celebrity in the murky, multi-million pound world of transfer of undertakings legislation. The future, he says, looks “sexy”.
“The sums involved are making people think to such an extent that they are hitting mergers,” says Dr McMullen, head of employment at Pinsent Curtis. “Traditionally, companies have liked making people redundant because it is an easy option when closing or moving factories, but it is a lot less easy now that tribunals can award the big money.” And that is where he comes in. There has never been a better time to be an employment lawyer.
Demand is rocketing. For two years running applications to tribunal have topped 30 per cent. Employers are estimated to spend more than £1bn in legal fees a year. Some predict this could increase by 50 per cent in the coming few years. As a consequence, the increase in both volume of employment law and litigation is spinning off a whole new service economy involving law firms, training companies, consultants, insurers and pundits.
People like Gary Armstrong. His firm, Professional Personnel Management Consultants, in which he is a senior employment specialist, has grown by 60 per cent for the last two years. “It’s a challenging market to be in,” he says. The company deals with about 580 tribunal claims a year, of which about half are settled. For people who don’t want the cost of employment lawyers, PPMC provides a lower-cost alternative. Advocacy charges work out at around £75 an hour plus expenses, which is some £30 an hour cheaper than a relatively junior solicitor. “Obviously, we aim to keep our clients out of tribunals by developing their procedures, but we come at tribunals from a more commercial angle than others,” he says.
Where there is anxiety, there is also insurance, and insurers have been reaping the whirlwind as much as anyone. DAS Legal Expenses Insurance, based in Bristol, has seen its employment work double in four years. Cover has to keep being widened as more laws are introduced. Basic cover on payroll costs of £5m can start from as little as £2,500. But there is gradually increasing demand for what general manager Charles Wright calls “the Rolls-Royce of policies”, aimed at total peace of mind for the twitchy employer – blanket cover for all employment headaches. It comes at a price. On the same £5m payroll, it will cost £2,500 for an audit, then £9,400 for the policy.
“There are a lot of scare stories around,” says Wright. “But in reality, employment law is not as mad as some people seem to think.”
Although the level of settlements and compensation has not risen as much as some people predicted a year ago, recent years have seen many new entrants to the market, all scrabbling to find ways of making themselves distinctive in an expanding sector. With great concern about the complexity of employment law in some personnel departments, many outfits are coming to realise the beguiling appeal of concepts of simplicity. “One-stop shops” abound. E-mploy, the brainchild of Staffordshire-based consultancy Hemingway, started up a year ago following the changes to unfair dismissal, gambling that insurance premiums were sure to rise in the wake of increased levels of litigation. The firm put together a team of trainers, insurers and lawyers to launch a product aiming to cut premiums for small firms, where ignorance of employment law is highest, while offering comprehensive cover without draconian excess clauses.
When they sign up, employers get a full audit of employment policies and contracts and training for all senior managers. Once certified, they receive cover and a legal helpline. As an example, a firm with 40 line managers and a payroll of £13m, a typical premium might be £25,000.
E-mploy reckons it can do it for £22,000.
Hemingway has been busy dreaming up other creative ideas. On 1 February this year, it will unveil a partnership with Jobsearch.co.uk, the online recruitment site. When people log on there will be a special section allowing them to establish whether they have been unfairly dismissed from their previous job. If people feel they have, they can have a free online consultation with a law firm, with the possibility of pursuing a no-win, no fee claim.
However, it would be quite wrong to think that only small, quick companies have seen the niche afforded by employment law. Big names are very much in on the act. Whereas in the late 1990s, when the £12,000 cap on unfair dismissal still existed, the big London legal firms might pat away inquiries about tribunal work to their provincial peers, now they are marketing hungrily. There are, after all, major financial implications attached to tribunals. KPMG’s legal practice, K-Legal, is quite open about exploiting the penumbra where law blends effortlessly into human resources.
“Employment law problems are normally strategic management problems in disguise,” says partner Tim Johnson. “So we are tending to say, ‘Yes, we can handle your tribunal problem, and we can also do the strategic consulting’. The first, which to us would be worth a few thousand pounds, leads onto the second, which can amount to hundreds of thousands.”
DLA, which boasts of being the biggest specialist law firm in Britain with 72 “HR lawyers”, even talks of “Nirvana territory”. “We are aiming to provide a whole solution to the client across both legal and non-legal issues,” explains David Bradley, head of the HR legal consulting group, set up in October 1999. “Employee relations, staff retention, equal opportunities strategy, managing diversity – all the people issues, in fact.”
HR directors should take note: in the new service economy created by employment tribunals, there is little demarcation between “people issues” and “compliance issues”. They are as one. Employees are risks that need managing, whatever the implications for the long-term status of HR.
Employees with attitude
Whereas most employers might look upon dismissal as an unfortunate evil that should be done properly when necessary, some outfits are using the boom to sell redundancy as a positive virtue. How to Legally Dismiss Employees With Attitude Problems, a popular course run by Padgett-Thompson, an off-shoot of the American Management Association, even helpfully details the kind of people to ear-mark for the sack in its material. The list is long. The “loose cannon”, the “company joker”, “the grim reaper”, “those who are all doom and gloom”, the “negative griper”, the “secretive clam”, the “Yes-man”; those who are “abrupt or intimidating”, or those who are “withdrawn, silent and depressed”. Then there are those who “require extra time and attention”, those who “study the company rules and regulations” and even those who “rarely smile or tell a joke”. “While you let them roam, you can never be safe,” the company thunders.
Personnel professionals may well sneer at the crudeness of some attempts to attract their cash. But, uncomfortable as it may seem, it is a market which HR departments have undoubtedly helped foster. Demand must come from somewhere. Those who take a broad view of their role may also acknowledge that applications to employment tribunals are a symptom of conflict, of unhappiness at work – even if employees are trying it on. Conflict used to be expressed in strikes. Now, it is expressed in tribunal claims.
“Many of the disputes I see, where relationships have deteriorated into severe views on both sides, should have been settled around the bargaining table long ago,” says David Cockburn, head of employment at trade union solicitors, Pattinson and Brewer, and treasurer for the left-leaning think tank the Institute of Employment Rights. “Lawyers are the worst at conciliating non-financial agreements. This climate that has people thinking of their rights all the time runs counter to the idea of sitting down, talking and compromising.”
This is the area in which many in the trade union movement think there may be a solution to both the growth of employment litigation and the market that has swollen around it. Their solution is simple: trade unions. One employee-sponsored member of the Employment Appeal Tribunal, who asked not to be named, says: “If you had decent trade union organisation you wouldn’t have so many claims because these things would be sorted out on an industrial relations basis. Most cases are from people who do not have any other means of redress.”
Peter Skyte, a regional officer in MSF who also sits on the London Central tribunal user’s group concurs. “Our approach would always be to attempt to resolve things in the workplace, but because of the decline in union organisation, that opportunity to resolve things has been removed.”
It is an argument that even Acas seems to think has some merit. “Obviously, you cannot stop people from exercising their rights,” says Rita Donaghy, the chair of Acas. “But where there is a trade union, they tend to want to sort it out at local level rather than bring in third parties.”