More than three in five (62%) of employment tribunal claims were settled before their final hearing, according to new figures.
Research by law firm Birketts, which looked at a two-year period from July 2022 to July 2024, also showed that 24% of HR teams reported claims had been settled the day before a hearing was due to start.
However, despite the high proportion of claims being settled before they were fully heard, employers had invested an average of 4.8 weeks over the two years purely on handling such claims.
The survey of 500 HR professionals in England and Wales found that the largest number of claims had been brought against organisations in Wales, with an average of nearly one per fortnight and an average of 45.5 in total.
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The most common claim was for unfair dismissal, which accounted for nearly one in four (24%) cases. This was followed by disability discrimination, which made up more than one in five (22%) claims.
Commenting on the findings, Catherine Johnson, partner in Birketts’ employment team, said: “Employment claims have become a costly burden for businesses, financially but also in terms of the resources required to handle them. Managers too often see dealing with grievances and disciplinaries as an inconvenience and rush through an investigation, increasing the risk of a successful claim being made. This may be because managers have had insufficient prior experience and lack good quality investigations and disciplinaries training.”
Highlighting the government’s commitment to a new of employment legislation, such as a ‘day one’ right to claim unfair dismissal, she said employers must take action now – particularly given the current backlog of employment claims in the courts and tribunals.
“Staying ahead of the rapidly changing employment law landscape has never been so important for businesses and their HR leaders. Failing to tackle the potential for employment claims early on is already proving costly to businesses and could get worse at a time when employers are already grappling with increased costs from the Autumn Budget,” Johnson added.
In light of the research, Birketts believes employers must implement clear workplace policies, provide quality line manager training and maintain clear communication channels between management and employees to stop any issues from escalating.
It advised employers to decide at an early stage whether early settlement is the most cost-effective or desirable outcome, since doing so would mean reducing the time and money wasted on preparing for a full hearing.
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