What is the answer to spiralling cash claims

Employers can do little to counter the effect of a qualifying period for claims and increasing payouts

Claims to tribunals have risen dramatically this year and it is hurting employers (News, 5 September). HR professionals are angry about time-wasting cases and have called for tribunals to fine the frivolous heavily to avoid legal chaos.

It was obvious that reducing the qualifying period and increasing compensation limits would lead to many more claims. You do not dangle such a large carrot without getting a reaction. Not only was it obvious, but it has been part of this government’s thinking that it is right to put employers under this sort of pressure. In the White Paper Fairness at Work, back in 1998, it was said that the likelihood of “proper compensation” being awarded would encourage employers to put “proper voluntary systems in place”.

Government policy is to improve the treatment of employees by making employers fear the consequences of paying heavily if they lose cases in tribunals. So we can expect that the policy makers are regarding with satisfaction the latest Acas figures and the levels of protest they have generated.

Even if the Government changed its policy – and such things do happen when elections loom – it is not going to be that easy to discourage claims. The proposed solution of imposing heavy fines for frivolous claims needs examining. First, can one prove that the increase in the number of claims is matched by an increase in the proportion of frivolous applications? Perhaps what is happening is that it has become much harder to settle genuine grievances and this is why more applications have been made.

Second, there is already a power for tribunals to award compensation to employers if claims are brought or conducted frivolously, vexatiously, or unreasonably.

The problem is that tribunals are generally reluctant to make such a finding. The usual cop out is a decision that the applicant was misguided but had “a genuine sense of grievance”.

The best disincentive for badly founded claims would be to increase the frequency of such awards but that will require a sea change in the attitude of chairmen and members, which is more difficult to achieve than changing the law.

In addition there is a cap of £500 on the sum a tribunal can award without asking a County Court to assess costs. This limit could be increased to encourage employees to behave in the same way the system pressurises employers, however you would still need to get the tribunal to make the order. Another alternative would be to impose a fee for making a claim.

Any kind of suggestion to impose costs on applicants creates heated opposition. Those looking after the interests of employees counter by saying that no Legal Aid is available for advocacy in tribunals. To avoid the prospect of pressure for Legal Aid many abandon the quest. As the present government is determined to reduce the Legal Aid budget on all fronts, this may today be less of a worry.

Probably the real question to ask is why the “industrial jury” system has become so expensive to operate… but that is a different debate.

• By Stephen Levinson, a partner in KLegal, the law firm associated with KPMG

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