Employment tribunals need reform, says BCC

The British Chamber of Commerce (BCC) has announced that the employment tribunal system is in “dire” need of reform and that employees should be charged a fee in order to deter spurious employment claims.

The call for reform comes as the BCC releases figures showing that it is more cost effective for an employer to settle a claim rather than defend it in an employment tribunal. The average cost for an employer to defend an employment claim is £8,500, with the average settlement award being £5,400.

The difference in costs for an employer means that many are choosing to settle employment claims rather than see it through the tribunal system, even if the employee’s claim is tenuous.

The trend for settling employment cases has also led to an increase in the number of employees issuing claims against their employer, as they can take advantage of the employer’s reluctance to spend time and money on an employment tribunal hearing.

Dr Adam Marshall, the director of policy and external affairs at the BCC, said that the current system is “perverse”.

The BCC’s proposal is expected to be considered by the government as part of their ongoing review into employment law in the UK.

A previous scheme was proposed by the Labour government in 2001 but it faced substantial opposition from the trade unions and Labour back benchers.

Critics of the proposed fee say that it will encourage employers to take advantage of low-income and vulnerable workers. Employers will be able to exploit workers in the knowledge that they cannot afford to pursue their legitimate claim in an employment tribunal.

The trade union TUC said the proposals would make it “harder to seek justice” and “challenge unfair treatment in the courts”.

However, Mark Warren, the head of employment law at the law firm Eversheds, said that employment tribunal claims increased by 56% in 2010, therefore it is understandable that the government should be seeking to reform the system.

In addition, John Cridland, the director general of the Confederation of British Industry (CBI), told the BBC’s Today programme that a small refundable fee should be paid by claimants in order to repair the current “broken” system.

It is not a new and untested idea. New Zealand currently charges claimants a fee between $200 and $300 under the Employment Court Regulations 2000 when they submit a claim to the employment court. The measures are intended to achieve a balance of fairness between the employer and employee.

TUC called the proposals “unfair”, insisting that employees with genuine complaints but little money will not be able to seek legal redress if a fee is imposed.