UK: £51,750 or Nothing - which would you prefer??

Last Updated: 16 October 2001
Article by Guy Hollebon

Employment Tribunal proceedings are again under the spotlight with the recent release of two consultation papers dealing with the spiralling rise in the number of Employment Tribunal claims – the Lord Chancellor’s Department paper following on from The Leggatt Report into tribunal functions generally and the DTI paper Route to Resolution.

The findings contained in the DTI paper in particular should concern employers and small businesses. According to the Workplace Employee Relations Survey 1999, which the DTI paper quotes, over half of Employment Tribunal claims are brought against businesses with under 24 employees. Added to this, the DTI report found that in the year 2000/2001 the number of new Employment Tribunal claims rose above 120,000 for the first time.

Note: The fast growth in 1994/95 and 1995/96 include the multiple applications received following the ruling in the Vroege and Fisscher case, and can be considered a one-off effect.

Source: ETS management information.

These are worrying statistics for any small employer, as they are precisely the businesses who can ill afford the costs of such claims. Indeed the DTI reports that on average it takes 16 hours of management time to deal with an Employment Tribunal claim and £1,866 of legal costs, even if the claim settles before a final hearing. It is worth noting that the legal costs figure is based on 1996/97 figures and in the same way that the number of Employment Tribunal applications has risen steadily, so too have lawyers fees.

The DTI and the Lord Chancellor’s department have suggested ways to reduce the number of Employment Tribunal claims. These suggestions include the introduction of fees to be paid by Applicants before commencing proceedings; widening the situations in which Applicants will have to pay the employer’s legal costs if the employer is successful in defending the application; increasing the use of Alternative Dispute Resolution and conciliation through ACAS and achieving greater uniformity in Tribunal’s decisions.

Only time will tell if these suggestions are ever implemented and whether they prove to be ultimately successful in reducing the number of Employment Tribunal claims. What is clear, is that they will not stop the most determined of employees from bringing claims.

Employers must now take a forward thinking and proactive approach in order to reduce the likelihood of an employee making a claim against them.

This should start at the commencement of employment with the employee being issued a clear, concise and conclusive contract of employment or a written statement of the terms of employment. The Employment Rights Act lays down what must be included in the contract or statement. By ensuring the terms of employment are fully documented from the outset there is less chance that a dispute will arise from misunderstandings between the employer and employee. Employers have been required to issue such a contract or statement within 2 months of commencement of employment since 1996. Five years on, do you comply?

Employers should also put in place user friendly and plain English policies dealing with, amongst other things, disciplinary and grievance procedures, equal opportunities and email and internet use/misuse. These contracts and policies should be regularly reviewed to ensure they are the most appropriate for the employer and to ensure compliance with ever increasing government legislation and regulation.

Reducing disputes and increasing good employee relations does not end there. As well as having the contracts, policies and procedures in place, employers must ensure they are followed.

It is common to see employer clients who have received notification of Employment Tribunal proceedings who could have avoided such a claim if only they had taken legal advice before acting in the heat of the moment and, for example, dismissing the employee on the spot.

It is time that employers realise that in the litigious society in which we now live and work, their actions and decisions that concern their staff will be subject to greater scrutiny by the courts and tribunals. To keep ahead and avoid costly claims, employers should involve their professional advisers at all stages from employment to dismissal. A stitch in time really will save nine.

Although there have been a lot of changes to employment legislation during the last couple of years many businesses are still not aware of the extent of these changes and the impact on their business. It is vital that they get it right now to avoid falling foul of the law - but where you they start?

Bevans solicitors are offering to all UK Chamber of Commerce members, a way of identifying exactly what they should be doing to ensure compliance with the new laws. For just £150 plus VAT, they will carry out a comprehensive audit of their employment practices.

For further details, please contact Mr Guy Hollebon of the Employment team at Bevans solicitors.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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