Protect your business against costly tribunal claims

The government says it is looking again at ways to reduce the number of tribunal claims made by staff against their employers.
It’s a move that will no doubt be supported by businessmen everywhere who for years have been subjected to the threat of costly and time consuming legal action. No responsible company will dispute that employees should be protected but there’s a growing tendency for some workers to play the system which is costing firms time, money and heartache.
A good example is the man who started 80 claims to employment tribunals over a period of 10 years. They were mainly to do with discrimination on the grounds of sex or disability.
He is either extremely unlucky to have come up against 80 bigoted bosses or there was something flawed in his definition of discrimination. The fact that he only won two of his cases suggests the latter may be true.
It could be argued that if he lost the other 78 cases then justice was done and employers have nothing to worry about. Unfortunately, that doesn’t tell the whole story. Every time an employee makes a claim his employer has to investigate.
That means taking senior managers away from their day jobs of running the company. Members of staff may have to be interviewed to establish the facts of the case. This can be disruptive and affect morale.
It adds up to a significant investment in time and money, and it leaves firms vulnerable to opportunist employees. There are even serial complainants who move from firm to firm seeking rich pickings from compensation.

Now Trade and Industry Secretary Alistair Darling has asked his officials to examine how the rules could be simplified as a way to reduce the regulatory burden on businesses. The move comes only two years after the department’s last attempt to discourage weak or vexatious claims.

The changes introduced in 2004 encouraged the use of internal dispute procedures which are less costly both in time and money for employers than tribunals. The new approach did lead to a significant drop in numbers but the success was short lived. After a temporary respite, the number of claims during the last financial year rose by a third to 115,000, marking a quick return to the levels seen before the changes were introduced in 2004. Mr Darling later said: “We do need to ask ourselves, and not be too proud about this, did we get it right first time.” It’s yet to be seen if the government will get it right the second time.

Faced with such a deluge of rising figures it’s not surprising that so many employers have been losing faith in the tribunal system. According to a recent survey by the CBI, many firms settle cases they have a strong chance of winning because they fear the cost of going to tribunals.

Nevertheless, employers should not give in too easily when faced by unreasonable claims. It’s easy to see a firm’s dilemma if they feel the tribunal system is more trouble than it’s worth, but if everyone simply gives in then it encourages more people to proceed with weak cases and the problem snowballs.

Sometimes it’s cheaper to stand your ground and fight. A good example of this is the case of the deputy head teacher who recently sought £1m compensation for bullying and intimidation after claiming she’d been forced to use a chair that made embarrassing noises every time she sat down.
The tribunal ruled that she was neither unfairly dismissed nor discriminated against. Ironically, it may be the fact that she was claiming so much that led to her defeat. Had her demands been more modest her employers might have decided that it was cheaper to settle out of court.
If they had taken that decision then clearly an injustice would have been done and taxpayers’ money would have been wasted on undeserved compensation.

As in so many things, prevention is better than cure. Putting the correct employment policies in place helps to ensure that problems to do with pay, staff relations, discrimination and so on don’t occur in the first place. When cases do slip through the net, the employer is more like to succeed at a tribunal if he can show that he followed the company’s own published and properly drawn up dispute procedures.

A little foresight and planning combined with properly drawn up policies can save thousands of pounds in the long run.

Sally Laughton is a Solicitor within the Employment Team at Andersons Solicitors. She can be contacted on 0115 988 6736 or email: Sally Laughton

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