Steep rise in tribunal claims poses a threat to employers

Steep rise in tribunal claims poses a threat to employers

The recession has sparked a huge rise in tribunal claims which have created costly and time-consuming problems for employers across the country.

Many of the claims relate to issues such as working time and equal pay but, not surprisingly perhaps, there has also been a rise in the number of cases involving redundancy. The indications are that the problem is going to get a lot worse before it levels out and starts to improve.

The latest full year figures from the Tribunal Service show that the overall number of claims rose by 43% in 2007/08 to a record high of 189,303. The provisional figures for 2008/09 show that this trend looks set to continue with a 38% rise in claims over redundancy payments, a 26% increase in unfair dismissal claims and a 25% increase in breach of contract claims.

There are several reasons for the increases. The recession has put pressure on many firms who have felt the need to lay people off, reduce hours or scale down benefits. All of these procedures can become a minefield when it comes to employment law. The problem has been made worse in some cases because the recession took hold so quickly.

Some firms have been taken by surprise and have rushed into changing working practices or making staff redundant without following the correct procedures. This haste has left them open to claims from disgruntled staff.

In the past, many employees who lost their jobs would find new work quite quickly and so would not feel the need to pursue a tribunal claim. The recession has made it much harder to find work so people have fewer options. They may choose to take legal action to make up for their lack of income.

The other difficulty for businesses is that employees are more aware of their rights these days and are prepared to pursue all sorts of claims relating to pay and conditions.

Looking to the future, employers will have to get to grips with the new Equality Bill which introduces stronger measures to tackle various forms of discrimination and could lead to a further rise in claims relating to age, disability and equal pay.

Many of the claims will be genuine but there is also a danger of a victim culture emerging in which someone who doesn’t get their way in the workplace feels entitled to make a claim. Most employment lawyers have seen a dramatic rise in cases over the last year, both from employees wanting to bring a claim and from employers needing to defend themselves.

Many employers may need to tread carefully because such claims can prove expensive, especially if the employee’s complaint is not handled correctly. To add to the problem, firms now face the added potential embarrassment of being named and shamed if they fail to pay awards made by tribunals.

Offending individuals or firms will be entered in the Registrar of Judgments if they fail to pay after being taken to court to enforce the award. The registrar can be searched by members of the public and by credit reference agencies.

The move is intended to give more weight to tribunal rulings and reduce the time people have to wait to receive payments.

On a more positive note, the Court of Appeal has ruled employers can take length of service into account when selecting candidates for redundancy.

The court was called upon to clarify the law after Rolls Royce was faced with the prospect of laying off several of its workers. The three judges held that length of service was a legitimate point to consider even though it could give older employees an obvious advantage over younger colleagues.

However, the ruling does not mean a simple “last in, first out” approach can be adopted. The judges made it clear that while length of service could be one of a number of factors under consideration, it should not be the only criteria used.

The ruling will be welcomed by many employers who would like to consider length of service when dealing with redundancies. However, they should still tread carefully and ensure they also take other factors into account before making any decisions.

Anthony Kay is a Partner in the Employment Department at Andersons Solicitors he can be contacted on 0115 988 6739 or by emailing: akay@andersonssolicitors.co.uk