Govt announces reform of employment tribunals

Posted on 27 Jan 2011 by The Manufacturer

The Government has proposed a plan to reform the employers tribunal system, in a bid to make it less costly and complex and to limit the number of spurious claims.

The main change is an increased qualifying period (from one to two years) for unfair dismissal claims, which will give businesses greater confidence to hire new staff. The Government will also consult on the introduction of a fee to bring a tribunal claim.

Last year saw 236,000 claims, a 56% rise on 2009. Businesses spend £4,000 on average to defend themselves from lawsuits. The proposed changes are a response to fears that the system as it is will end up damaging business, especially smaller companies.

Business Secretary Vince Cable said: “Disputes in the workplace cost time and money, can affect morale, reduce productivity and hold back businesses. We often hear that knife-edge decisions about whether to hire new staff can be swung by concerns about ending up in an employment tribunal if things don’t work out. Today’s proposals address these concerns and should help give employers more confidence.”

John Cridland, CBI director-general designate, commented: “It is in everyone’s interests that disputes are resolved swiftly and fairly. Introducing an element of charging would help weed out weak and vexatious claims, clearing the way for more deserving cases to be heard.

“Extending the qualifying period for unfair dismissal is a positive move that will give employers, especially smaller ones, the flexibility and confidence they need to hire.”

An Employer’s Charter was also published. It clarifies what employers can and cannot do and tackles a number of employment law issues.

Cable said: “In the business world there is also a common misconception that employment protections are all one-way – towards the employee. The Charter we are publishing today tackles this myth by setting out clearly some of the most important rights that employers already have in the workplace.”

Steve Radley, EEF’s director of policy, also commented on the Charter: “In recent years employers have become fearful of the impact of employment legislation and the charter is a positive first step in clarifying what they can and cannot do. However, the bigger picture remains how we sweep away the barriers to growth and make a difference to employers’ ability to create the private sector jobs we need. This will require far more radical action.”

According to Radley, the proposed reforms are a good step forward. He stressed that we must ensure that “mediation is the first port of call and a recourse to legal action the last.”

Not everybody agrees with the proposed changes. Brendan Barber, the Trades Union Congress general secretary, said: “While employer groups complain that tribunals are costing them too much, they have lost sight of the fact that if firms treated their staff fairly, few would ever find themselves taken to court.

“Instead of making it harder for employees who’ve been treated badly at work to seek justice, ministers’ time would be better spent looking at why so many companies, especially small employers, have such poor employment practices.”