The government has now made the official announcement that it is to review the dispute resolution procedures, as new research reveals that cases which reach tribunal cost an average of £277,000.
Alistair Darling, the secretary of state for trade and industry, told parliament he has asked Michael Gibbons, a member of the Better Regulation Commission and former director of communications at Powergen, to review the dispute resolution process.
Gibbons’ remit is to review the options for simplifying and improving all aspects of employment dispute resolution and to make the system work better for employers and employees.
He will look at all aspects of the system, including the current legal requirements, how employment tribunals work, and the scope for new initiatives to help resolve disputes at an earlier stage.
The review will involve business representatives, unions and other interested parties in considering the options for change and recommendations are expected in spring 2007.
In addition, Gibbons has also been asked to chair a panel which will advise on other aspects of the wider employment law simplification review which the DTI is currently carrying out, and make suggestions about other areas for simplification.
Darling said: “We must make the employment disputes system work better, both for business and employees.
“By reducing the number of disputes, and resolving those that do happen more quickly, we can raise the UK’s productivity and ensure better employer relations. We can also cut the cost of dealing with disputes, which can be substantial. At the same time, we are determined to protect the rights of employees and ensure that they have access to justice.”
The Centre for Effective Dispute Resolution (CEDR) together with Barclays Bank and City law firm Lewis Silkin has published the results of research into the costs of dispute resolution.
A dispute which goes before a tribunal will, on average cost a whopping £277,000 – a quarter of it in management time. But the research reveals that if the dispute can be solved in its early stages, before legal fees begin to rocket, then costs fall to an average of £9,000.
The research also found that an internal dispute involving managers and employees was second only to a dispute with a customer in having the biggest impact on the performance of businesses – but that internal disputes were far more numerous.
