There’s been a lot in the media recently about the costs to employers of defending unmeritorious tribunal claims. There was an article in the Times on 4 January and an item on the Today programme on Radio 4 on 5 January (http://bbc.in/g3acSr). Both of these in turn set the ‘blogosphere’ alight with the musings on employment lawyers on the topic. Despite the fact that most of these employment lawyers depend on employers for their, generally comfortable, living, most took the view that employers protest too much and, for example, that the fact the BBC spent more than £600,000 in 2010 on ET claims brought by 33 staff was actually “quite low” and “a pretty good deal”!
New research from the British Chambers of Commerce (http://bit.ly/gcXdqw) suggests that the Beeb did in fact spend more than the typical employer. The average employer paid around £8,500 to defend a typical ET claim, while an average settlement cost around £5,400. But, in reality, aren’t those really rather shocking numbers? It’s no wonder there is a growing market for the high quality fixed-fee, insurance-backed employment law service. Spending £8,500 on a matter that’s worth only around £5,000 – and half of successful claimants in tribunal are awarded less than £5,000 – is not really good business (except for the lawyers that charge the fees!)
Using traditional law firm approaches clearly does not make sense for most businesses. But at the same time, they need high quality advice they could rely on – equal to the best law firms – with the peace of mind that insurance brings. You can’t blame lawyers for gathering where there is a mass of regulation and case law but in truth law firms have probably had it too good over the last 25 years; the market will, in my view, inevitably have to change and I aim to ensure Ellis Whittam continues to be at the vanguard of that change.
So what can be done to tackle the problem of weak and unmeritorious ET claims? I think it is a racing certainty that this year will see the Government taking up the suggestion made by John Cridland of the CBI on the Today programme that claimants should have to pay a court fee (refundable if they win their case) in order to bring a claim. John Cridland spoke of a bit more than the small claims court fee of £30; a figure of £50-£100 is often proposed. If you are going to engage the resources of the state to resolve your grievance and if you are going to tie up some of your (ex-)employer’s resources, you ought to be willing to put your money where your mouth is, so I think this is the right way forward. (No doubt the fee could be waived for the poorest claimants).
For employers that do settle an ET claim, the court fee will inevitably be added to the price of settlement. That’s one reason why I would favour a fee more like a £100 than the £500 the British Chambers of Commerce are suggesting. A £500 fee is likely to lead to claims that the system is biased against employees. A fee of around £100 is still, I think, likely to put off those who currently believe they have nothing to lose by trying to squeeze a few bob out of employers – in particular the serial litigants.
I am sure we will also see in 2011 a greater emphasis on pre-claim conciliation by Acas, whereby the conciliation service tries to broker a settlement even before the worker’s claim reaches the tribunal. For many employers, that will be attractive if they can settle a claim for a relatively smaller sum and not have to engage lawyers to defend the claim. But for employers who don’t believe they have anything to settle, who have conducted themselves properly in dealing with their employees there may be a race towards a quality, reliable and insurance backed fixed fee option.
Ellis Whittam provide a comprehensive range of employment law, HR, health & safety, training, recruitment and business support services to UK employers. http://www.elliswhittam.com