The Confederation of British Industry (CBI) will today (Wednesday) launch a new drive to make employment tribunals the last resort for resolving disputes in the workplace.

It will publish figures showing the business cost of tribunals rising 50 per cent in just two years, exacerbating fears that the “compensation culture” has well and truly arrived.

Legal, management and recruitment expenses alone rose for UK business from £426 million in 1999 to £633 million in 2001. This means basic tribunal costs rose four-fold over the past decade during which time annual tribunal claims trebled to a record 130,000 cases.

The full business cost will be millions of pounds more as the figures do not include out of court settlements, productivity losses and staff cover. Firms also face a raft of intangible costs like damage to reputation and diversion of management time.

The CBI says the figures show the government is right to want employment tribunal reform and better dispute resolution. It urges opponents of change to acknowledge that the tribunal process is getting out of control and damaging UK employment relations.

Digby Jones, Director-General, made clear that the push for reform aimed to get more disputes settled in the workplace, not threaten anyone’s right to justice or fair treatment.

“In too many cases the tribunal system is the solution of first resort rather than last resort. That is bad for employers but it is also bad for employees who face a stressful court case and often find themselves out of a job or in lower paying work. While most cases are genuine, firms are worried that a punt-for-cash culture is taking hold. They are often faced with the choice of successfully defending a spurious claim, paying a big legal bill and using up valuable management time, or stumping up a few thousand pounds ‘to make it go away’ – it often seems like a 21st century version of ‘Danegeld'”

Tribunal applications rose 25 per cent last year. Some 64 per cent of applications come from employees who have not tried to resolve the problem directly with the employer.

Last year the government responded to CBI concerns by introducing measures to cut weak and vexatious claims. Ministers gave tribunals extra powers to ask for deposits and award costs in cases with little chance of success.

Now ministers are consulting on ways to cut numbers of employees going straight to tribunal, leap-frogging over company grievance procedures and the ACAS conciliation service. Proposals include charging to register a claim, which is normal practice in other courts.

The CBI stresses that tribunal applications remain rare events for most firms, with 80 per cent of workplaces having no claim against them in the past five years. It points out that 88 per cent of firms with more than 10 staff have formal grievance procedures in place.

Digby Jones said the employers’ organisation would, over the coming months, continue to make the case for reform to ministers and trade unionists. He plans to publish a formal response to the government proposals in October.

“We welcome the start the government has made but there is a long way to go. Occasional disputes are inevitable and sometimes the tribunal system is the most appropriate way of sorting them out. But too many cases end in litigation when they could have been resolved in the workplace. We need a fair, efficient tribunal system but we also need all alternatives exhausted before anyone gets near a court room.”

Responding to CBI claims that the cost of Employment Tribunals has increased by 50% in the last two years, TUC General Secretary John Monks said, “Whilst we agree with the CBI’s desire to reduce the number of tribunal cases, they are vastly exaggerating the extent of the problem. Last year, out of a workforce of 23 million, just 130,000 people made tribunal claims.

“The TUC argues the main cause of this is too many employers without adequate grievance or disciplinary procedures, leaving employees with no choice but to take their bosses to court. The median award for unfair dismissal is just £2,700 – hardly big money and a far cry from the climate of compensation the CBI claims the UK workforce is wrapped up in.

“Government statistics show that where employers work with unions there are far fewer tribunal cases.”