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Editor’s Comment: ‘Compensation culture’ – fact or fiction?

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By Annie Ward, HRZone Editor


The latest report from the Employment Tribunals Service would suggest that Britain’s ‘compensation culture’ is already here and firmly embedded in our culture; the number of Tribunals in Great Britain rose by 17 per cent last year with sex discrimination claims seeing the biggest rise. The Better Regulation Task Force, however, refute claims denouncing ‘compensation culture’ claims as a myth; HRZone examines the issues.

Claimant count rises
Last year 115,042 applications were registered with tribunals. This was an increase from 98,617, filed in the previous year. The Employment Tribunals Service says this increase was almost entirely due to multiple applications. That is claimants making two claims for example unfair dismissal and sex discrimination. Indeed, sex discrimination claims have soared comparatively since last year with a 76 per cent rise.

Employers in the dock
High profile cases have included Matthew Thompson v Jobcentre Plus. The backroom employee who claimed that the introduction of a standard dress policy at Jobcentre Plus requiring men to wear a collar and tie at all times was discriminatory as women were not being forced to wear tops of a similar standard. In a landmark ruling, the Tribunal ruled in his favour, clearing the path for similar cases.

More than 7,000 applications were filed following the ruling.

While claims like the ‘tie case’ might be viewed as more light-hearted in issue; sex discrimination claims of a more serious nature abound. Indeed many female-brought claims seem to shed light on a more worrying issue; that antiquated notions of the role of women still exists in many a boardroom and workplace.

Take the recent ongoing case of high-flying mum of one, Diane Winship who is suing former employers, Goldenberg Hehmeyer for sex discrimination and unfair dismissal. She states that the trading house broke their promise to allow her to come back to work part-time after four months maternity leave. Shortly before her scheduled return to work, Mrs Winship says the organisation demanded she returned to work full-time. Mrs Winship made complaints but was accused of being disruptive and following disciplinary proceedings she was sacked. Goldenberg Hehmeyer strongly denies her claims.

While also in the dock are British Airways who are being sued by 14 flight attendants over claims of sex discrimination. The women say they missed out on promotions and pay after taking up more family-friendly, part-time working arrangements. The women claim that BA unfairly discriminated against them for 25 years; the workers say they had to wait an extra 14 years to achieve the seniority they deserved because taking their right to maternity leave left them at the bottom of the career ladder. The Tribunal decision is yet to be announced.

Embracing equal opportunities
Might elements of our ‘compensation culture’ be quashed therefore, if employers genuinely embraced equal opportunities? The Equal Opportunities Commission thinks so.

Speaking to HRZone, a spokesperson commented: “Many employers do take equal opportunities seriously, but others do not do as much as they could to ensure they are treating staff and potential recruits fairly. If more employers were to ensure that they stay within the law and provide equal opportunities to all employees it’s likely that this would reduce the number of people taking claims to employment tribunals.

“However, it’s important to remember that only some people who feel that they have been treated unfairly at work take their claim to a tribunal. It can be a lengthy and very stressful experience, and the fear of being labelled a troublemaker is likely to deter many from complaining.”

Daniel Isaac, partner at employment law firm Withers LLP agrees: “There is no ‘compensation culture’ in employment law. Employment rights are, on the whole, clear and reasonable. If there are too many claims, it is because these rights are consistently flouted by employers, sometimes deliberately and sometimes through ignorance of the law.”

‘Better Routes to Redress’
David Arculus, chairman of the Better Regulation Task Force believes that managing disputes in the workplace could be the cure to the ‘compensation culture’ problem. While Arculus announces Britain’s ‘compensation culture’ as a myth, he believes that the amounts of money involved and the potential cost to business is a very real threat.

Launching the Task Force’s report “Better Routes to Redress” back in July, Mr Arculus said: “It is a commonly held perception that the United Kingdom is in the grip of a ‘compensation culture’. Newspapers complain that the UK is becoming like the United States with stories of people apparently suing others for large sums of money, and often for what appear to be trivial reasons.

“In 2000, the cost of litigation in the UK as a percentage of GDP was less than a third of that in the US. Media reports and claims management companies encourage people to “have a go” by creating a perception, quite inaccurately, that large sums of money are easily accessible. Over 55 per cent of county court awards in 2002 were for less than £3000.”

The concern, says Arculus is the problem that genuine claimants might be hampered by the spurious claims created by the perception of a compensation culture.

Teresa Graham chair of the group commented, “We look at what has created the perception of a compensation culture; how it has been fuelled; and the damage that this perception, unless tackled, will have on the prosperity and well-being of the UK. We consider how people with genuine grievances – especially those who in the past may not have had access to justice – can have better access to appropriate redress. Compensation is not the only form of redress available. We want the Government to explore greater mediation and no-fault rehabilitation, as well as allowing people to apologise. Often an apology will go a long way.”

Improvements
So what is the government doing to make things better both for genuine claimants and Tribunals who are bogged down by bogus and time-wasting claims? This week, HRZone reported how the Government plan to keep details of Employment Tribunals a secret. Lobbyists including MPs, solicitors and Public Concern at Work, a charity promoting open justice believe that the greater principal is the right to know. Balancing the interests of the public against attempts to stop the compensation spiral is a tough line to draw. The Better Regulation Taskforce believe that the solution can come with Tribunal reforms.

The Task Force have suggested that the Government raise the limit under which personal injury claims can be pursued through the small claims track. They also recommend researching the viability of contingency fees, which would make legal charges more transparent and less subject to dispute.

It remains to be seen how proposed reforms of the current Tribunal structure will help claims handling to become more effective and whether adopting Equal Opportunities practices can help organisations fight off sex discrimination and unfair dismissal claims.

One Response

  1. Rights vs. Responsibilities
    Firstly, welcome to your new role.

    At a slightly tongue-in-cheek level, I’d say your article scores better than most. My scoring is very simple: a count of the number of times that ‘right/s’ appear vs. the number of times that ‘responsibility/ies’ appear. You have a ratio of 4:0 (which is much better than most articles of the last few years).

    There is, however, a serious point here.

    There are few inalienable rights – and even most of these (e.g. the right to free speech) can only operate if people recognise that they have responsibilities (e.g. not to stir up hatred, to avoid gratuitous antagonism, etc).

    The compensation culture DOES exist (and is growing faster than in the US even if it has not yet caught up with them).

    The solution as everyone in HR ought to know is not going to be achieved via legislation – which encourages litigation, pays the lawyers and resolves nothing (other than compensation).

    Legislation is necessary to provide a safety-net for those who suffer and have no other recourse. But common-sense says it is better to prevent the suffering than to minister to it after it occurs.

    Of course educating people (from parents to teachers to staff to managers) is much harder – and embuing them with a sense of responsibility (to themselves to partners to co-workers to employers) takes a long time – it’s called growing-up.

    But avoiding hard work and trying for a ‘quick win’ is another symptom of the same culture that permeates most organisations.

    Frankly I have little sympathy with the majority (but not all) claimants – but even less for most employers on the receiving end of a claim. You shouldn’t be able to hide behind legislation to demand your ‘rights’, but an employer that practices true equality of opportunity (i.e. availability and relevant skills count, gender/ethnicity/age/etc don’t) should have nothing to fear and is being equally ‘responsible’ to shareholders & staff.

    And yes, like Tony Blair, I am a child of the ’60s who believes in ‘freedom’ – but (unlike him?) I also believe in sticking to a moral position even when it’s uncomfortable.

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