The truth about employment tribunals

The thought of facing an employment tribunal is enough to fill a salon owner with fear, but new research shows that only a small percentage of plaintiffs are successful UK employers spend in the region of £210m a year on employment tribunal claims, but that’s nothing compared to what could be in store in the near future. This figure is predicted to rise by 70% to £360m once age discrimination legislation comes into force in October 2006. However, claims against employers in employment tribunals have dropped to 86,181 a year, according to the latest figures published by the government. The significant reduction is in line with the underlying downward trend that has been evident over the past five years, and that, in an increasing culture of compensation, is great news for employers.A published Employment Tribunals Service Annual Report for 2005 reveals that just 10% of unfair dismissal cases were successful. In the case of sex, race and disability discrimination the figures are even lower, at 2%, 3% and 5% respectively, which should be heartening for many business owners. Although many claims are settled out of court, it is suggested that they still cost companies £7,000 on average, mainly to cover legal fees. A number of high profile cases and six figure pay-outs have boosted employees’ awareness of employment rights and encouraged a number of claimants looking for compensation. However, as the statistics show, the success rate is surprisingly low and employers should not necessarily feel under siege if a claim is made against them. The odds of them losing are not as stacked against them as they might have expected. The figures also show that headline-grabbing pay-outs are the exception, rather than the norm. According to the Employment Tribunal Service report, the average award for unfair dismissal was £7,303. For race, sex and disability discrimination the figures were £19,114, £14,158 and £17,736 respectively. Arguably, the historically lower level of compensation for successful unfair dismissal claims has resulted in more claimants bringing dual actions, for unfair dismissal and some form of discrimination. In other words, claimants are seeking to load up the accusations in order to raise the compensation stakes or perhaps to try to frighten the employer into a ‘commercial’ settlement. There is more encouraging news for employers when claimants seek to appeal a decision that has gone against them. Of the 714 appeals that went to a full hearing, according to the report, around only 24% were allowed by the Employment Appeal Tribunal. A significant number of appeals were dismissed at a preliminary ‘weeding out’ stage. Although employers should be encouraged by the statistics, you need to be cautious as they do not give the entire picture. Not all cases go through formal tribunal hearings. In some instances they are settled informally, perhaps with some intervention from union bodies. In these cases an award is agreed between the parties and while the odds of an employer losing at the tribunal are slim, the cost of proceedings remains an issue. It will come as a surprise to many that even if they win, it is the employer, rather than the ex-employee, that will be required to meet the costs. Costs were awarded in fewer than 1,000 tribunal cases, and the average cost award was just £1,828. This is hardly likely to reflect the real costs in executive time and legal fees to the employer. Prevention is better than cure though, so if you’re unsure of your employment law, seek specialist advice to make sure you don’t get caught out. As an additional safety net, and for peace of mind, you could look into the possibility of obtaining employment insurance to protect your business. Employment tribunals need not be as scary or damaging as they are perceived to be. If you find yourself facing one, don’t panic. Seek advice and work through it – it might not be as bad as you first thought.