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Business group urges tribunal reform

6 January 2011

The British Chambers of Commerce (BCC) has called for urgent reform of the employment tribunal system, in light of research undertaken by the organisation, which asserts the average cost for an employer to defend a claim has risen to £8,500.

The high cost of defending even spurious claims, warns the BCC, has led many businesses to simply settle, at a much lower average cost of £5,400. While there are provisions to allow businesses facing unmeritorious claims to reclaim costs, the number that do so are miniscule, and have decreased each year since 2004/05.

Commenting on the research, Dr Adam Marshall, director of policy and external affairs at the BCC, said: “The current system is perverse - forcing businesses to settle spurious claims rather than fight them, simply because it is more cost effective for them to do so. And those costs go beyond legal fees. The reputational impact of a tribunal can be hugely damaging to a business, particularly as they can be stretched over several months.

“We urge the Government to review the current system and consider introducing a fee for claimants to discourage spurious and baseless claims. Ministers must also commit to reducing the wait time for a first hearing - and making the system less of a barrier to business growth."

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Thursday January 6, 2011, 22:14

This argument is approaching the problem from the wrong angle.

The ethos behind the employment tribunal system was that it should be a less formal court, accessible to all. In particular it should be a forum for unrepresented parties where the judge undertakes a more inquisitorial role and ensures the parties are on an equal footing (whether this happens in practice is of course debatable but the theory is sound).

This idea of introducing a fee is preposterous. The answer is to remove the need for parties to be represented at all therefore no one runs up massive legal fees.

Introducing a fee is fraught with difficulties. How much should it be? When is it decided that a case is "spurious"? There is a serious access to justice question inherent in this. Someone who feels they have been unfairly dismissed and is jobless may simply be unable to afford even a nominal fee. Most people who read this will see the Article 6 implications inherent in this.

It would also have no effect on someone who can pay the fee and simply wants to cause trouble.

I am open to evidence that the scenario of spurious claims is a major problem for business.

Michael Buchan

Monday January 10, 2011, 18:13

As someone who has seen this first hand I would agree that the number of spurious claims has been on the increase. The cost of defending such claims goes well beyond the legal fees and many should not go the distance (I have had feedback from 'opposition' solicitors that they believe there is no case to answer but their client cannot be persuaded otherwise!).

Does the system need reforming? Absolutely.

Do I know the answer?


However, bringing it into the open to stimulate debate can only be a good thing, especially when I come across small businesses without the resources to defend such claims, thereby paying out hard-earned revenue for something just to make it go away.

That can't be right.


Friday January 14, 2011, 22:58

I do accept that the cost to a small business especially is disproportionate. Technically speaking however they don't have to pay for representation at a tribunal. If a claim is obviously spurious then why pay thousands for a solicitor? Surely a tribunal judge would have the judgment to call for a pre-hearing review to decide if the case should go any further, e.g. be struck out on the grounds of no reasonable chance of success or the ordering of a deposit to be paid before the case be allowed to continue if it has little reasonable chance of success?

This deposit would surely have the same effect as the ludicrous fee mooted above - but it would be ordered after at least some evidence has been heard and the strength of the case assessed.

If a tribunal judge does not order a deposit or a strike out then like it or not, the case cannot be said to be spurious.

I find your experience of "opposition solicitors" very disturbing. If a client is on legal aid then carrying on with such a case is surely tantamount to defrauding the legal aid board. Additionally does a solicitor not have a duty to refuse to conduct such a case in such circumstances as they are clearly aware they are wasting court time?