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Claims up, reform not enough

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Claims up, reform not enough

CIPD have released a survey revealing that 69pc of employers believe they have no effective protection against employees making unjustifiable claims to employment tribunals, with over half (52percent) wanting unfair dismissal law amended to make it easier for them to dismiss employees.

In an attempt to try to address issues such as this the UK Government has recently published a consultation on employment tribunal reform. The consultation floats a wide range of proposals. Owen Warnock, partner at international law firm Eversheds, comments: “Many of the aims and sentiments contained in the consultation paper will strike a chord with the views of employers reported in the CIPD survey. Although initial reactions to the consultation paper focused on increasing the unfair dismissal qualifying period from one to two years, many employers and unions will be more interested in the paper’s proposals for tackling weak and time-wasting claims. One of the most radical suggestions is to introduce a “payment in” system which would put a claimant at real risk of paying the employer’s costs if he or she declined to accept a reasonable offer of settlement.

Other important proposals include introducing a less stringent test for striking out spurious claims, increasing the scope to order financial deposits to deter a claimant pursuing weak arguments, doubling the cap on cost awards to £20,000 and forcing claimants to try to resolve a complaint through ACAS before lodging a tribunal claim. “However, many employers are also looking for the introduction of fees for lodging employment tribunal claims, to act as a deterrent to ‘have a go’ claimants, and there will be concerns that the Government has postponed this issue for another consultation on fee- charging later in the year.” Many employers will however be concerned at the Government’s proposal to introduce fines for employers found to have breached employment rights in a tribunal, in addition to compensation paid to the successful claimant. No doubt this is intended to increase pressure on employers to settle complaints away from a tribunal, however, there is a real concern that small employers will be particularly vulnerable should this proposal be implemented.

“There is a tricky balance here – the number and complexity of tribunal claims has become a real burden for businesses and measures to discourage weak and spurious claims are to be welcomed. However there is a risk of some unintended consequences in that, instead of discouraging such claims, a number of the Government’s proposals could serve to increase the pressure on employers to settle claims rather than defend themselves when they have acted legally. Those employers who consider that these proposals do not go far enough should take the opportunity to shape the reforms by responding to the consultation. It is important to ensure that the Government’s wish to tackle this issue, which is very welcome, leads to reform which is effective, fair on all parties, and simple in practice.”

10 March 2011

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