The latest figures from HM Courts & Tribunal Service (HMCTS) show a significant and sustained increase in the number of cases going to Tribunal, and the number of companies having to contest claims. Contributor Andrew Weir, Head of Employee Relations and Advocacy – Moorepay
New single cases were up 23% in the last quarter and have risen every quarter except one since the Government was forced to abolish Employment Tribunal fees in a 2017 Supreme Court ruling. In fact, the number of single cases brought against employers in the year April 2018-March 2019 more than doubled when compared against the same period before fees were abolished (up 229%).
While the dropping of Tribunal fees has clearly created a significant challenge for businesses, particularly SME businesses, which will not have the same resources that larger firms can bring to resolve disputes, the fact that more people are bringing cases to Tribunal should be seen as a positive for the HR industry.
It is right that staff should be able to seek redress for breaches of their employment rights, and it is healthy for the economy that companies should be held to account for poor practice.
However, what is not healthy is the resulting drain on company resources that defending, or contesting, increasing volumes of Tribunal cases brings – particularly if they are vexatious or opportunistic.
Tribunal cases more complex than expected
When the change to the fee structure was introduced many firms that we work with expected to see an increase in claims being brought to Tribunal. However, the expectation was that the majority of those claims would probably be for relatively lower risk, less complex and lower value claims, such as claims for unpaid holiday pay or unpaid wages for staff leaving the business (whether voluntarily or through redundancy or disciplinary action).
What has actually transpired is that many more of these Tribunal cases now seem to revolve around much more complex and challenging cases such as whistleblowing and discrimination. These cases are far more complicated – and time consuming – for companies to defend.
What’s driving this complexity for employers
The most effective way to address this risk to the business is to avoid creating an environment that opens the door for these types of cases in the first place. It is not just the type of case going to Tribunal that has increased the cost and complexity of this area of HR for businesses. The way staff are being disciplined and monitored is also having an impact.
The huge growth in social media use and the ability for companies to monitor staff behaviour using social channels and technology has created areas of risk for employers and employees.
On the technological side, more companies are improving their HR data insights and, with advice, taking reasonable steps to manage things like long term or persistent short-term sickness absence. If an employee doesn’t agree with the reasonable steps taken, their only recourse outside of their employer is to the Employment Tribunal service.
From a social perspective cases where employees have openly posted a negative comment about their employer online or have been seen out socialising when they were due to be working, or perhaps even seen abroad when they had reported themselves as very unwell, are increasingly common.
Social media presents employers with a much wider lens to view a much less anonymous world. If there is fundamental disagreement around action taken as a result, the only cost-free refuge for employees is either in the arms of another employer, the critical gaze of the Employment Tribunal or both.
Companies are also at risk of Tribunal cases created by macro-economic trends. The recent British Steel collapse highlights the negative headwinds that are impacting the economy, with Brexit creating uncertainty within the business community that could see more redundancies and force firms to choose which roles to retain and which to let go. All of this creates an environment where the volume of Tribunal cases continues to grow, making a huge impact on businesses, particularly SMEs.
What this impact on businesses looks like
The main impact will be in time and emotional energy. Defending an Employment Tribunal (complex or otherwise) with or without advice takes up masses of both time and emotional energy from various people within a business.
Businesses are now understanding this and we are seeing a lot more investment in products and in tools such as Advice & Legal Expenses Insurance, HR software, outsourced Recruitment, outsourced Employee Relations Consultancy, Occupational Health and Employee Assistance programmes to ensure that HR teams have the right expertise in place to address Tribunal claims effectively and ultimately avoid them altogether.
However, much more can and should be done and businesses need to be prepared in advance for employment issues that can lead to Tribunal cases. We still see examples of SME businesses that have a misconceived belief that a Tribunal case will either simply go away, or their defence team will resolve it for them with little if any engagement from their side.
Unfortunately for businesses, that is not the case. Getting the very best result in an Employment Tribunal involves working in close partnership with defence teams, giving them everything they ask for as soon as possible and working with them to prepare fully for what can be a very taxing period.
Addressing business impact at the source
We are often asked what businesses can do to address the increasing volumes of Tribunal cases. The single biggest thing they can do is to have the HR processes and practices in place to avoid disputes ending up as Tribunal cases.
Many SMEs could do a lot more from the very beginning of the employment process – at interview – to mitigate risk. Whether the business makes furniture or splits atoms, having a robust, competency-based interview process is key. The better suited people are to their roles, the fewer reasons the company has to reverse them out of the business.
That single act will significantly reduce the number of Tribunal claims that an employer faces. Once people join the business, giving them clear annual objectives with a quantified view of what good looks like is very precious, both for the member of staff and for the business. While it comes with clear benefits in terms of what the employee delivers and their own career progression, it also is critical in defending claims at Tribunal.
If employers can be shown to have followed due process and communicated clearly and regularly with staff around an agreed set of objectives, then action taken in the event of any transgression is far easier to defend.
Companies need three core HR processes in place to defend themselves more effectively against vexatious or opportunistic Tribunal cases: Good HR data/processes; Expert HR and Legal advice and Regular HR training
These provide a backbone of process and compliance that will enable a business to show fairness and due process in its dealings with staff. If this behaviour becomes engrained into the culture of the business then the risk of employment issues becoming Tribunal cases is lessened. If issues do go to Tribunal it also means the company is in a far better place to set out its defence, with less drain on management time and emotional energy.
Companies can also set out clear working practices that work in tandem with employment processes that help create a better work culture and which mitigate the risk of employment disputes in the first place.
1. Communicate regularly with their teams, so everyone understands what is expected of them
2. Be consistent & reasonable in their requirements of their people
3. Work towards a set of common goals
Striking a fair balance between employees and businesses
While Tribunal cases can be costly, complex and challenging for businesses to deal with, we should celebrate the role of the Tribunal in creating a healthy, just and strong working environment that protects rights for both employees and employers.
The Employment Tribunal service was setup as a lay court for the lay person paid for by the exchequer; this is especially important when you consider that the majority of cases are brought by people who are either out of work, or who have seen their earnings fall.
For people in that position who have a just claim, then Tribunal fees are an unnecessary and unfair barrier, and abolition was a good thing. The Tribunal system needs to strike a balance between giving all employees access to justice regardless of their circumstances and supporting a judiciary service that has technical resource demands far beyond many other paid for court services.
So what, I hear you cry, is the solution?
Increase the exchequers budget? Never introduce fees again? Lower fees for employees to pay? A (much) better system of means testing for when employees’ fees should be paid? Lower fees paid by both parties, with the winning party receiving a full refund?
Thankfully this is a matter for parliament to decide when they are out of the Brexit quagmire.
For businesses the key is to understand the processes that lead to Tribunal cases, take advice regularly, set clear parameters and have a fair and representative relationship with the workforce – fair processes and fair action rarely result in unfair Tribunal outcomes.
Achieving that balance demands processes and ongoing attention from employers but the costs of Tribunal cases – in money and time – make it well worth the effort.