It has long been a complaint by employers that disgruntled employees are able to lodge tribunal claims which are costly to defend, at no cost to them. Tribunals are also reluctant to award costs against undeserving claims/claimants. Claims are costly for employers to defend, whether they win or lose.
Many employers also hold to a rather innocent belief that frivolous claims will be rejected when they are received by the tribunal’s office; the reality is that this rarely happens.
The proposal recently announced by Vince Cable, to take effect from Summer 2013, would bring in fees to lodge a claim initially, with a further fee for the hearing. The fees will be £160.00 to lodge plus £230.00 hearing fee for straightforward cases such as those for notice pay, and £250 plus £950.00 for more lengthy cases such as Unfair Dismissal. However, if there is an exemption (from the fees) for those on low incomes, the original intentions behind the fees may be significantly diluted. So what are the intentions?
At a time of government cost cutting, the first objective is obviously to reduce the cost of the tribunal system to the tax payer. Presumably a secondary objective is to deter frivolous claims.
The fees might achieve these objectives, but they might also deter genuine claimants who, having lost their job, dare not risk, or cannot afford to pay those fees. The low paid who might well be exempt from the fees will not be deterred anyway.
When the industrial tribunal system was set up following the Industrial Relations Act of 1966, the worthy intention was neither side in the case would need to be legally represented. How times have changed.
2. Compensatory Award
The proposal is to reduce the maximum Compensatory Award from its current level of £72,300 to the lower of national median average earnings (£26,000) or the individual’s annual net salary. This in turn begs the question of whether it would be salary or earnings as for many sales people there is a vast difference between salary and (commission based) earnings.
At first glance this looks like simple good news for employers. However, the average unfair dismissal compensatory award is around £8.000.00 so, for most cases lowering the maximum figure is meaningless. The costs of defending a claim will not change, and many employees will (still) add a claim for one or more forms of discrimination – for which there is no limit on the compensation.
On the other side of the coin, less scrupulous employers could be tempted to dismiss higher paid employees unfairly because it is cheaper than going through the proper disciplinary procedure.