The total number of employment tribunal claims has surged over recent years, with the past financial year yielding the highest overall figure since 2013.
Whilst the pandemic has no doubt contributed to an increase in employment claims, the removal of tribunal fees in 2017 is also a driving factor in this year-on-year increase, with more and more employees becoming aware that they may lodge a claim for free.
Even though fees are no longer payable, this doesn’t mean tribunals are free and without risk for an employer; the British Chamber of Commerce estimates the average cost to an employer in defending a claim is £8,500. Even when an employer wins a case, they will rarely recover their legal costs from the employee unless the claim can be proven to be malicious or vexatious. Even then, there are no guarantees that these costs can be recovered.
Employers should also factor in the significant and disruptive drain on management time when defending a claim. Due to the backlog the tribunal is dealing with, the average duration of a case is 43 weeks; this is 5 weeks more than the position pre-COVID. Throughout this process you will be reviewing documents, speaking to witnesses and talking to advisors – all of which take up significant amounts of yours, and your employees’ time.
Ultimately, the costs of losing at the employment tribunal can be significant. For example, an unfair dismissal claim has a maximum compensatory award of £86,444, whereas discrimination claims have unlimited compensation.
Avoiding the cost
To put it simply, the easiest way to avoid these costs is to avoid the claim being issued at all. Employment law is constantly changing and it is vital that you seek sound legal advice on your policies and procedure to ensure you are compliant with the law. A strong and consistent approach to HR policy and procedure will help to minimise the risk of being on the wrong end of a tribunal claim, whilst also providing clarity to your employees.
If you need advice on any aspect of employment law or have a legal HR query, please contact Farleys’ employment law team on 0845 287 0939, send your enquiry by email, or speak to an expert on our online chat at the bottom of this page.