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Sharp Rise in Employment Tribunal
By Martin Brewer, Partner, Mills & Reeve LLP
The Employment Tribunal Service has released statistical information for the year 1 April 2006 to 31 March 2007 and, no doubt much to the concern of the Government, they show a marked increase in the number of tribunal claims. The Government had hoped that forcing employers and employees to attempt to resolve disputes, through statutory dismissal and grievance procedures, before they become litigious would operate to reduce the burden on employment tribunals and therefore the cost to the public purse. Do these latest statistics suggest that the hope was forlorn?
The total number of claims accepted by the employment tribunals last year was 132,577. This was an increase of more than 15,000 on the year before. Some have suggested that the increase reflects the current trend for mass litigation in the local authority and NHS sectors where there are thousands of equal pay claims currently going through the system many of which were started last year.
However, whilst it is true that the number of equal pay claims rose dramatically, from17,268 in 2005/2006 to over 44,000 in 2006/2007, it is also true to say that the number of claims has risen in all of the main employment tribunal jurisdictions. For example, unfair dismissal claims rose by almost 3,000, unauthorised deductions claims, the second most “popular” claim, also rose by almost 3,000, breach of contract claims rose by 1,000 and sex discrimination claims doubled from just over 14,000 in 2005/2006 to over 28,000 last year.
It is not all bad news for the Government. Claims under the Working Time Directive which rose from 3,223 in 2004/2005 to over 35,000 in 2005/2006 fell back last year to just over 21,000, there were also reductions in the numbers of claims for race discrimination and in relation to pregnancy. However, these are small crumbs of comfort. In all other jurisdictions there have been increases to a greater or lesser degree. Added to that of course is a whole new category of claim under the Age Discrimination regulations of which there were almost 1,000 last year.
One of the most interesting and persistent trends in tribunal claims is what might be called the rule of thirds. It is an almost invariable rule that of claims which proceed through the tribunal system, about one third are withdrawn, about one third are settled and about one third go forward to a hearing of one sort or another. This holds true for almost all of of the jurisdictions listed in the statistics.
It is also interesting to note that except for claims essentially for pay-unauthorised deductions, breach of contract and redundancy pay-most tribunal claims fail (although equal pay remains an exception to this trend in ‘pay’ claims where there was twice as much chance of the claim succeeding as failing). The obvious exception to this general trend is unfair dismissal claims where there is an even chance between succeeding and not succeeding at tribunal.
To take one example, last year there were 102 successful race discrimination claims but 465 unsuccessful claims. This pattern is repeated for all of the discrimination jurisdictions (except equal pay) where the Claimant’s chances of success are outweighed by the chances of failure.
The statistics also set out the level of compensation awarded by tribunals. The compensation figures surprise many, particularly Claimants, and can which can be useful information for those trying to decide the cost effectiveness of fighting or settling any particular claim. And if the decision is to settle a claim the figures are a useful tool to use in order to dampen down the Claimant’s inevitable enthusiasm for a high settlement figure.
The average award for unfair dismissal last year was just £7,974. Of the 3,309 cases in which unfair dismissal compensation was awarded, only 84 received compensation in excess of £50,000. The vast majority of cases attracted awards of less than £5,000.
In contrast, the average award for cases with an element of race discrimination was just over £14,000 and for claims with an element of sex discrimination, just over £10,000. But again the trend is for most awards to be towards the lower end with the average being skewed by a few very large awards. In race discrimination claims only six cases received more than £50,000 and in sex discrimination claims only two received such high awards. These figures should be contrasted with the rather more difficult jurisdiction covered by disability discrimination.
Many employers find it very difficult to comply with the rigours imposed by the Disability Discrimination Act and in particular the requirements to consider making reasonable adjustments. Arguably this is reflected in the relatively higher average award of over £15,000 covering relatively few disability discrimination cases (116). The highest award for a disability discrimination claim last year was £138,648 which is rather lower than some of the highest awards in previous years which may reflect a more conservative approach being taken by the judiciary (or of course it might just be the nature of the claims that were brought).
Finally, it is interesting to look at the question of costs awarded in employment tribunal cases. Many Respondents in the employment tribunals who are successful in defending claims by what they perceive as troublesome ex-employees very often ask whether they can recover costs against the unsuccessful Claimant. It is not uncommon for the solicitor to come under pressure to apply for costs. This may stem from the experience in other courts where, by and large the winner gets his costs paid by the loser as a matter of course. B ut that is not the position in the employment tribunals where the costs regime is fairly restrictive and indeed there is a cost to pursuing costs.
Of course in theory it is always possible for the ‘winner’ to apply to the tribunal for the ‘loser’ to pay it’s costs. The reality is shown starkly in the statistics. Costs were awarded in only 509 employment tribunal cases and of those, some 166 were costs awards made to the Claimant and 343 to the Respondent, just about twice as many. But in the context of the total number of claims this is small comfort and no-one should go into tribunal litigation assuming that they will be able to cover their costs if they win.
So has the move to require employers and employees to deal with workplace disputes before going to court succeeded in any way? Well on one view it might be argued that the increase in the number of claims tends to suggest that the experiment has failed. However, as famously said there are lies, damned lies and statistics. We cannot know whether without the statutory procedures the number of claims would have been even higher and it is certainly true that use of the statutory procedures has meant that the employer and employee have to focus on what the complaints really are and that if the claim goes to tribunal it is fairly well formulated at an early stage.
On the other hand the Government’s move towards either repealing or at least fundamentally changing the statutory procedures tends to suggest that at best they have failed to live up to expectations and at worst have been a complete waste of time and money. For this reason many are looking forward to the Government’s proposals on the statutory procedures with some interest.
Martin Brewer
Partner
Mills & Reeve LLP
martin.brewer@mills-reeve.com
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