Posted on Friday 16 September 2011 by Ulster Business

Tribunals under the spotlight

The UK’s employment tribunals system has come in for increasing criticism in recent years for its perceived negative impact on business. Nigel Tilson asked a business organisation, a trades unions body and the Labour Relations Agency for their views on how the system could be improved

Leading business figures have claimed recently that the UK’s employment tribunals system is flawed and is having a negative effect on business.

Even if a claim is unjustified, they say, it is often hard to avoid significant disruption and cost defending it, and many employers say they settle out of court even if they don’t think a claim has much merit.

So is a system that is there to protect the rights of employees who have been wrongly dismissed really open to abuse from those with spurious claims or grudges against employers who got rid of them for legitimate reasons?

According to Nigel Smyth, director of the CBI in Northern Ireland, there is a widespread perception among employers here that the tribunal system is biased in favour of the applicant, whether they are an employee or an ex-employee.

“The burden of proof seems to be on the employer to show that they have not done wrong, which could amount to not following a procedure to the letter, while the behaviour of the applicant, however unreasonable, is not taken into account,” he says.

“So employers often make the rational commercial decision to settle cases rather than spend even more time and money getting involved in a tribunal hearing with the attendant negative publicity that this may entail.”

He believes that at a time when management should be focusing every effort on developing their businesses, too many are finding themselves spending time and resources defending themselves against weak and vexatious claims.

“Many have concluded that the current system is no longer fit for purpose for applicant and respondent,” he adds.

Peter Bunting, assistant general secretary of the Irish Congress of Trades Unions (ICTU), says it now seems that in order to resolve a dispute an industrial tribunal has become the first resort instead of the last resort and this is of huge economic cost to both employers and the trade unions.

“We are deeply concerned about the access to fair play, justice and early dispute resolution in Northern Ireland. There are many reasons for that concern, including the emphasis on legality and the construct of the Northern Ireland economy, where around 90 per cent of economic activity is carried out by SMEs. From a small employer’s perspective, it is difficult to have the time to keep abreast of the ever-evolving situation of employment rights,” he comments.

“Everyone is having difficulty keeping up with the costs of engaging in industrial tribunals. This legalistic approach can poison relations between those in dispute. It can make a professional disagreement more emotional as the stakes become higher, as the months drag on and as the legal fees mount.”

Back in the summer Tom Watts, the chairman of a Midlands recruitment company, attracted headlines across the UK when he won record costs against a female former employee who accused him of discrimination and victimisation. An employment tribunal ruled that the charges against him were false.

Afterwards he said he was not bothered about the £100,000 award by the tribunal. Instead he commented: “What I’d like this to do is send a message to all the opportunists and chancers and vexatious spongers who bring these cases that it can backfire.”

But he also noted: “The trouble is they still have everything else going for them. The entire system is rigged in their favour. I’ve won one, but most people will still cave in and pay out.”

The Labour Relations Agency believes an industrial tribunal should be a last resort. It insists many claims can be – and are – resolved through a conciliation process rather than a tribunal hearing.

Penny Holloway, director of conciliation and arbitration at LRA, points out the agency is a fundamental part of the dispute resolution process in Northern Ireland.

All tribunal claims are referred to the agency by the Office of Industrial Tribunals and the Fair Employment Tribunal (OITFET) and the LRA then contacts all claimants and respondents involved in the claims to invite them to engage in the process of conciliation in an effort to resolve their dispute.

According to LRA statistics, less than 20 per cent of all claims received by the agency from OITFET currently go on to a full tribunal hearing.

“There is a cost to dispute resolution for the parties and the costs will increase if the claim does go to a hearing. It is important that case law is established through hearings particularly on complex issues and for new legislation where there is little case law established,” she says.

Both the CBI’s Nigel Smyth and Peter Bunting of ICTU believe the current tribunals system needs to be changed.

Nigel Smyth says: “In their conception tribunals were meant to be easily accessible, speedy, informal and inexpensive – if only that applied today. The current system is remote, slow, legalistic and costly. The time has come for this to change.”

CBI NI has been reviewing the system and earlier this year came up with a range of solutions which it has asked the Department for Employment and Learning to consider with urgency.

The wish-list includes extending the qualifying period for unfair dismissal from one year to two, introducing mandatory conciliation and allowing a greater role for arbitration and pre-tribunal hearings.

It also believes stricter conditions should be set by the tribunal and it wants to see the introduction of a fee per claim to discourage unreasonable behaviour by applicants. It says more use of powers to award costs would be welcome, too.

ICTU, on the other hand, wants a dispute resolution system that is similar to that of a rights commissioner system. It would be voluntary, non-adversarial and be the first port of call if a dispute arises.

It would be along the lines of the Rights Commissioner Service operating in the Republic where commissioners are independent and are chosen from a list put forward by trade unions and employers.

Peter Bunting says workers and employers would find it easily accessible: “It is non-legalistic in its approach, although it deals with legal issues. It is investigatory as opposed to adversarial. Our objective is to sustain employment relations in a way that will be compatible with employees and employers realising their rights.”

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