Employment tribunal applications have fallen by 25% in the last year. However, the Federation of Small Businesses (FSB) has warned that the figures mask the number of employers opting to settle out of court rather than go through a system that is increasingly costly and complex.
The Employment Tribunal Service annual report shows that:
- Cases are becoming more complex with 1.81 jurisdictions per claim in 2004/5 to 1.72 per claim in 2003/4
- Where the employer successfully defends a claim costs are awarded in 6% of cases, and in only 0.75% of cases are those costs likely to cover legal expenses
- Because out-of-court settlements are confidential the report does not contain information on the number of employers who settle out of court. FSB research in 2004 suggested this figure was running at 44%.
FSB Employment Affairs Chairman, Alan Tyrell said, "I welcome the report from the Employment Tribunal Service but it ignores the fact that many small employers settle out of court rather than go through a system that is increasingly complex and costly.
"Small employers face large legal bills on top of any awards they may be required to pay and are particularly frustrated that costs are only awarded against the litigant in a tiny minority of cases.
"Costs need to be awarded much more often against vexatious applicants, and should take into account the huge increase in the legal fees faced by both sides."
The FSB provides a 24-hour legal advice line for members and insurance to protect their business activities against employment disputes.
Murray Fairclough, who runs the FSB legal advice line said, "Tribunals are no longer the quick and relatively straightforward methods of solving work place disputes they once were. The huge volume and complexity of legislation means that most employers seek legal advice before attending a tribunal and so face increased costs. For many small employers these costs have become prohibitively expensive and the fact remains that in less then 1% of cases do businesses recover their true legal costs of defending their position."
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