Employment law and the Employment Tribunals system are like a runaway train, having been hijacked by vexatious litigants who have learned to play the system to wring thousands out of their employers in settlement of spurious claims. Claims which SME companies and charities can’t afford to fight.
The Government is shortly to announce proposals for reform, which will go out to consultation. Headlines on what is likely to appear in those proposals suggest that the nature and scale of the problem has been missed by policy makers. The changes will fall far short of what is needed to restore a real and proportionate balance between the interests of the employer running a business efficiently, and those of the employee who must have legal redress in the event of arbitrary and unreasonable treatment at the hands of the employer.
The only way that the government will get this balance right is through a wholesale rethink of both the law and the Employment Tribunal system as they currently operate in the UK. And the only way policy makers can rethink this meaningfully is by undertaking a thorough investigation into the problems with the current system as experienced by employers on the ground. They must get into a position where they can fully appreciate the chaos and expense being incurred by thousands of employer organisations across all sectors. They need to understand the ways in which all this is going to severely hamper achievement of several of the government’s own key policy objectives.
Unless the problems are addressed the Government will be making it very hard turning around the economy by boosting private sector employment, improving the efficiency of the public sector, and empowering voluntary and community enterprises to deliver positive social outcomes at reduced costs as part of the Big Society. Personalisation of support and care services for the elderly, sick and vulnerable will be held back as in many instances the individual purchasers of services will be deemed employers and therefore open to legal claims being made against them. And as things stand, few but the very largest employers will be willing to take a risk on taking long-term claimants of benefits into their employment when the latter constitute a very high risk in employment law terms if things don’t work out.
The uneasy alliance of vested interests who defend the status quo point to the fact that two thirds of claims submitted to employment tribunals (ETs) are settled out of court, and of those that do go to court only half are won by the litigant. They go on to claim that this is evidence that the system is not stacked against employers. In reality, these statistics are indicative of major flaws with the system. And it is in the two thirds of cases that are settled that we see the enormity of those flaws and the degree of the skew against the employer.
It is vitally important that the government seeks first-hand witness to the stories that I see and hear on a daily basis from associates and clients in public and voluntary services and small businesses. The following is a scenario that I see played out with such depressing frequency and predictability that every affected employer will find it easy to finish another’s story as soon as the first line is told. Despite what naysayers try to claim, hiding behind their willful misinterpretation of the flimsy ET stats, this is happening to thousands of employers across the country every year.
Employee A is serially underperforming, under-attending and misbehaving over a number of months before the manager plucks up the courage to tackle these issues. The manager seeks advice from their HR team, an external lawyer, or expert adviser and paying for the privilege, because they are conscious of the legal minefield they are about to tread.
Upon said advice the manager requests A to attend a formal meeting to discuss the concerns, whereupon A sticks in a grievance stating that the manager has bullied and harassed, or offended or discriminated against them in some way. The expert advisor tells the manager that the only safe way to proceed in law is to suspend any proceedings against the employee until another manager (or in many cases an expensive independent external investigator) has fully investigated the matter. This procedure often takes several weeks as many people have to be pinned down and interviewed at length. Meanwhile, Employee A goes to their GP and gets signed off with stress. The length of the period of medical certification of unfitness to do anything at all almost invariably correlates precisely with the amount of contractual sick pay to which A is entitled. Three months is a fairly typical period during which A is being paid full pay to do no work while they claim they are too sick to be interviewed as part of the grievance investigation, so the proceedings are stalled for weeks on end.
The employer’s legal advisor then advises that A must be referred to an Occupational Health Advisor (yet another fee paid by the employer) for an opinion of when A might be fit for an interview, and the report takes some time to come back as A exercises their legal right to see a copy of the OHA’s report before it goes to the employer.
By the time the grievance investigation has been concluded, finding – to nobody’s surprise given what everyone knows of the history of those involved – that there was no ground to the grievances raised by A, further such stalling on the grounds of ill health happens around the re-commencement of the initial procedure to address A’s shortcomings.
Since in all but gross misconduct cases this same process must be gone through on at least two occasions, and more often three, before any legal advisor will advise that it is safe to dismiss, the amount of loss to the employer in terms of management time, sick pay, lost opportunity through non-performance of the contract has by now run into many of thousands of pounds. However bad A’s performance, conduct and attendance, it will typically take around at least 12-18 months to effect a dismissal.
Irrespective of the laboriously reasonable and fair procedure carried out by the employer, once dismissed if not before, A will fill in an ET1 form to make a claim against the employer, at no cost, often abetted and supported by a non-win no-fee solicitor. The latter has no intention of taking the claim to court because they know it is as weak as water, but they also know that the cost of going to court will frighten the average employer into an out-of-court settlement. They will not be content with an unfair dismissal claim as the stakes involved are too low. So they will claim unfair dismissal and two or three heads of the many heads of discrimination there are to choose from (perhaps gender, race/nationality and religious or philosophical belief). If the employee has been employed for less than 12 months, they will seek to shoehorn their complaints into one or more heads of discrimination, whistleblowing, or another of the long list of claims that can be made without any length of service whatsoever.
The employer knows that the rigours placed by ETs on the employer to defend the claims, however trumped up, means that they must instruct a lawyer from the outset, and as the claim proceeds a barrister is most often instructed in addition.
The Employment Tribunals will list A’s case for 8 days of taxpayer-funded time in court. Even if the case goes to a pre-hearing review, the judge will have been instructed that only in the most extreme of circumstances should they ever throw out a claim of discrimination. So the claim almost invariably goes through.
The date scheduled for the court hearing to commence will be at least 18 months after the dismissal, because the ET system is clogged up with claims, very many of them virtual carbon copies of A’s case.
Here is where the story can take one of two turns. Either the employer, or their insurers if they have them, decide that they cannot bear the cost of £40,000 in legal fees to fight the matter in court, however strong they know their case to be, and they concede to demands from the employee and their advisor for settlement, negotiating that at around £20,000 tax-free in to A’s pocket. Alternatively, they fight the case, win it, but don’t get a penny of their £40,000 costs back from the litigant or anyone else. Either path amounts to legalised extortion.
Many a small business has been ruined by these goings-on and many a small charity forced to close down. There are several variants on these stories, each more grotesque and scarcely believable than the last. For example, the letter I had from one businessman whose 100 year-old mother was taken to ET by her part-time domestic and who as a consequence has moved all his businesses out of the UK in disgust. Or the client of mine advised by lawyers that they must settle the claim for discrimination of an employee still working for them as they could get her to leave as part of that settlement.If they didn’t do that, they were advised, although they would almost certainly win their case, at any time in the future when they might need to take any action against her for underperformance or similar they would likely see themselves in receipt of an ET1 claim form for victimisation.
I would call upon all employers who have similar stories to get them out there. Once the Government is able to appreciate the whole picture, they will surely see the need to:
- Identify those parts of the law parts most in need of repeal or revision to restore a fair balance of justice;
- Undertake a wholesale reform of the Employment Tribunal system to ensure that there is a meaningful financial deterrent to individuals and no-win-no-fee lawyers to lodging and pursuing unreasonable and vexatious claims.
A few of my personal recommendations would be:
- More robust initial paper-based assessment of the merits of claims before they get to any sort of stage that involves legal expenditure by the employer. It is inconceivable that this would be as difficult to do as the vested interests would have us believe. After all, tribunal insurance schemes all work on the basis that insurance will not be available if a lawyer assesses the case on paper as having a less than 51% chance and Trade Unions, even where they support people to the point of appeal, normally dump cases that look weak on paper as they don’t want to spend good money fighting no-hope case.
- Claimants made liable for a significant proportion of the employer’s costs if they proceed with a weak claim.
- Open access to information on past claims by litigants and admittance of evidence about previous claims into ET proceedings.
- Reversal of the current burden of proof in discrimination claims, with the requirement for much stronger prima facie grounds of discrimination before allowing cases to proceed to court.
- Investigation of the activities of no win no fee lawyers and advisors to assess the extent to which the worst elements are actively inciting claimants to pursue meritless claims to the point at which they can force a settlement out of the exhausted employer facing unmanageable legal costs.
All of you who have experienced the excesses of things as they stand should:
Share your stories on this blog site.
- Raise the issues directly and personally with your trade and membership bodies and with your MPs.
- Ensure that your voices are heard in the forthcoming consultation on changes.
Finally a word about my own interest in this matter. Those who disagreed with me when I recently raised these issues in The Times and on the Radio 4 Today programme tried to paint me as the enemy of the rights of badly treated workers. This is as far from the truth as could possibly be. I am HR Director of Broadway Homelessness & Support, a charity providing services to homeless people. Broadway has won many awards and accreditations for its excellent people management practices, on the say so of our staff. I firmly believe that all employees should enjoy fairness and respect at work and redress at law if these rights are transgressed.
I raise these issue because in networking widely within the charitable sector, and in supporting many small charities and businesses through our social enterprise HR support arm, I have for long despaired at the regularity with which I and my associates have seen these stories played out because the law and the ET system as they stand are so open to abuse. At the very heart of our concern is the negative impact on vulnerable service users when providers of services are tied up with all this destructive and wasteful game-playing with their worst employees. Instead they should be expending their resource and time on supporting those that they receive funding to support and developing their most committed staff to improve their skills and performance.
