Cost burdens on employers could rise following the introduction of a new tribunals regime from Monday 29 July, an employment law expert has warned. In a bid to deter staffers from launching bogus tribunal claims and to reduce financial pressures on the Tribunal Service, the new rules will force claimants to pay for registering their claims and attend Employment Tribunal hearings.
However, Andrew Willis – head of litigation at business-advisory firm Croner Solutions – says that the measures, combined with the introduction of confidential termination negotiations, could encourage employees to expect severance payments. That would end up having the reverse effect to the one intended by piling up the financial burden on companies.
“If employers in large numbers begin to take advantage of the limited comfort offered by protected settlement conversations,” said Willis, “employees will increasingly expect a payoff on termination of their employment. And if the case instead goes to tribunal proper, then settlement sums will inevitably incorporate an extra element to cover tribunal fees.”
The size of fee payable would typically depend upon the type of claim – with simpler claims, such as unlawful deduction from wages, costing less than those for more serious issues such as unfair dismissal or discrimination. Although costs are paid in advance, the tribunal will have the power to force an unsuccessful party to reimburse the fees of the victor.
Reforms of the tribunals system have partly been motivated by a desire to provide a sifting process for employment judges – but Willis cautions that even if the bureaucratic burden on businesses is lowered, companies could end up paying an unexpected price. “In the future,” he said, “it is likely that claims reaching tribunal will be increasingly complex and difficult. And more cases will be settled before tribunal proceedings are even commenced. As a result, the costs of resolving employment disputes will fall on the parties concerned – particularly employers.”
He added: “HR professionals will need clear strategies in place to control these costs and ensure that a new payoff culture does not become the norm.”
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