This month we witnessed the first steps in the coalition’s plans for the reform of the tribunal system. New employees taken on after 6 April 2012 only qualify for protection against unfair dismissal after being continuously employed for two years (up from the previous one year). Simple unfair dismissal claims will be reserved to one employment judge rather than the present tribunal with two lay panel members. The maximum costs that may be ordered by a tribunal will rise from £10,000 to £20,000. Due to follow, over succeeding months, are a watering down of employers’ obligations on transfers of employment and in redundancy situations.

Dramatic change

The government’s most dramatic change to the tribunal system will be the introduction of issuing and hearing fees for claimants, ie workers, but not for respondents, ie companies. The proposed fees for an unlawful deduction of wages claim will be of the order of £400, rising to £1,500 for a discrimination claim.

The ground for these “reforms” has been prepared by a press campaign to the effect that most employment tribunal claims are dubious, weak or vexatious, that the average cost to an employer of defending a tribunal claim is £125,000 per claim (British Chambers of Commerce (BCC)), and that seen as a whole the tribunal system is as bleak as “Dante’s vision of the inferno” (the Financial Times).

But the majority of tribunal claims that make it to a contested hearing succeed (roughly 60% in 2010–11). Meanwhile, a careful check of the BCC document in which the figure of £125,000 per claim appeared shows that it was the guess of a single personnel manager. The median awards for unfair dismissal and discrimination claims are a rather more miserly £4,500 and £7,000 respectively.

The press criticism of employment tribunals has distracted us from deeper problems with the system, which are likely to be aggravated by the coalition’s planned changes. Here I will focus on two of them.

Lack of reinstatement

First, it is unjust that the vast majority of tribunal claimants who are dismissed will never be reinstated. Of the 10,000 unfair dismissal claims heard by the tribunal in 2010–11, only eight concluded with orders reinstating or re-engaging the claimant.

A reinstated claimant returns to colleagues she knows, and to a work environment in which she has the credit (in most cases) of good service prior to dismissal. Her salary is maintained at its old level and her prospects for the future are protected. A claimant who wins her claim but is not reinstated finds herself at the mercy of a job market, in which it always takes longer than hoped to find suitable work.

Employers know that tribunals will not reinstate successful claimants, and refuse to reinstate employees where an employee is dismissed and the employee appeals the dismissal. In the mid-1960s, in the industries which kept records, workers who raised internal appeals against dismissal succeeded in between one third and one fifth of all cases. Today, the success rate of internal dismissal appeals is undocumented, but experience suggests it is unlikely to be more than one or two per cent.

Our leading employment judge Elias LJ recently remarked in the Court of Appeal (of cases where an employee is suspended from work to enable allegations of misconduct to be investigated): “It would be an interesting piece of social research to discover to what extent those conducting disciplinary hearings subconsciously start from the assumption that the employee suspended in this way is guilty and look for evidence to confirm it” (Crawford & Anor v Suffolk Mental Health Partnership NHS Trust [2012] EWCA Civ 138, [2012] All ER (D) 132 (Feb)).

The fundamental cause of the declining independence of workplace structures of discipline and grievance is the certainty that once a worker is dismissed, they will not return. The interest of those remaining in the workplace rests, therefore, in convincing themselves that a dismissal is fair, irrespective of its actual merits.

Low awards

Second, the level of tribunal awards is appallingly low. The average wage in the UK is around £24,000; the average time between dismissal and a tribunal hearing is roughly one year; and the clear majority of tribunal claimants remain unemployed at the time of their hearing. Putting all these factors together, the average award should presumably therefore be of the order of £24,000. But the median unfair dismissal award was just £4,591 in 2010–11.

The gap between loss and remedy results from overlapping rules which give tribunals multiple grounds on which to reduce an award beneath the claimant’s actual loss, plus artificial limits on the weekly wage which can be compensated.

Among the coalition’s proposals for fees is the idea that where a worker agrees in advance to limit their claim to a maximum of £30,000 they should pay lower fees. In other words, “reform” will aggravate one of the worst aspects of the present system.

Much indeed needs to be changed; but the proposed reforms are going the wrong way about it.

David Renton is the author of Struck Out: Why Employment Tribunals fail workers and what can be done, published by Pluto Press & a barrister at Garden Court chambers. E-mail: davidr@gclaw.co.uk Website: www.gardencourtchambers.co.uk

(This article was first published in New Law Journal “Trials & tribulations”, NLJ 27 April 2012, p 557.)