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Sharp rise in employment claims after tribunal fees scrapped

Four years ago the government introduced fees of up to £1200 for employment tribunal claimants with the premise being to reduce the number of malicious and unmeritorious claims. Much has been debated on subject since and I recall the appetite of both camps to advance their views. In one corner, the objectors voiced their concern under the ‘access to justice’ banner; in the other corner, the supporters cited the cost to the taxpayer enfeebling the UK, post-recession.

Fast-forward four years and the results are now in: the tribunal system has seen a 70% fall in claims with little or no change in the division of outcomes, a change one could expect to observe with the successful eradication of undeserving claimants. Even the most ardent supporter of tribunal fees would be unwise to suggest that the dramatic fall was due to a 70% increase in employee satisfaction, or equitable improvement in employer behaviour. The most recent report since the fees were scrapped last July, produced by the National User Group of Employment Tribunals, indicates a significant increase in submission of ET1 forms since the July ruling in the Supreme Court, some regions reporting a 100% rise.

The facts reported above support the notion that the cost of tribunal fees negatively affected the majority of claimants, who have limited financial reserves and particularly in cases of dismissal. In short they simply could not afford to make a claim with front loaded fees.

For employers the reality is that their risk exposure has significantly increased since the ruling and they recognise this: A recent article in the Law Gazette published the results of a survey by the Confederation of British Industry (CBI) which stated: ‘90% of businesses thought the Supreme Court’s decision would lead to a spike in vexatious claims.’

For law firms, there is an opportunity to deliver a structured risk mitigation strategy. Forward thinking firms appreciate the value of long term successful partnerships with their business clients and this may no longer be achievable using the traditional case by case retainer-based firefighting approach.

With Brexit steadily looming, stability within the workplace will be increasingly important to ensure consistent growth and law firms must recognise that their business clients need to avoid unpredictable attacks on cash flow due to litigation. A predetermined regular fee for a comprehensive protection and prevention package is far more attractive. Employment lawyers can provide pre-emptive audit reviews of policy and practices, HR guidance, telephone and online support services as well as legal expenses insurance.

The benefits for the client are wide reaching and centre on the peace of mind they get from knowing that as the inevitable issues arise, the plans are already in place to provide a swift and cost effective resolution by preventing protracted litigation, which has closed many otherwise strong businesses.

The benefits for the law firm are equally appealing: long term relationships with business clients, a reduction in the need for fee earners to lose valuable billing time chasing one off cases, a predictable cash flow into the firm and regular work for trainees to focus on and develop knowledge.

The employment law market is changing again, how law firms respond to the changes may determine their success.

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