Employers deserve better justice from the tribunal system

Since the phrase work-life balance was first coined, employers have struggled to feed the insatiable appetite employees have found for innovative and engaging work practices. But has the pendulum swung too far?

Imagine the scenario where you are wrongly accused of committing an act you did not carry out. Imagine that act was a criminal offence and the consequence is a spell in the ‘clink' overnight while the police investigate. Imagine how powerless and frustrated you would feel.

Fans of TV police dramas such as The Bill will be familiar with the scenario and in my view UK small and medium-sized enterprises (SMEs) face the commercial equivalent because their financial viability is at risk from employment law regardless of how well they run their businesses.

I find the rights of the individual now supersede the rights of the organisation to such an extent the financial stability of many SMEs could be at risk.

One of my clients, a highly reputable SME, recently made a provision in its accounts running to many thousands of pounds to defend an entirely vexatious claim by an ex-employee. This means it has to find £400,000 of additional gross sales to cover this provision - or jobs could have to go.

The injustice is a legal system that allows spurious claims to receive credence while simultaneously tying the hands of the employer. Legal opinion instructed by this client stated there was nothing more it could have done to better protect or defend itself. Yet it must up cough large sums of cash to preserve its reputation and indeed its very existence.

There are a number of factors that fuel such conditions, and there's no better place to start than the Law Society.
Its members are free to market their services on a ‘No Win - No Fee' basis, meaning any individual can submit a claim at nil cost to them and without consequence. No Win - No fee solicitors often proffer skewed legal opinion because they know many employers will settle rather than waste valuable management resource or risk defeat at an employment tribunal.

Litigious employees, more aware than ever of their individual rights, must also share some of the blame. Spurred by headline-grabbing stories in the media, for a disgruntled ex-employee the prospect of a potentially huge windfall can be all too alluring - especially where it costs them nothing to play the game. The maximum compensation award for unfair dismissals has risen by 473% in the past decade to a lottery-sized £63,000.

With awards for unfair dismissal shooting up by almost 500% in the past decade, there can be no question therefore that the employment tribunals (ET) system is in need of a radical rethink.

Before going ahead tribunals should thoroughly evaluate an applicant's case. We would be horrified if the police arrested someone without taking a witness statement or securing some sort of corroboration, but at present tribunals act in very much the same arbitrary fashion.

What we need is the creation of a new body, possibly made up of a reformed ET system and Acas, where cases are robustly challenged at the outset. The result would be far fewer of the sort of cases I have witnessed where, though applicants fail to tell the facts and though facts fail to match the evidence, tribunals will give credibility to the most mendacious of claims and issue an [online response form] ET3

As to employment law itself - it works against employers by favouring employees in a number of fundamental ways. First, employees can discharge their legal obligation if they adopt the Modified Grievance Procedure after leaving their employer. This mitigates their failure to complain formally while in employment, thereby denying employers the opportunity to address any matters at issue.

One of my clients bent over backwards to accommodate the career wishes of an employee so as to provide work-life balance. Yet although the employee failed to raise any concerns formally at the time the Modified Procedure allowed him to pursue a case at tribunal. Meanwhile, if my clients fail to follow due procedure the system punishes them.

Even if a claim is unsuccessful the employer loses out as in most cases each side will pay their own costs. It is only in certain circumstances that the tribunal may order one side to pay the other's costs.

Those circumstances can include the tribunal ruling a case to be so weak that it should not have been brought - which begs the question as to why such claims manage to reach a tribunal hearing and further underlines the need for rigorous examination at the outset. 

So, faced with the possibly of forking out large sums even if successful, what can employers do, particularly SMEs who very often do not have access to employment law experts or are simply unable to afford £200 an hour for a lawyer?

Let me offer five strong tips:

1 Make sure you have the basic processes in place - these can be readily accessed from bodies such as Acas
2 Record, record, record - make sure you capture discussions where there may be an issue, as it can be portrayed very differently by an individual intent on causing your business harm
3 Always think worst-case scenario. Act accordingly by instigating the formal procedure, even if it may seem over-the-top, as it is best to have a climate where people think of you as ‘firm but fair'
4 Think FEW - facts, evidence, witnesses. Keep records, have witnesses present when you think you need to and work on hard facts every time
5 Phone a friend - ask a third party for their impartial view of the situation while not ignoring the your own instincts. There are many sources of advice, too - take the time to find them out.

In the past year nearly 45,000 cases went to tribunal, showing how much wasted time, money and effort is expended annually in the UK. The system cries out for some swift and dramatic improvement so that SMEs, the very lifeblood and backbone of the British economy, are accorded far more justice and protection than they receive at present.

On their behalf and on behalf of all employers, let's have some action - and the sooner the better.

Stuart Thomas, director at human resources consultancy themybigtoecompany