ACCORDING to a recent report, the North East had the highest rate of increase of business failures in the UK during 2012, but hopefully, things look more positive for 2013.
The Government has proposed changes to the employment tribunal system which it says will help businesses and give them the certainty and flexibility they need to flourish. The changes are designed to cut the number and resulting cost of employment tribunal claims which have little merit or prospect of success.
The number of employment tribunals is falling year on year, but the most recent Government statistics show that more than 186,000 claims were still brought to employment tribunals in the UK between April 2011 and March 2012.
The cost to businesses in terms of both time and money of fighting a tribunal can be significant, but from this summer, and for the first time since the introduction of employment tribunals in the 1970s, employees will need to pay a fee to present a claim to the employment tribunal.
Employees who want to claim they have been unfairly dismissed will have to pay a £250 fee just to present their claim, and if their case goes to hearing, they will have to pay an additional £950 fee.
It is anticipated that the introduction of fees will lead to a reduction in the number of weak claims being presented to a tribunal, thus saving the employer time and money.
There will be measures within the system to protect people on low incomes, who are expected to have to pay reduced fees, but full details of what these would be have yet to be confirmed.
A new limit on compensation awards for unfair dismissal will also be set at either the employee’s annual salary or a maximum of £74,200, whichever is the lower figure.
The change in compensation limits will also help to address the notion that, because the compensation has a cap of £74,200, that is what claimants are going to achieve, and it will also give employers certainty of how much could be awarded if the ruling goes against them.
The proposals are all part of moves to tackle the claims culture whereby some employees who realise that it is often cheaper for their employer to settle a claim than to fight it and win it, regardless of its merits, bring a claim in the hope of getting an easy pay-off.
The business community doesn’t always welcome Government rule changes, but in this instance, a very positive response can reasonably be expected.
:: Sarah Fitzpatrick, associate solicitor at specialist employment law firm Collingwood Legal