15 April 2014
Employers and the taxpayer may not be seeing the savings they were promised in relation to employment claims following the introduction of fees, according to legal expenses insurer ARAG. Despite an initial fall in the volume of Tribunal applications since fees were introduced last July, the complexity of cases and therefore duration and costs are eroding anticipated cost savings.
“Whilst many tenuous, malicious or spurious claims are deterred by up-front fees”, comments ARAG Head of Underwriting & Marketing David Haynes, “the remainder are being up-scaled to ensure awards will cover costs. The latest tribunal statistics show a 40% increase in complaints per application from an average of 1.8 to 2.5 (during 2013). This is the unintended result of introducing fees that can run to several thousand pounds for something like an unfair dismissal case that goes all the way to an appeal hearing”.
As a result employers are facing complex and aggravated complaints which expose them to inescapable legal fees and potentially unlimited compensation awards that have the potential to damage their business.
The fee system itself does not give individuals new rights to bring more complex cases as such, but has the potential to incentivise fee- paying individuals to raise grievances that would not formerly have been included to inflate their ET claim as one set of fees applies irrespective of the number of complaints raised.
“There are definite signs of a more aggressive approach by individuals wishing to strengthen their chance of recovering fees by adding additional grounds for complaint” adds Mr Haynes. “If the new system simply leads to an increase in the complexity of claims, it will certainly not fulfil its stated aim of reducing costs and, in fact, may considerably raise the total cost to both taxpayer and employer”.
Major trades unions are also pushing towards paying Tribunal fees as an incentive to expand their memberships. This would potentially add to the volume of claims, especially from women that the TUC believes have suffered most.
“Recent reports highlight very extended and complex cases concerning whistle-blowing sexual harassment, and equal pay show how time consuming and damaging these kinds of cases can be to business. Resulting bad publicity has added to the problems for the organisations concerned”, adds Mr Haynes. “Those employers benefiting from our innovative commercial legal protection policies would be cushioned against such awards, legal costs as well as any tribunal fees awarded against them. With a successful defence, all their costs would be indemnified and a stressful situation averted”.