Thursday, January 20, 2011

Employment tribunals are legalised extortion

Interesting comment piece from the author of excellent books on the Spitfire and Lancaster.

I wonder what Impdecers who are also employers think of this one?


Comment: Employment tribunals are legalised extortion
This Is Money
By Leo McKinstry
6 January 2011
Employment tribunal cases have rocketed, with businesses paying out tens of millions to spurious claimants. When will ministers put a stop to this blackmail?

Amid our current economic crisis, with the dole queues lengthening remorselessly, everything possible should be done to encourage job creation and enterprise.

Tragically, however, there is a huge roadblock in the way of greater freedom and dynamism for employers.

That vast obstacle takes the form of Britain's increasingly strident culture of workplace rights, which not only weighs down companies with excessive bureaucracy and the costs of compensation, but also encourages a climate of permanent grievance that can be exploited by greedy lawyers and vexatious litigants.

This culture is seen at its worst in the Employment Tribunal Service, where disgruntled staff or even job applicants can sue employers without any concern for the costs or the justice of their cases.

Of course there has to be some form of protection given to workers so they are not at the mercy of capricious management. A vicious culture of 'hire and fire' does nothing for the economy or living standards. Respect for employees should be an integral part of a civilised society.

But the pendulum has swung too far. Over the past decade, the tribunal system has become heavily loaded against the employer. The threat of a complaint to the tribunal has been turned into an instrument of moral and financial blackmail.

Only yesterday, John Cridland, the director-general of the Confederation of British Industry, said that the tribunal system is 'broken' because of the way it undermines good industrial relations.

Even more critical was Helen Giles, the human resources director of a homelessness charity, who told the BBC the bias towards staff amounted to a form of 'legalised extortion'. She cited the testimony of an officer at a housing association who had told her that three homes could be built for the cost of fighting each complaint at the tribunals.

It is perhaps understandable that the BBC should take a keen interest in this issue, since earlier this week it was revealed that the Corporation has had to fork out £600,000 in dealing with 33 employment cases, spending no less than £204,000 on legal fees and another £380,000 to litigants.

Yet this is an employer fully imbued with the fashionable ethos of anti-discrimination that is the very cause of such a monstrous waste of money.

Indeed, the BBC's troubles emphasise the iron law of modern employment practice: the more an organisation emphasises its commitment to fairness and equality, the more vulnerable it becomes to spurious claims.

That was certainly my experience in the Nineties as a Labour councillor in the North London borough of Islington, which famously made a fetish of workplace rights. As I quickly learned in my role as head of the council's personnel committee, the council's commitment to rights meant we were deluged by claims from staff seeking redress over race discrimination, sexism or bullying.

Notoriously, managers in the social services department became so terrified of provoking legal complaints that they did not even take disciplinary action against gay or ethnic minority staff who were suspected of abusing children in the borough's care homes, a failure that ultimately led to one of the worst child abuse scandals of the decade.

In recent years, the culture of employee victimhood has tightened its grip. The total number of cases submitted to the employment tribunals has soared since the first Labour government of 1997, up from 91,000 to 236,000 last year.

So great is the tribunal service's workload that it can barely cope: only 65% of cases are handled by their target date for completion.

Those who play the system successfully can find themselves extremely well rewarded.

Last September, Redcar council in the North-East was ordered to pay an astonishing £442,500 to equalities officer Pauline Scanlon, who complained that she had suffered sex discrimination, victimisation and unfair dismissal.

One of the causes of her suffering was that someone in her office put up a poster of the singer Robbie Williams, with his trousers round his ankles, which she claimed violated the council's policy on unwelcome advances. In response, her employer described her as unhelpful, unco-operative and 'a zealot', but that cut no ice with the generously minded tribunal.

Given the scale of the payouts, it is no wonder so many employers try to settle claims out of court before they even reach the tribunal. While the litigant takes no risks whatsoever, the employer not only faces the danger of a huge compensation bill, but also has to fork out for legal fees.

In addition, there is the threat of bad publicity that could result from a long case.

Ian Hacon, chief executive of Norfolk firm Blue Sky Leisure, says: 'Every employment tribunal claim we have been to for the past five years, I've settled before the hearing. The economics of fighting these claims, however spurious they are, don't add up.'

Even if an employer has liability insurance, the insurer often insists claims are settled quickly to avoid the costs stacking up. In fact, it is estimated that 65% of all complaints to tribunals are resolved out of court.

Yet this reluctance to fight serial litigants only emboldens them. Take Margaret Keane, a 50-year-old accountant who in 2008 sent off dozens of complaints in response to job adverts that appealed for 'newly qualified' or entry-level candidates. She claimed this was discriminatory for someone of her experience and 12 firms agreed to out-of-court settlements worth between £4,000 and £10,000 each time.

Another litigant, economics lecturer Suresh Deman, struck fear in the hearts of the educational establishment after he launched 40 separate race — and sometimes sex — discrimination cases against more than a dozen British universities, and won at least £100,000 in payouts and out-of-court settlements.


JP said...

UK in "Government actually trying to help" shock:


Reforms set out for employment tribunals
27 January 2011

The Government today put forward plans to increase the qualifying period for unfair dismissal claims from one to two years and suggested fees for taking employment tribunal cases under plans to reform the system.

Ministers laid out a series of "important reforms" for consultation aimed at improving the way the "costly and time consuming" employment tribunal system worked.

Tribunal claims rose to 236,000 last year - a record figure and a rise of 56% on 2009 - and business has to spend almost £4,000 on average to defend itself against a claim, said the Government.

Wembley71 said...

It's a good move. In the current climate especially, employers need to be free to hire and fire as needed in response to economic circumstances.