Since the change in rules regarding Employment Tribunal fees there has been a fall in claims of over two thirds, leading to a flurry of questions for the legal sector – and now the HR budget holders are starting to reflect on the implications.

An already common question is: if it’s no longer being put to the test, is compliance still worth investing in?

In resolving issues HR professionals often tread the fine line between commercial expediency (reaching for the good old settlement agreement) and due process, complying with employment legislation and company policies. Should the balance be re-struck if the risk of it being tested in tribunal has been so greatly diminished?

Whilst the fall in claims has been precipitous, it doesn’t follow that organisational behaviour will change with such speed. But as months and years of unchallenged management practices and decisions roll ahead, what new problems might emerge for HR?

Stealth disgruntlement

We all know that lack of legal dispute does not mean lack of disgruntlement. Where as in more litigious days disputes were often clear from the tribunal case load, we are now moving increasingly into a period of ‘stealth disgruntlement’ – arguably more damaging than overt challenge. The organisational impact will of course vary between employers, but festering conflicts – stories about unfair treatment that live long in the mess rooms – can cause pernicious damage to the employer brand and of course employee relations. HR professionals already understand that such a climate damages engagement, productivity and long-term issues such as recruitment and retention.

Cause for celebration?

What of the other side of the equation? Happy days for managers? If a check and balance is removed there are clearly greater opportunities for managers to take decisions based on their own unfettered (or at least less scrutinised) judgment. Some may even believe that they now have almost carte blanche in terms their management decisions and how they implement them.

Of course this will not be a wholesale and overnight shift, but compliance with policies (often the organisation’s interpretation of legal requirements) is the first line of defence against inconsistency of management practice. So from stealth disgruntlement we can see it is not such a leap towards increased perceptions of unfairness rooted in disparate treatment. This presents both a challenge and an opportunity for HR.

A second – and perhaps controversial – reason why the drop in tribunals is no cause for celebration is that we have lost the opportunity as employers to take a stand and defend legitimate managerial and business decisions. In a tribunal the employer is given the opportunity to vindicate tough decisions. If an issue doesn’t end in a tribunal, unfair or unreasonable employee behaviours can go unchallenged.

From contingency to proactivity

As the fall in tribunal claims filters through into the experience of organisations, HR budget holders should be encouraged to review the contingency for fighting and/or settling cases. Here is the first opportunity for the HR department to take the initiative.

The new tribunal statistics should give HR budget holders the confidence to reassign contingency budgets towards proactive development of line managers. Rather than earmarking funds for defensive purposes, they can instead benefit from far more successful and positive advantages than the ‘lessons learned’ outcome of a tribunal experience.

A positive focus on development of management practice, in line with (perhaps refreshed) company policies, sends out a message of professionalism and investment that will achieve more in terms of commercial return than paying lawyers to mitigate the impacts of claims.

Messages in this context should be value and return driven, and not – as is sometimes the case – framed with scaring managers into it for fear of defending expensive claims.

A subtle recasting of HR’s tone of voice may also increasingly be required when supporting decisions at collective and individual levels. If there have not been any claims in recent times, the ‘fear factor’ may be eroded. HR advice in terms of policy compliance, value based management and overall organisational strategy will increasingly have more resonance as memories of ET experiences fade from the collective memory in some organisations.

The industry seems to agree with us on this. Jamie Walford, HR business partner at Norbert Dentressangle Transport Services, said: “We are not allowing ourselves to be distracted by the national fall in tribunals because compliance and best practice management of employment issues have always been intrinsic to our employer branding and HR strategy.

“We do see this recent trend as an opportunity to continually focus our resources on management development and employee relations in order to improve business performance and employee engagement.”

A programme of development, not rooted in compliance but in strong, value based and consistent management practice, may be a novel way to spend the employment/legal budget – but it will achieve more than ‘lessons learnt’: it will combat complacency in this relatively dormant legal environment, and will equip an organisation to be ‘incidentally compliant’ when the tide turns – as it inevitably will eventually – the other way.

Darren Maw, managing director of employment law and HR firm Vista