Firms discourage from hiring due to increased tribunal claims

One-fifth of business owners have been threatened with a tribunal claim by an employee, discouraging many from hiring staff, according to a survey by the British Chambers of Commerce (BCC).

The research, conducted among 4,000 businesses, also found that 57 per cent feel the tribunal system is weighted against the employer.

The number of tribunal claims reached a record 236,000 last year, 56 per cent higher than in 2009. Businesses hit with claims spent almost £4,000 on average to defend themselves, according to official figures.

The coalition government has proposed tribunal system reforms, such as lengthening the qualification period for employees to bring an unfair dismissal claim from one to two years and withdrawing the payment of expenses.

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However, the BCC is concerned about the inclusion of plans to fine employers who lose tribunal cases, claiming that this will increase a feeling among business owners that the system is organised against them. “When you start with a system that has been weighted against employers for so long, it is going to take a lot to undo it,” said Adam Marshall, the BCC’s director of policy.

Others have warned that the government’s efforts to reform the tribunal system may be undermined by separate plans to increase employment rights for working parents.

Marian Bloodworth, an employment partner at Berwin Leighton Paisner, the law firm, said the introduction of additional paternity leave rights could lead to women making sex discrimination claims similar to those being made by men in cases of maternity leave.

“Every time you introduce a new right, you give new protection as well,” she said.

“Employers have tended to be cautious when it comes to awarding bonuses to women who are or who have been on maternity leave. Employers will also have to deal with the treatment of bonuses for men who take additional paternity leave.”

A consultation by the Department for Business on its tribunal reforms finished at the end of last month. The Ministry of Justice has been conducting a separate consultation on the introduction of fees for tribunal cases to ensure users share the costs of the process.