Court cases weigh down business

Fighting legal cases, such as unfair dismissal, costs vast sums of money

by the BBC's business reporter, Marcia Hughes

The Industrial Society has warned businesses that alternatives to employment tribunals may end up costing them just as much in time and money.

The deluge of employment legislation was meant to improve working practices - and give workers more protection against things like unfair dismissal and discrimination.

But businesses say it tipped the balance too much in the employees favour.

Most firm's lawyers would advise them to settle out of court even if the employer is convinced they haven't done anything wrong

Chris Humphries, DG, British Chamber of Commerce

Last year the number of employment tribunal claims exceeded 100,000 with most companies having no option but to settle out of court and it has cost them millions of pounds.

"The burden of proof now almost rests on the employer to prove that they didn't do something wrong," says Chris Humphries, Director General, British Chamber of Commerce.

"In that sort of situation, most firm's lawyers would advise them to settle out of court even if the employer is convinced they haven't done anything wrong."

"The complexity of the case and the burden of proof balanced against the employer will mean the costs are likely to exceed any level of settlement, so they settle even if they feel they are in the right."

The government has now proposed changes, hoping to redress the balance and strike out any ill founded claims.

Chris Humphries says the burden of proof rests heavily on the employer.

From April, the cost that can be awarded against anyone who brings an unreasonable claim goes up by a significant amount from £500 to £10,000.

And there is an increase in the deposit for pursuing a weak case or defence. That will rise from £150 to £500.

ACAS, The Advisory, Conciliation and Arbitration Service is hoping to resolve employment disputes more quickly.

It is proposing an alternative to employment tribunals with a new arbitration scheme starting next Spring.

But this alternative is only offered for unfair dismissal cases.

"The aim is that for those cases where conciliation has failed, we will offer an alternative arbitration scheme where there is just one arbitrator sitting and will take the final decision," explains Rita Donaghy from ACAS.

"This will be a simpler, cheaper, more private, informal way of dealing with cases for those who might find employment tribunals a little bit overwhelming."

But the success of this new scheme has yet to be seen.