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Rebalance the costs of industrial tribunals

Comment 9th July 2010

When industrial tribunals were first implemented they were designed to be a low cost & fair way to resolve differences between employers and employees. They were specifically designed to operate in the absence of legal representation in order to minimise costs to both parties.

The situation has changed. With the proliferation of no win no fee lawyers a not inconsiderable industry has sprung up and has badly weighed against the emplyer.

This is how it works:

A disgruntled empolyee engages a no win no fee lawyer, the deal they strike is based on the lawyer winning and claiming costs from the employer and perhaps sharing in any payout awarded or negotiated. So far so good you may think – obviously the lawyer won’t take a case without a reasonable prospect of succeeding and therefore there is an automatic balance against frivolous or malicious cases. Unfortunatley this is not so because the burdern of costs and proof as so unequal:

The employees solicitor has only to write a letter with a summary of the alegations and apply for an industial tribunal hearing – cost for this is negligible and surely less than £100. The employer at this point is faced with the following:
1) Engaging their own lawyer (only a fool would try to do this in house).
2) Fully investigate and document all of the allegations – usually this involves major amounts of time of SENIOR personel
3) Work closey with their lawyer to prepare the case
4) Arrange to cover their (senior) staff whilst the tribunal is to be held – whilst not knowing how long the tribunal will last or if it will be adjourned.
4) Go through the arbitration process not knowing if they will win or not (even if their case is very solid)

This process is very expensive and in our case is always more than £10,000. There is then the prosepect of the claimant winning damages on top of this. Even if the employee looses there is no way to recover the employers costs of the case

So the costs to the emplyees lawyer start at £100, the cost of receiving this letter runs to £10,000 plus.

There’s an obvious way out for the employer (which is what we do). We negotiate with the employees lawyer to acheive an “out of court” agreement. The employees lawyer wins because they will always recover more than their £100, the employee wins because they receive “compensation” the employer looses – every time, regardless of right or wrong.

This amounts to legalised extortion.

My idea is very simple, make the no win no fee lawyer responsible for the employers costs should they loose. This way it would be worth the employer taking the case to tribunal as there would be a prospect of recovering the costs of doing so. It would also encourage no win no fee lawyers to investigate their clients claims and remove many of the current frivolous or malicious cases from ever begining in the first place.

Why does this matter?

Apart from saving some bureacracy for emplyers there is a very serious consquence of the current system.

We used to give people a chance in a job if they had a por previous work history (or non) – sometimes this worked out and sometimes not. these days unless you can provide glowing references, an unbroken work history and proof of your reliability and business mindedness you won’t be considered. This is NOT where we want to be as a responsible employer but quiet honestly we can’t afford not to.

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