A spurious spike in employment tribunal claims

Hot on the heels of one suspect statement regarding employment tribunal claim statistics comes another. Apparently unfair dismissal claims have “spiked” in advance of the forthcoming introduction of charging fees for submitting claims and the new rules that some hope will achieve the holy grail of dealing with all those so-called frivolous claims. 

Above a picture of the brass plate outside the Employment Appeal Tribunal the headline on the Daily Telegraph was “Dismissal claims spike ahead of job law change”. The article went on to explain that “the latest figures” revealed a substantial increase in the number of claims, up by some 44%. 

Other on-line articles from web-sites such as the Chartered Institute of Management and HR Magazine carried the same story: a nearly 50% rise in unfair dismissal claims, brought by employees looking “to rush through claims before new restrictions come into place, which will make it easier for employers to fire underperforming staff.” 

It was even suggested that, employees fearing the chop were resigning early in order to bring unfair constructive dismissal claims, so that they could avoid the tribunal fee of £250. 

The evidence for such assertions was provided by “Commercial law firm [or employment law firm, depending on which article you read] EMW.” We were told that it had made a Freedom of Information Act  request for “the information”, which in reality was nothing more than the freely-available Tribunal Service statistics. 

Commercial Law Firm EMW told us that during the period April to June 2012 10,600 unfair dismissal claims were submitted to the employment tribunals. During the following three months – July to September 2012 – 15,300 unfair dismissal claims were made. 10,600 to 15,300 is indeed a 44% increase, but it seems highly questionable to draw the conclusion – put forward by EMW – that “There will have been a spike in very lightweight claims for unfair dismissal”. 

To begin with, no information was provided by the Government (or could have been) to explain the reason for the apparent spike in claims, Freedom of Information Act notwithstanding. All that was provided were the employment tribunal claims statistics, which include the number of unfair dismissal claims. 

Secondly, why compare only the first and second quarters of 2012/13, when we have figures for the third quarter? Third quarter figures show that unfair dismissal claims lodged amounted to 12,249. That is a decrease on the preceding quarter, which is at odds with the suggestion of a “spike” in claims. 

Thirdly, arriving at such a conclusion appears to take little or no account of the prevailing economic circumstances at the time (dipping in and out of recession) or other one-off factors, such as the end of the whole process of building for and hosting the Olympics. 

Fourthly, at the time all these claims were being submitted, the proposals for charging fees and changing the rules were not finalised, let alone there being a date for their implementation. Whilst it is probably fanciful to suggest that disgruntled and about to be sacked employees were scanning the pages of the BIS web-site to check on the progress of the fees proposal (and Underhill’s proposed rules of procedure), it is more absurd to suggest they were clairvoyant. 

Fifthly, on the basis of the extensive research that Commercial Law Firm EMW carried out – which I confess I have not seen – its says that only 1 of the 100 unfair dismissal claims it was involved in was actually likely to be affected by the proposed changes in relation to employment tribunal. This appears to run counter to the notion of people putting claims in now to avoid the fees. On the one hand such people are so aware of forthcoming changes they see with fees coming they should put a claim in, yet at the same time they can’t work out whether the fees will hit them personally or not. 

Sixthly, all these claimants need to have been dismissed: whether and when to put a claim in has little choice around it. The dismissal is usually out of the employee’s hands and they only have 3 months in which to submit the claim. 

In relation to those it is alleged have resigned early in order to beat the fees, leaving aside the fact that fees will not come in until later this year, is it really credible to suggest someone would give up their income and employment in order to have a few hundred pounds in tribunal fees? Probably not. 

What this story illustrates (apart from the speed with which nonsense can be transmitted around the internet) is that different parties have different interests when it comes to tribunal claims. The Government has an interest in showing that claims are reducing, whereas others may wish to show the opposite, perhaps to scare employers into seeking advice to protect themselves from predatory claimants. What is important is that any claims of big swings in the number of claims (24% reduction or 50% increase) should be treated with the utmost caution, with all of us being slow to make a judgement on what they mean.

 

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The reality behind the latest Employment Tribunal statistics

Claims about claims

The Employment Tribunal quarterly statistics for the period October to December 2012 have just been published and will make surprising reading for some. Our friends at the Ministry of Justice tell us that Employment Tribunal claims are down and, no doubt, the Government will claim this reflects its success in reforming employment law as part of its growth strategy. Any such claims should be treated with a good deal of caution.

Reductions

In the Executive Summary that went out with the statistics for all tribunals – immigration, social security and so on – it was trumpeted that, “Employment Tribunals (ET) received 42,603 claims in total a 24 per cent decrease on the same quarter of 2011/12.” . This is entirely correct, in that for Q3 in the previous year the total was 55,928 claims. Scratch beneath the surface, however, and a different picture emerges.

First of all, much of the 13,000 overall reduction in claims is due to there being nearly 15,000 fewer Working Time claims. Many will recall that for the past few years airline cabin crew have been submitting 10,000 annual leave claims every 3 months. These are starting to dry up now with a downward effect on the statistics.

Increases

Secondly, unfair dismissal claims have remained fairly constant: Q3 2011/12 12,505 claims, compared to Q3 2012/13 12,249 claims. Taking an average of the current year’s 3 quarters and annualising it suggests that the number of unfair dismissal claims will rise by around 6%.

Thirdly, claims in most jurisdictions are up, in some areas significantly. Quarter on quarter, sex, race, disability, sexual orientation and religion and belief claims have increased. Sex discrimination claims are up by nearly 30% and will probably show a rise over the year of more than 50%.

Strip out the ‘exceptional’ item of the reduction in Working Time claims, then the drop in claims is far less than the claimed 24%: down by perhaps only 5 or 6%. Even then, the main area in where there has been a reduction is in unlawful deductions from wages claims, down 36%. The ‘bigger’ claims of unfair dismissal and discrimination are the same or up (no separate figures are included for whistleblowing claims).

Collapse of the system – backlog

Of real concern to practitioners and users will be decline in the ability of the Tribunal Service to process claims. The number of claims disposed of in Q3 in the current year dropped by 10% as against the same quarter in the previous year (25,305 claims as against 28,126 and the lowest quarterly figure this year).

Claims not disposed of in one quarter carry over into the next and beyond. This can lead to the system clogging up. The number of claims outstanding at the end of Q3 in the current year was 574,301 (yes, over half a million). That is an increase of 8% on the same quarter in the previous year.

More worryingly, if one looks at figures for previous years, there has been a dramatic collapse in the ability of the system to process claims. In at the end of 2007/08 there were around 240,000 outstanding claims. This rose to over 400,000 by the end of 2009/10 and to over 540,000 in 2011/12. That is an increase in outstanding claims of 125% over that 5 year period, with it still increasing.

Length of time to resolve

This clogging up of the system inevitably means a longer wait for cases to be dealt with. Practitioners will be familiar with the Tribunal Service target of bringing 75% of claims to a hearing within 26 weeks of receipt. The average time in Employment Tribunals is in fact 76 weeks. In fairness, however, these figures are skewed by Equal Pay claims – average of 179 weeks – and race and sex discrimination claims, which average 126 weeks from receipt to conclusion. Nevertheless, the Tribunal Service is a long way off meeting its target in relation to any of the jurisdictions. Unfair dismissal averages 35 weeks, for example, and unlawful deductions from wages 45 weeks.

The future

The Government’s reforms to employment law and tribunal process have either not come in – fees for example – or will not have had any impact on the figures yet (the increase in qualifying period for claiming unfair dismissal). It may be that they significantly reduce claims going into the system, but this is an unknown.

Equally the full force of the Government’s austerity cuts has not yet been felt, with the inevitable impact on Tribunal Service resourcing and the ability of the system to cope. That is not an unknown: it is coming. £1.3bn per annum has been lopped off the MoJ’s already, due to rise to £2.5bn by the end of 2014/15. One should always be careful with statistics, as they are easy to manipulate.

Even with that caveat, what we can say is that in the principle jurisdictions the number of claims is the same or up. We can also say that the system is not coping with what is does have. Even if the volume of claims does reduce it is clear that significant resource is needed to clear the backlog and get the system back on track.

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