Britain's employers are losing confidence in the employment tribunal system and demanding that the system be simplified to reduce the number of spurious claims made against them.
A new report from the employers' organisation the CBI reveals companies are very concerned about the complexity of the new procedures even though the number of tribunal cases has fallen since the reforms were introduced last October.
The system is supposed to provide cheap and effective resolution of workplace disputes. But too many firms are still settling cases they have a strong chance of winning because they fear the costs of going to tribunals which, they believe, too often allow weak and vexatious claims to be heard.
"The new tribunals procedures are falling short. They may be having an impact on absolute numbers but are unnecessarily complicated and run the risk of undermining business confidence," said John Cridland, Deputy Director-General of the CBI.
"Tribunals, across the country, also need to adopt a more consistent, common sense approach. They must properly judge claims on their merit, allowing deserving ones to be heard while striking out unscrupulous ones".
The CBI's report, 'Restoring Faith In Employment Tribunals', is based on responses from the 450 companies contributing to the CBI-Pertemps employment trends survey.
Particularly striking was the fact that all of the firms with fewer than 50 staff settled every claim out of court despite advice they would win almost half of them. A quarter of all the firms surveyed also settled even if they felt the claims lacked merit.
As employment tribunal specialists Croner warned earlier this year, settling a claim early is giving the message to 'have a go' employees that if they file a claim, they will receive an out of court settlement from employers.
Unsurprisingly, more than four out of 10 (45 per cent) of employers believe the system is ineffective and half reported a rise in weak and vexatious claims in the last 12 months despite the reforms.
Three quarters have encountered extra red tape because of the new reforms and a quarter said the overall system is too costly - each claim costs a business £4,360 alone in legal fees, on average, on top of management time and stress.
More than half also criticised the tribunal system for being too adversarial while a further one in five believe it damages rather than helps employee relations.
Among the recommendations made by the CBI is the demand that tribunals must make full use of their powers to dismiss weak and vexatious claims and for the process of dispute resolution to be speeded up.
In particular, costs in vexatious cases should be awarded against losing complainants to deter unscrupulous litigants – something that happened in fewer than one per cent of all cases last year.
As Tim Watts, Chairman of the Pertemps Group, said: "too many employers believe they are vulnerable to vexatious and frivolous claims because costs are seldom, if ever, awarded. In the very rare occasion that costs are awarded to us, it is often impossible to enforce."