Employment Tribunal Statistics: a reminder of how the recession has hit UK employers
Every year, the Tribunal Service, which includes the employment tribunals, publishes its statistics. Usually, not a great deal changes from one year to the next. However, the 2009/10 statistics showed that there had been a 56% increase in claims brought in the employment tribunals. With 236,100 claims over all, this was the highest total ever. The statistics for 2010/2011 have just been published so we thought we would see whether these new statistics are as gloomy as last year’s.
The 2009/10 statistics bore out what we had been experiencing with our clients. More employers were making redundancies or selling their business. This resulted in more people having their employment terminated. Although the number of jobless overall was slowly declining, the number of those unemployed for 12 months or longer was on the rise and there had been a significant increase also in the numbers of people in part time work.
In 2010/2011, 218,000 cases were received by the employment tribunals. This is a 8% fall on last year. While any fall is welcome, the figure is still 44% higher than 2008/2009. Over the same period, the tribunals disposed of 244,000 claims, which was an increase of 7% on last year. We, like many other people practicing in this field, have noted that the tribunals have begun allocating hearing dates at the same time as sending the claim to the employer and in general, being much more difficult about granting postponements. This means that the tribunals have more chance of getting a claim to a hearing within the stated aim of six months from receipt of the claim.
Of the 244,000 cases dealt with over this past year, 39% of them were unfair dismissal, breach of contract and redundancy payment claims, which are the most common type of claims. There were 49,600 unfair dismissal claims. Of those claims, only 8% were successful and the rest were unsuccessful, struck out before getting to a full hearing, withdrawn or settled. According to the statistics, 41% were settled through ACAS and 25% were withdrawn. No further information is given about the withdrawn cases, but this very often happens in circumstances where the parties have settled the claim between them with ACAS assistance.
Of the unfair dismissal cases that went to a full hearing, there were more claimants who were unsuccessful than successful. Further, of the 4,200 successful cases, 1,400 were awarded no compensation. The average award of compensation for unfair dismissal last year was £8,924 and the median award was £4,591.
The compensation for many claims is calculated using the employee’s net loss of earnings. This means that in times when the job market is buoyant and employees obtain new work quickly, there is little incentive to bring a claim as the level of compensation is likely to be relatively low compared with the legal costs involved in bringing a claim. In times when it is difficult to get a new job, employees have a greater incentive to claim. We are still seeing more and more employees having their legal costs covered through legal insurance attached to their home or car insurance.
The economic downturn is also affecting the willingness of employers to settle a case just to get rid of it. We have certainly seen this with our clients, where we are bargaining hard on their behalf, offering smaller sums in circumstances where, in the past, the offer would have been more generous. Some of our clients simply prefer to wait until a few weeks before the hearing date before entering into settlement negotiations. This is in the hope that, over the time the case takes to get to a hearing, their ex employee will move on with their life and either drop the claim or obtain new employment limiting any potential compensation.
It is clear from the statistics and our experience that we are not out of the woods yet. With a very small drop in the numbers of claims brought to the employment tribunals, and with potentially less budget for settlement, it is important that you take careful advice before terminating the employment of any of your staff. We can’t render an unfair dismissal fair after the event. If you want to negotiate on a shoestring, you need to be able to convince the other side that the dismissal was fair.