Rise in equal pay claims threatens councils

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Claims for equal pay for local authority and national health staff have continued to surge, leaving public authorities facing a potential bill for billions of pounds.

Employment tribunals, and possible claims from them, rose in number by almost a quarter in the 12 months to the end of March, according to figures from Acas, the conciliation and mediation service.

“The increase in the number of claims received for conciliation is mainly due to a rise in the number of equal pay and working time claims received,” said Ed Sweeney, Acas chair.

The latest figures appear to confirm the worst fears of local government employers. Councils that faced an equal pay “timebomb” were last year allowed by government to increase borrowing or use receipts from asset sales to pay for a wave of backdated claims, expected to total at least £3bn ($6bn).

According to separate figures published this month by the tribunals service, which is part of the Ministry of Justice, claims lodged with employment tribunals were 42 per cent higher than expected during the year to March.

Jeanne Spinks, acting chief executive of the tribunals service, blamed the rise on an increase in multiple claims – which are characteristic of legal actions that involve equal pay.

In the previous year the number of equal pay claims lodged with tribunals rose by 155 per cent.

Local government employers and public sector unions have cited a rise in no-win, no-fee claims as one of the biggest reasons for the increase.

Ministers last year agreed to allow English local authorities to raise up to £500m by borrowing against capital assets or through asset sales, in order to help meet the rising cost of equal pay claims.

This compares with £160.5m the previous year.

The rise in claims has occurred in spite of the introduction in 2004 of mandatory dispute resolution procedures aimed at keeping claims out of the courts.

Ministers scrapped the rules last year and Acas is drawing up a code of practice to replace the mandatory procedures.

Mr Sweeney said that three-quarters of claims passed to the conciliation service were settled without the need for court action.

“Early intervention is crucial in allowing Acas to prevent claims escalating, saving businesses and people time, money and stress,” he said.

Reynolds Porter Chamberlain, the City law firm, warned that employers could face heavy penalties if they failed to follow the new guidelines.

Simon Henthorn, a solicitor-advocate at RPC, said: “Tribunals will be given the discretion to increase awards by 25 per cent for unreasonable failure to comply with the code of practice, so businesses may be liable to pay out high levels of damages.”

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