Business groups are pressing the coalition to introduce a fee for pursuing an employment tribunal in an bid to reverse a trend that saw a 56 per cent rise in claims last year.

A fee or deposit, returnable if the claimant wins the case, is expected to be among the main options when the government launches a consultation on reforming the under-stress tribunal system this month.

Minister appear sympathetic to the idea – with proposals ranging from £30 to £500 per case – as a way of discouraging spurious claims, though the Trades Union Congress warns it will scare off genuine claimants.

Employment tribunal claims soared to 236,100 last year, according to the Tribunals Service – mostly the result of multiple claims by trade unions or no-win, no-fee lawyers on behalf of hundreds of workers in disputes over working time or unauthorised wage deductions.

Employmnet tribunal claims

Single claims by individuals rose by a more modest 14 per cent, largely a recession-linked increase in disputes over unfair dismissal, breach of contract or redundancy pay.

But employers say spurious claims are growing, sometimes by people who claim against successive employers in the hope of winning payouts because it is cheaper for businesses to settle than to fight.

“The system is in dire need of reform. It’s a barrier to creating jobs and to managing your workforce and it’s a barrier to growth, ultimately,” said Adam Marshall, director of policy at the British Chambers of Commerce.

The government is likely to focus on measures to resolve disputes at an earlier stage. Some business groups think the use of conciliation services should be compulsory and are pressing for steps to weed out weak claims, speed up the system and cap awards in discrimination cases.

Downing Street has also floated the idea of increasing the qualifying period before people can lodge unfair dismissal cases from one year to two, though it is unclear whether that will be part of this consultation.

Ed Davey, minister for employment relations, said he was “aware of the concerns many businesses say they have when they are considering taking on employees and am keen to find ways of improving their confidence”.

The move is part of a review of employment laws pledged in the coalition agreement. “We are looking at how we can encourage people to work to resolve any workplace difficulties at an early stage and will consider all the options,” Mr Davey said.

Business groups think a fee would discourage spurious claims but disagree over the sum. Mr Marshall said something similar to the £30 charged in small claims courts, with exemptions for those who cannot afford to pay, would be “eminently reasonable”.

But Alexander Ehmann of the Institute of Directors said £500 could be charged without creating a barrier to justice. The Federation of Small Businesses proposes up to £225.

Sarah Veale of the Trades Union Congress said people who had genuinely been treated badly would be “scared off by the prospect of paying the fee and losing the case on a technicality and not being able to recoup it”.

Get alerts on UK business & economy when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Comments have not been enabled for this article.

Follow the topics in this article