Saturday, March 24, 2012

Why Employment Law is an Ass

A few months ago a little-known venture capitalist called Adrian Beecroft wrote a report for the Prime Minister, setting out a new proposal that would allow any employer to fire anyone, with compensation, if in their view things weren't working out. No hearing, no capability assessment - just a P45.

This didn't go down too well. Many, rightly, saw it as tipping the scales too far in favour of management, creating a nervy workforce terrified of getting the wrong side of their boss.

But ask any charity chief executive over a glass of wine what they think about employment law as it stands and you'll get the same answer: the system is a joke. Employment law costs charities millions, causes massive stress and, saddest of all, rights few wrongs.

After a few glasses more, you'll also get plenty of sarcasm about the system. It has become a lawyer-fest - 218,000 claims in 2010/11 in total, which is 44 per cent up on two years before.

As an employer, I have been on the wrong side of several employment tribunals. Being cross-examined at one makes you feel as if you are some kind of criminal. It seems surreal and not a little twisted. You have a trio of judges (yes, three for each tribunal) who are paid God-knows-what by the taxpayer for dissecting what is often low-grade, he-said, she-said 'evidence'. It feels like a farce. That's because it is.

So what needs to be done? Three things. First, there needs to be a place for 'safe conversations', which would allow employers to say "this isn't working out" without it leading straight to a solicitor's letter claiming bullying or constructive dismissal.

Second, every tribunal application should be put through the conciliation service Acas before it is allowed near a tribunal. This allows a mediated settlement rather than the well-paid confrontations so beloved of the legal profession and the judges.

Finally, everyone who wants to initiate a tribunal should put up a returnable deposit that is lost if they lose, say, £500. This will get rid of the most vexatious claims in one go.

Sounds familiar? By and large, this seems to be what's coming out of the coalition after the shock and awe caused by Beecroft earlier in the year.

It's easy to forget, but small employers, including charities, are terrified of existing employment law. One nasty incident can ruin a charity, and the third sector tops the league table for employment tribunals. Some cases merit the time and money that goes on them: rank injustice deserves its day in court. But most of what gets into the system shouldn't really be there at all.

This should soon change. Up and down the land, people will cheer discreetly - chief executives, colleagues of underperforming staff and HR managers. Everyone, in fact, but the opportunists and obsessives who, in my view, bring a large proportion of claims. And, of course, their lawyers.

1 comment:

Audrey said...

This blog is so one sided and lacking in accuracy. On a pro bono basis we represent claimants but our Government funding has now ended, and legal aid is going. For average and poorly paid employees the only hope is they have legal expenses insurance or a member of a Union.

This is because the Employment Tribunal system is now so weighted in favour of employers resisting compromises (and recent Government policy on fees etc are going to make it make is so much worse). ET directions require the Claimants to do significant and complex legal work at the beginning of a claim (not just the grievance procedure but post ET1 documents like schedules of case, schedules of loss etc). This heightens rather than reduces the stakes and the tension.

Employers could agree to ACAS mediation at any time but invariably refuse until a full hearing is looming.

Compensation for average worker is modest (median award for race discrimination is £6K) and legal fees (even for very meritorious cases) are not routinely awarded. There is no incentive for employers to settle at an early stage; and they tend to be the intransigent ones (in my experience).

In practice, at modest expenditure even small employers can get sufficient HR advice and legal expenses insuance to avoid nearly all claims. Furthermore, if they took a much more constructive approach to grievances and managing termination of employment professionally then very few claims would ever be successful.