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Every year employers and agencies face claims that have no real merit, yet employers choose to pay out rather than incur the cost of defending the action. The reason for this is that practicality rather than justice is normally the driving factor according to Adrian Marlowe, Chairman of the Association of Recruitment Consultancies (ARC).

Speaking at an ARC networking meeting in London, which was attended by agencies and end users, he explained that respondents mainly wanted to avoid the cost and aggravation that they faced whenever a claim was made. “Is this fair, and if not what can be done about it?” he asked the audience. “In particular, in the current economic climate, should the government not be looking at taking steps to reduce these payouts by business and at the same time cut the cost of the Employment Tribunal service?”

Marlowe announced that ARC has recognised that the problem of vexatious claims should be addressed as soon as possible, not least because there is a likelihood of an increase of claims once the Agency Workers Regulations apply in October 2011 and that it was launching a campaign to ensure that where an employer has done things properly and/or there is no proper basis for a claim, it simply should not be entertained by a Tribunal. To get matters moving, ARC has written to the government highlighting its concerns and it will report back to members as soon as it has further news.

Marlowe stressed that in his experience, and that of his recruitment and employment law consultancy, Lawspeed, it was nearly impossible to get a case struck out early on in an action as things stand at the moment. The ET’s own statistics showed that last year, Tribunals struck out a claim at a preliminary hearing in only 4% of some 190,000 claims. Furthermore, in only 0.9% of all claims was the claimant ordered to pay the costs of the employer, amounting on average to some £2,400 - significantly less than the normal cost of fighting a case.

Marlowe continued that this resulted in pragmatic advice being given, balancing the costs of fighting a case against making a payout. Inevitably, therefore, many opted to pay out however unfair this turned out to be.

Daniel Barnett, the employment law barrister, added that Employment Tribunals often saw claims in the context of “the little man versus the big boys”. However, there was a slightly increased trend to award costs against claimants who lied, but he said that claimants who had low incomes were unlikely to have costs orders made against them, despite their inappropriate actions. Applications for early strike out of the claim, thus avoiding the majority of costs, were simply not a realistic option he explained.

Keith Mizon, a Director of the conciliation service ACAS, emphasised that applications for ET claims should always be routed initially through ACAS to see if it was possible to reach some settlement. Mizon said that ACAS had an impartial role and never gave advice or took sides as to do so would undermine the confidence of the parties to talk to them.

However he explained that conciliation could only work where both parties agreed to talk, and that ACAS has no teeth as such. “If claimants do not wish ACAS to be involved because they just want their day in Court, the claim had to run through the ET process.”

Although there were now fewer claims month on month according to ACAS internal statistics, a significant number (45-50%) of conciliated claims did result in a payout by the employer, regardless of the merits of the action. Published statistics from the ACAS pre claim conciliation showed that only some 10% of claims did not involve a payment of some sort to the claimant.