A leading business group has urged that the current employment tribunal system be reviewed in order to cut down on the number of spurious claims that are being lodged.
The British Chamber of Commerce (BCC) has published figures suggesting that, on average, employers face bills of £8,500 to defend themselves at a tribunal.
Research by the BCC also revealed that three-fifths of claims are settled because of high costs.
The average settlement payment of £5,400 indicated, according to the BCC, that it is less expensive for employers to agree a case, even if it is spurious.
Last year saw the highest number of employment tribunal claims.
Overall, 58 per cent of cases were settled, 39 per cent were settled through the conciliation service Acas and 19 per cent resulted in a private agreement.
The main reasons that employers tried to settle were to keep costs down (51 per cent) and because it was convenient to do so (25 per cent). While there are provisions to allow businesses facing unmeritorious claims to reclaim costs, the number that do so are small and have decreased each year since 2004/05.
The BCC wants employees who make a claim to pay a deposit that is refundable should they win their case. The aim would be to deter workers from lodging claims that have little substance.
The Government is to embark on a consultation into ways of improving the employment tribunal system later this month.
Dr Adam Marshall, director of policy and external affairs at the BCC, said: “The employment tribunal system is in dire need of reform. Currently, tribunals are too slow and overwhelmingly weighted in favour of the employee – whereas they should be fair for employers and employees alike.”
Dr Marshall went on to describe the regime as “perverse’, forcing businesses to settle spurious claims rather than fight them, simply because it is more cost effective for them to do so.
The BCC believes that the costs to businesses go beyond legal fees as claims can adversely affect the reputation of a firm.
Dr Marshall added: “We urge the Government to consider introducing a fee for claimants to discourage spurious and baseless claims. Ministers must also commit to reducing the wait time for a first hearing – and making the system less of a barrier to business growth.”