Government orders fresh review of employment tribunals

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The Government is to carry out its second major review of employment dispute procedures in as many years following evidence that changes to the employment tribunal system have failed.

Alistair Darling, Secretary of State for Trade and Industry, announced yesterday that Michael Gibbons, a member of the Better Regulation Commission, will conduct the review and report back by next spring.

Following representations from business about the rising number of vexacious claims for unfair dismissal, the Government overhauled the law on dispute resolution in October 2004.

The changes included a requirement for employees to go through a statutory three-stage grievance procedure before going to an industrial tribunal and new powers for tribunals to vet cases before allowing them to proceed.

Despite this, the number of cases remains as high as it was before the introduction of the new arrangements. In 2003-04 there were 115,042 tribunals. This dropped to just over 86,000 in 2004-05, the year the new law took effect. But last year the figure rose back to 115,039.

The Confederation of British Industry welcomed the latest review, saying employers lacked faith in the system, seeing tribunals as too costly and adversarial. A CBI survey last year showed that 45 per cent of firms viewed the system as ineffective while half reported a rise in weak and vexacious claims.

The survey also found that all firms with fewer than 50 staff were settling claims without going to a tribunal despite advice that they were likely to win half of the cases. "The statutory discipline and grievance procedures have not improved dispute resolution - rather they have added to red tape and have elevated process over the merit of a case," said John Cridland, the CBI's deputy director general.