Tribunals to crack down on 'compensation culture'

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Tough new powers are to be given to employment tribunals to throw cases out in an attempt to undermine a growing "compensation culture" among employees.

The measures follow a deluge of claims from workers who are thought to be taking advantage of new employment rights, bigger pay-outs and the growing number of lawyers who are prepared to take cases on a "no-win, no-fee" basis.

The number of claims has tripled over the last decade. In the year to March there was a one-third increase in claims to almost 165,000. Employers believe that around one in four of them are workers simply "trying it on".

Applications vary from unfair dismissal claims to sex and race discrimination cases.

Stephen Byers, the Secretary of State for Trade and Industry, is understood to be drafting new guidelines for tribunals which will enable them to dismiss cases immediately if they believe the application is "vexatious". Mr Byers also favours a proposal from the Confederation of British Industry to introduce new "sifting" procedures which will force the complainant to give far more detail of claims before the case gets to a tribunal.

Under a review of the whole system, the courts may also be urged to make more use of powers to order costs against litigants. Mr Byers is also investigating the possibility of ensuring that employees involved in "marginal" cases put money up-front.

Digby Jones, director general of the CBI, wants tribunals to make greater use of a procedure whereby employees are ordered to place bonds with the court. The Government is likely to take heed of another CBI proposal which urges tribunals to postpone cases where both parties request it. That would allow time for an out of court settlement. The CBI believes that new mechanisms for dispute-resolution being set up by the conciliation service Acas could help the situation.

Mr Jones said his members believe that thousands of employees were abusing the law. "A lot of smaller firms are being forced to settle out of court for say £3,000 rather than fight a case they know to be without foundation and end up with legal costs of £10,000-20,000."

High profile settlements include an award of £600,000 to an occupational therapy assistant who slipped and fell twice on her employer's premises. There was also a theatre sister who was awarded £70,000 for a back injury caused by lifting patients, the orthopaedic technician who got £103,000 after contracting eczema because of an allergy to latex and the caretaker who enjoyed £110,000 compensation after injuring his shoulder trying to unblock a faulty rubbish chute.

A TUC spokesman said that unions accepted the need for reform to shorten waiting lists for hearings and to allow for disputes to be settled outside the law.

"It can be very stressful to take a case to a tribunal - especially cases involving sex harassment. We reject any idea that most people are on fishing expeditions."