Three-quarters of employers in the UK worry about the financial implications of being taken to an employment tribunal and more than two-thirds are concerned about the damage it could do to their business reputation, according to new research carried out for the Department of Trade and Industry.
Two-thirds of businesses said that they were worried about the damage an employment tribunal could do to workplace morale, with three-quarters of managers saying that they were also worried about the effect a tribunal would have on their own stress levels - four out of ten cited this as a major headache.
Figures from the Employment Tribunal Service show that last year tribunals dealt with 98,000 claims based on work disputes, ranging from problems over pay and conditions, to racial and sexual harassment.
Almost four out of ten of the 500 small- and medium-sized UK businesses surveyed by the DTi had experienced a workplace dispute.
Of these, eight out of ten suffered up to five disputes in the last five years.
Research also showed that each tribunal claim costs an employer an average of £2,000 in management time and legal fees.
But in more than a third of those cases, the individual and their managers had not discussed the problem at all before approaching an employment tribunal.
The DTi said that the findings underlined the importance of a new employment law which comes into force in October making it mandatory for all employers to have minimum dismissal, disciplinary and grievance procedures in the workplace.
The dispute resolution procedures are aimed at small firms and others which lack formal disciplinary procedures and are intended to stop aggrieved workers launching tribunal cases against their employers without first complaining to them in writing.
The regulations will place new responsibilities on employers and employees to discuss workplace disputes when and where they happen in a bid to resolve them before going to an employment tribunal, thereby avoiding unnecessary litigation.
But many employers believe that such figures merely underline just how far the balance of employment law has shifted in favour of employees – whether they have a legitimate grievance or not.
Unhappy staff are now able to use up to 26 employment acts and 80 types of complaint against employers and the number of cases taken to tribunals doubled between 1993 and 2000.
The number of unjustified or 'speculative' tribunal cases is also rocketing. According to the EEF, more than a quarter of claims against employers (some 27 per cent) are withdrawn by the applicant for no financial or other return before reaching a hearing.
Yet costs are hardly ever awarded against employees who loose their cases – a mere seven per cent of cases won by firms resulted in costs being awarded against employees.
Peter Schofield, director of employment and legal affairs, at the Engineering Employers’ Federation said earlier this year that : "the government' s forthcoming dispute resolution procedures will not, by themselves, help and could make the situation worse."
And the Federation of Small Businesses (FSB) has found that four out of ten small business owners believe that the tribunal system is now "very unsatisfactory", with a quarter believing that the process treats employers unfairly.
But employment Relations Minister Gerry Sutcliffe said that the new regulations were designed to make sure that employment tribunals were the backstop for individual employment rights rather than the first port of call.
"Employment tribunals have a vital role to play ensuring individual employment rights are not abused," he said.
"But it is clear that there are too many cases which could be resolved in the workplace ending up at tribunals. This costs time and money, creates unnecessary stress for both parties and slows down the tribunal system. Our aim is to improve this situation for everyone."