Monday, 31 January 2011

Cable's dodgy statistics

Last week, Vince Cable, Secretary of State for Business, Innovation and Skills, announced a consultation on changes in employment law to reduce the number of cases being brought. The measures proposed include raising the qualifying period to bring a claim of unfair dismissal and the introduction of a deposit scheme to discourage spurious cases. Cable points to the increase in the number of claims to employment tribunals (ETs) last year as evidence of the need to change the law, but LAG believes that he is guilty of misinterpreting the figures to strengthen his case for change.

Yes, the headline figure of a 56 per cent increase in the number of cases in 2009/10 looks like a compelling reason to press ahead with the reforms. Hidden in the detail of the annual statistics from the Tribunals Service, though, is an explanation which has nothing to do with vexatious former employees rushing to bring cases (despite what the employers' lobby would have us believe). The Tribunals Service says that 86 per cent of the increase is due to multiple claims brought by trade union and other employee representatives for equal pay and cases concerning the Working Time Directive.

In a procedural manoeuvre, many thousands of these cases are resubmitted every three months so they are not time-barred. This artificially inflates the figures for new claims. Most of the cases involve large numbers of employees working in the public sector or for big, private companies, not the small and medium-sized businesses which Cable and his government claim are unfairly penalised by the existing system. Moreover, the changes suggested would do nothing to discourage such multiple claims.

There was a 14 per cent rise in the number of single cases in 2009/10. LAG argues that this is a much more reliable indicator of the underlying trend in ET claims. While this increase is high, it is in line with the figures from previous recessions. As times get harder, some employers tend to try and cut corners by dismissing employees without using fair procedures. This results in an increase in claims.

Interestingly, the latest figures from the Tribunals Service on the number of ET claims show a 19 per cent decrease in single claims for the quarter to September 2010. These figures were released before Vince Cable made his announcement. Surprisingly, the government failed to highlight this piece of good news, which could reasonably be interpreted as a sign that the country is coming out of recession. Perhaps this was a case of the government ignoring inconvenient facts?

LAG believes that adequate procedures are already in place which penalise employees who bring spurious claims. Costs can also be awarded against both employees and employers which conduct their cases frivolously or vexatiously. Increasing the qualifying period would risk unfairly penalising many employees. It could also be illegal as it might have a greater impact on women than men, as was decided by the European Court of Justice when the time limit was last set at two years (see R v Secretary of State for Employment ex p Seymour-Smith and Perez C-167/97, 9 February 1999).

Image: Department for Business, Innovation and Skills

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