How to Handle Employment Claims at an Employment Tribunal

The Employment Rights Act, which received Royal Assent last December, is set to come into force in phases this year. It strengthens workers' rights and could, therefore, lead to more disputes between employers and employees.

This could result in a rise in the number of employment tribunal claims. These cases cover workplace disputes such as unfair dismissal, constructive dismissal, discrimination relating to age, gender, race or disability, wage disputes, unlawful deductions and redundancy issues. Unfair dismissal tops the table of claims at 24 per cent of cases, according to research last year from law firm Birketts, while disability discrimination was a close second at 22 per cent.

Tribunal claims are already rising. The latest government figures show that between October and December last year, 13,000 single claims were filed, up 54 per cent on the same period in 2024. Over the year as a whole, there were a record-breaking 9,100 claims, a staggering 234 per cent rise over the year before.

Possible reasons for the increase include the current economic climate and a greater awareness of employment rights and protections, but another is a rise in the use of AI tools, helping workers file claims without the use of a solicitor.

The good news, according to law firm LegalVision, is that very few claims result in a cost award against the employer: "This suggests tribunals reserve cost awards for genuinely unreasonable conduct rather than applying them routinely, giving well-prepared employers confidence that a properly conducted defence is unlikely to result in a cost award being made against them," says the firm.

Even so, it's not something any small business wants to have to face. So how can you avoid being taken to an employment tribunal, and what's the best way to handle it if you are?

What steps should you take?

The first step is likely to be getting independent legal advice on your chances of success; this may be covered by your insurance. But the system tries to make it as easy as possible to avoid actually going to tribunal. Before an employee can file most types of claims, they must first notify ACAS and participate in an early conciliation process in which ACAS will offer to mediate. While it's not compulsory to do this, it can save time and legal costs.

If an agreement can't be reached, the employee can then file a tribunal claim. This means using an ET1 form, setting out the details of the complaint and the solution they're after. Employers then have 28 days to submit their response via an ET3 form, or possibly see judgment entered against them.

The next stage is the tribunal hearing itself. And this needs careful preparation, involving gathering all relevant evidence and documents and drafting witness statements. This might include contracts, emails, notes of meetings, grievance or disciplinary records and policies.

"The tribunal will expect both sides to have organised bundles and professional statements. Poor preparation can undermine even a strong defence," warns law firm EBS Law. "Employers should work closely with legal representatives to ensure evidence is complete and presented in the most persuasive way possible."

There are a number of standard defences against tribunal claims, depending on the type of claim itself. You should demonstrate that disciplinary or redundancy processes were followed lawfully and that your actions were those of a 'reasonable' employer. In the case of redundancy, you should show that there was a genuine business need and that the selection criteria were fair, and you may need to show that no discrimination was involved.

If you win at tribunal, all well and good. If you don't, the tribunal you may be ordered to pay compensation, reinstate the employee or change company policies. You can appeal through the Employment Appeal Tribunal, but only on specific legal grounds.

Dealing with an employment tribunal can be a lengthy process. Government figures show that the system is currently experiencing a massive backlog with 65,117 open cases awaiting resolution at the end of last year, 43 per cent more than a year earlier.

It's also a massive drain on a company's resources, with Birketts' research finding that employers are having to devote more than a month of their working time to dealing with employment tribunal claims.

As a result, the firm advises employers to try to avoid the situation arising by putting clear workplace policies in place, providing high-quality training to line managers and maintaining open lines of communication between management and employees to avoid an escalation of issues.

"Employment claims have become a costly burden for businesses, financially but also in terms of the resources required to handle them," said Catherine Johnson, partner in Birketts’ employment team. "Managers too often see dealing with grievances and disciplinaries as an inconvenience and rush through an investigation, increasing the risk of a successful claim being made."

At Howden, we understand the pressure this can place on your business. A comprehensive insurance package can help you manage risk and access the right support when you need it. Our HR services also offer strong guidance, including expert support from qualified HR professionals with broad industry experience, cost-effective advice without the need for in-house hiring, Employer Defence cover for added peace of mind, practical guidance that keeps pace with employment law, and bespoke consultancy to support people initiatives, coaching, training and wider HR projects.