The Employment Tribunal Tidal Wave is About to Break
The backlog in outstanding ET claim grows with little prospect of improvements without stronger government action. Increasing claim costs and the unknown cost of those claims already in the pipeline causes a knock- on effect for legal expenses insurance. Straight Solutions continues to successfully navigate the trouble waters.
We are not alone in having our highest ever number of ET claims outstanding as the influx of new tribunal claims and the backlog of cases, which already reached record highs in February, is unlikely to have peaked.
Two sets of data released by HM Courts and Tribunal Service (HMCTS) last month showed both a big increase in the number of claims accepted by the tribunal in the last three months of 2020 and a backlog of outstanding claims continuing to grow with many listed well into 2022.
- HMCTS weekly management information during coronavirus shows over 51,000 outstanding employment claims, up 45% on ‘pre-Covid baseline’ figures at the end of February
- HMCTS tribunal statistics reveals Q3 (Oct-Dec) saw 37% more claims accepted than in Q2 and 66% more than in Q1
It’s clear that the tribunal system does not have the capacity to cope and steps the government proposed to address the backlog last year, by increasing use of virtual hearings and trying to deploy underutilised and non-specialist judges, clearly haven’t worked. There is no doubt that stronger action is urgently needed to bring the backlog under control.
The end to the furlough scheme is likely to bring another spike in redundancies and yet more tribunal claims, so it is hard to see the situation improving anytime soon. The situation is difficult for businesses facing a claim and for those employees who may have been unfairly treated, as it is clear many will have to wait significant periods of time, potentially years, before getting any sort of resolution to their dispute.
This has an obvious knock-on effect for legal expenses insurance with increased total claim costs and the problem of understanding, with any certainty, the cost of the claims that are already in the pipeline.
As we have previously reported several insurers have completely withdrawn from the employment protection market and we have seen very strong underwriting action from almost all the other active players. “Management Protection” policies that previously offered employment protection are seen to be removing employment cover from renewal date.
With our insurance partners, we continue to manage losses and keep our policies viable in this challenging economic climate. We are constantly monitoring the insurance market to ensure our products are fit for purpose so that we provide continuity and improvements for existing clients and remain open for new business across the broadest possible range of industries.
Please feel free to contact us if you have any insurance questions.