Reforms to the Tribunal system that have led to a 70 per cent reduction in claims have been defended by justice secretary Chris Grayling.
Speaking to The Yorkshire Post, Grayling said the impact of the reforms was being monitored, but change was “necessary” to stop businesses from being threatened by “disaffected employees”.
Lawyers and trade unions have criticised the July 2013 changes, which saw claimants at employment tribunals incur an upfront cost to the claimant of either £400 or £1,200, depending on the complexity of the case.
Grayling said: “We were trying to deal with a situation where it was too easy to go to a tribunal and where employers, often good employers, were easy prey for questionable claims.
“For someone to go to a tribunal there should be some degree of hurdle for them to cross.”
Small business owners often chose to settle claims “even though they believe they are right” to avoid the costs of defending a claim, Grayling said.
Tribunal applications fell 75 per cent in the first quarter after the change. This rose to 79 per cent year-on-year. Applications between April and July 2014 were down 70 per cent on the same period last year.
Solicitors have suggested the sharp drop in claims means some valid disputes are not being heard.
Grayling highlighted the fee remission system available to low earners, but stressed “there needs to be a degree of commitment” for people lodging claims.
“Otherwise a small business becomes very vulnerable to someone trying it on,” he said.
“The consequence of that is fewer people end up being employed.”
Speaking at an event at Beaumont Legal in Wakefield, the Conservative MP for Epsom and Ewell also urged the legal sector to innovate in order to bring down the costs of advice.
The industry should pursue new technology and buisness models to deliver services for the future, he said.
“Both the consumer and the public purse needs to secure legal services at a lower cost than they have in the past,” he said.
“That requires out-of-the-box thinking, imaginative new business models and using technology to find ways of delivering that.”
Alternative Business Structures (ABS), which were launched in 2011, were hailed as a way for law firms and other professional services to deliver a more joined-up approach.
Three years on more than 300 ABS licences have been approved, including to PwC. However, the reform is not seen to have been as revolutionary as it was hailed to be.
Grayling said with some changes “it takes time before people really take advantage of the opportunity”.
However, he suggested there will be more competition in Government contracts across professional sectors in future, as well as more joined-up services.
Grayling said: “In future competitions for Legal Aid contracts, we’ll see firms that are more broadly based across the professional services.
“As firms look to deliver serivices in a more cost effective way, we’ll see combined packages.
“If you need a particular service there’s often a fairly grey area between whether it’s something your solicitor would provide or something your accountant would provide.”
There is a “particular logic” to combined professional services in rural areas and small towns, he added.
The Secretary of State for Justice and Lord Chancellor said a future Tory government would also work to reduce red tape for law firms.
However, he added: “A lot of people will say, ‘yes, let’s deregulate’, when you ask for the detail, it becomes less clear what needs to be done.”
Investing in future legal talent
Beaumont Legal, which claims to be the largest residential conveyancing firm in Yorkshire, has invested £150,000 in a training centre to develop the next wave of legal talent.
Chris Grayling, Secretary of State for Justice and Lord Chancellor, officially opened the centre at the firm’s new office in Wakefield and congratulated the first nine graduates.
Mr Grayling said: “It’s great to be here in Yorkshire and to celebrate the successes of the graduates and training academy.
“There is still plenty of work to do to improve the economy, but Beaumont Legal is a real beaming example of growth and success.”
Beaumont Legal has a turnover of £5m and is led by Roy Cusworth, senior partner and head of commercial law. The firm dates back 200 years.