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08:33 on Wednesday
7 March 2001

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Compensation culture threatens business

A rapidly expanding compensation culture is placing a damaging burden on business, particularly smaller, owner-managed enterprises, says Stephanie Smye, chairman of the Eastern Branch of the Institute of Directors, which represents over 900 business leaders in Cambridgeshire.

The number of applications to employment tribunals rose from just 49,000 in 1989 to 113,600 in 1998 and 161,200 last year. The Institute believes the situation will become even worse following the introduction of the Human Rights Act on 2 October.

"Logically employers have not become more oppressive in the past decade," said Miss Smye. "Such a huge increase has been caused by massive expansion in employment legislation and changes in social attitudes that encourage people to allocate blame and seek compensation."

She blames the increase on well-publicised high pay-out cases that have prompted disgruntled people to take a chance on making a claim - often encourages by 'no-win no-fee' promises from law firms. As a result, 45 per cent of unfair dismissal claims are judged frivolous and fail.

In addition, many more case are being brought on the basis of alleged work-related stress and depression, often without regard to other lifestyle factors that may be influencing the performance of an employee.

Meanwhile, employers are expected to continue managing their businesses while suffering considerable anxiety, expense and other associated losses caused by the threat of litigation.

"No responsible employer would ever condone the ill treatment of employees," said Miss Smye. "However, present attitudes that focus too sharply on employees' rights and employers' obligations without acknowledging that employers also have rights and employees have obligations are unbalanced and can only lead to distrust and suspicion in the workplace."

September 2000




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