By Helen Loveless
Employers face an increased financial burden because of a rise in discrimination allegations, with many settling ‘spurious’ claims rather than facing the cost of going to court.
The amount paid out for discrimination claims has doubled from £4 million in 2007 to £8 million in 2009, figures from the Equal Opportunities Review show. The average amount paid out for an individual claim in 2009 was just under £21,000, the journal reports.
The rise is being fuelled in part by more legislation aimed at protecting staff treated unfairly by their employer. These include race and gender laws, and age discrimination laws that will make it harder for bosses to retire staff if they want to continue working beyond 65.
But experts warn that many small business owners are being forced to ‘pay off’ claimants because they cannot afford the costs of the case going to court. It costs employers an average of £9,000 to defend a claim, with no cost to an employee. Figures show that 14,456 claims were rejected in 2009, yet in only 265 cases were costs awarded to the employer.
Insurer Allianz says firms can protect themselves by taking out legal expenses insurance. Most business insurance policies offer legal insurance cover as an add-on, with the cost usually dependent on the size of a business and its turnover.
Legal expenses insurance typically includes access to an advice line, so employers can find out how to avoid claims wherever possible. If a claim does go to court, the insurer will pay for an employer’s solicitor.
Richard Simpkins of Allianz says: ‘We are concerned there are cases where employers are being held to ransom by less than scrupulous individuals.’
Unfair dismissal, breach of contract and redundancy claims rose by 17 per cent in 2009 compared with the previous year, as the recession hit.
Tags: discrimination, employment law, Enterprise Zone, small business, SMEs
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