How much are employment tribunals costing businesses?

The Telegraph today ran a story regarding plans by the coalition government to overhaul employment law in which it was claimed that "business spends on average £4,000 on average to defend itself against a claim".

The BBC echoed this figure, stating that "it costs on average £4,000 to defend each claim", and it duly appeared in the Independent and the Guardian too, where it was attributed to the government.

However the Daily Mail ran an article which estimated the average cost of an employment tribunal to be £8,500, over twice as dear as the figure quoted in its Fleet Street rivals.

So what could be at the heart of this divergence of opinion?

Figures published this month by the British Chambers of Commerce state that the average cost for an employer to defend themselves at a tribunal is £8,500, which was the price picked up at the Mail.

However a press release from the Department for Business, Innovation and Skills (BIS) released earlier today stated that it had estimated that employers face average costs of £3,800 per case. This figure was drawn from its consultation document  'Resolving workplace disputes' published earlier this month. This figure refers specifically to the cost of resolving a dispute through a claim to an employment tribunal.

The legal advisory website Law Donut state that costs can vary immensely depending on the type of case and how the individual chooses to pursue it, but estimate a figure of £4,000 plus VAT for a one-day Tribunal hearing from start to finish. But methods of compromise, mediation and conciliation before a tribunal could all be factored into the cost to an employer of resolving a claim.

An attempt to include some of these wider costs in the estimate was actually produced by BIS's predecessor the Department for Trade and Industry. Its 2003 Survey of Employment Tribunal Applications found that the mean amount spent by employers on advice and representation is £4,360 per claim, not including the cost to the business of the management and administration time of dealing with a case.

However, findings from the more recent 2008 survey, published in March 2010, set the mean amount paid for professional advice and representation for all employers in 2008 at £8,009.

So what is the true cost of Employment Tribunals to business? That very much depends on whether the price of representation, advice and administration are added to the court costs.