Workers flock to sue employers

A dramatic rise in the number of disgruntled employees suing their bosses is revealed today.

Complaints against employers soared by more than 20 per cent to a record 127,000 last year with tens of thousands of cases ending up at costly employment tribunals.

But employers warn that today's numbers could prove just the tip of the iceberg with new anti-ageism laws coming into force in 2006.

The vast majority of claims, however spurious, are settled by companies desperate to avoid the cost and time of a full tribunal. This encourages staff to "try it on", say lawyers.

Companies argue workers are exploiting new employment laws and a "sue now" culture to bring ever more claims for discrimination and unfair dismissal. But unions claim companies are often guilty of exploiting staff by exposing them to discrimination and unfair pressure at work.

John Hayes, a partner at law firm Bracher Rawlins, which advises the Federation Of Small Businesses, said: "There are very real cost issues for small businesses.

They are forced to settle simply because they want to avoid the management time and legal costs of defending a case.

"It may only be two days in the actual hearing but with the preparation of witness statements it can mean the best part of a week's distraction for the managing director."

Companies also believe the system is stacked against them because there is no mechanism for recovering their costs from claimants even if the case is successfully defended.

Even the most trivial claim will cost at least £10,000 in legal fees to prepare a basic defence.

The number of tribunals cases has trebled in a decade. They began soaring when Labour came to power in 1997, since when 21 new pieces of employment legislation have been passed. The latest saw laws against discrimination on grounds of sexual orientation and religious belief come into force in December.

Firms are braced for the first of huge claims under the new laws. "I seem to be spending more time in seminars about workplace discrimination than I do actually bringing in business," said a senior City banker.

Firms are also concerned that even the current high level of litigation may be dwarfed in two years when European age discrimination laws come into force in Britain.

That will give millions of middle aged, white, male workers the opportunity to pursue unfair dismissal cases.

"People now think they will 'have a go' and that will continue to rise," said Melissa Paz, an employment lawyer with Withers solicitors.

But new rules coming into effect in October will require workers to raise complaints with employers before taking them to a tribunal.