Employment tribunal payouts in the North East have fallen by a staggering 60 per cent in a year, according to new research carried out by leadership development specialists Azure Consulting.
While damages for issues such as unfair dismissal and sexual or racial discrimination cost North East businesses £4m during 2013/14, this figure fell to £1.6m during the 2014/15 financial year.
The region has seen the biggest fall in overall payouts in percentage terms than anywhere else in the country, with the national average being a reduction of 21 per cent compared to the previous 12-months.
There has, however been an increase in the number of claims brought by women. In 2013/14, claims brought by women made up 21% percent of 22,763 claims accepted while figures for the first three quarters of 2014/15 show female claimants made up 36% of 11,588 claims accepted.
The most expensive year for North East businesses was 2011/12 when payouts reached a total of £7.7m. Since 2005/06, firms in the region have paid out a total of £26.3m.
Nationally, over the past decade, £242m has been paid in employment tribunal compensation.
Sue Alderson, director of Azure Consulting said: “New rules designed to cut the number of tribunals being brought have had a huge impact. From July 2013, anyone who wants to bring a case to tribunal has had to pay a set of fees, which has led many to think twice.
“But tribunal decisions are still costing North East employers dear and many cases could be avoided if firms invested in training and leadership skills.
“The relationship between manager and employee is often critical in tribunal claims as people tend to leave bosses rather than workplaces. Employees may feel relations soured so much they had no choice but to leave while managers may believe they were ill equipped to deal with difficult situations.
“Businesses need to make sure that anyone who manages others is given the right tools to do so through training and support to develop leadership skills and qualities. Firms should also be doing everything they can to improve employee engagement.
“Just because numbers of tribunals and the sums involved in payouts have fallen, that does not necessarily mean that staff across the region are now perfectly happy in their jobs. If businesses set aside the time and budget to provide the right training, they may save in the long run by improving staff retention while avoiding having to fight expensive employment tribunal claims.”
The Ministry of Justice is currently conducting a review into the impact of tribunal fees, which is expected to be published later this year.