Employment Tribunal litigation has entered a new era, and Alternative Dispute Resolution is becoming an increasingly important part of the process.
Rising claim volumes, structural delays, and significant legislative reforms are combining to reshape how workplace disputes are resolved.
For employers, the message is clear: traditional “wait-and-see” litigation strategies are increasingly risky and commercially inefficient.
Employment Tribunal backlogs – a system under strain
New Employment Tribunal claims continue to outpace disposals, creating a substantial, and ever-growing, backlog. The latest tribunal statistics published by His Majesty’s Courts and Tribunals Service in December 2025 indicate that:
- There were 515,000 open claims at the end of September 2025, an increase of 54,000 from the previous year.
- Between July and September 2025, 26,000 new claims were received, but only 10,000 cases were disposed of.
- Unfair dismissal accounted for 23.7% of new claims, followed by disability discrimination at 14.8%, and unlawful deduction of wages at 12.2%.
Delays are now measured in years rather than months with cases currently being listed for hearing in 2027 and even 2028, particularly for complex multi-day hearings in discrimination, whistleblowing, and high-value dismissal claims. For employers, this means prolonged uncertainty, extended management involvement, and increased legal exposure.
The significant passage of time will also mean deterioration in the quality of witness evidence and recollections, and witnesses will also inevitably leave organisations, adversely impacting employers’ ability to defend claims.
Against this backdrop, Alternative Dispute Resolution is shifting from optional to essential in managing litigation and risk.
The Employment Rights Act 2025
The Employment Rights Act 2025 introduced some of the most significant changes to UK employment law in decades, but most of its key provisions will not take effect until October 2026 and into 2027.
Some of the most consequential reforms for tribunal litigation come into force from 1 January 2027, namely:
- The qualifying period for ordinary unfair dismissal will be reduced from 2 years to 6 months and will have retrospective effect – meaning anyone employed from the 1st of July 2026, or before, will have qualifying service.
- The statutory cap on compensatory awards for unfair dismissal will be removed entirely, meaning tribunals will no longer be restricted by previous ceilings on financial loss awards.
These changes essentially expand eligibility for unfair dismissal claims and significantly increase potential financial exposure for employers, with knock on effects for claim valuation.
Forecasting growth in claim valuations
One of the most practical consequences of these reforms will be the potential for increasingly inflated schedules of loss presented by Litigants in Person (i.e. claimants pursuing claims themselves, without legal representation), which may be further fuelled by access to inaccurate AI-generated legal advice.
Six figure schedules of loss are often advanced even when realistic recoverable loss is significantly lower. And once such figures are pleaded, they often become psychologically embedded, making settlement more difficult.
In addition, once the statutory cap on awards is lifted, from 2027, we anticipate there will be a widening gap between realistic litigation risk and perceived claim value. This is an area in which ADR is becoming a more valuable tool.
Alternative Dispute Resolution
With Tribunal hearings delayed for literally years at a time, ADR offers employers earlier commercial certainty, reduced legal costs, the protection of reputation, and mitigation of prolonged operational disruption.
Key ADR mechanisms include:
- ACAS Early Conciliation – a mandatory step prior to issuing a claim, though often too early in complex matters to deliver resolution.
- Judicial Mediation – where an Employment Judge facilitates settlement discussions. This mechanism is particularly effective in discrimination and whistleblowing cases.
- Judicial Assessment – a short evaluative hearing giving non binding indications on liability and remedy.
- Dispute Resolution Appointments (DRAs) – structured, judge led evaluative hearings held shortly before Final Hearing; normally listed for cases with Final Hearings exceeding 5 days.
- Privately arranged mediation – in which the employer (or parties together) funds the use of a professional mediator to explore settlement.
These alternative approaches to resolving cases have the potential to reach settlements far earlier, benefitting both employers and employees alike.
The growing importance of Dispute Resolution Appointments
In particular, DRAs are becoming more effective in the current environment because they typically take place at a point when both parties face the reality of imminent litigation risk, after all documentary evidence has been disclosed and witness statements exchanged.
The judge at a DRA can give a frank indication of prospects, liability, and claim value, with the aim of narrowing the gaps between the parties’ positions. Where a claimant’s expectations have become entrenched, a DRA can materially recalibrate expectations and unlock previously closed off paths to settlement.
From the Tribunal’s perspective, DRAs also help manage judicial resource pressures, especially for complex, multi day hearings.
Looking ahead
Employment Tribunal litigation in 2026 and beyond is likely to be characterised by:
- Higher claim volumes,
- Increased, and often inflated, claim valuations,
- Greater valuation gaps,
- Longer hearing delays, and
- Stronger judicial encouragement of Alternative Dispute Resolutions.
Under these conditions, mediation and DRAs are not simply rising in popularity. They are now central to effective dispute management.
For employers, combining realistic early assessment with strategic ADR use at the right stages of proceedings will often produce the most commercially sensible outcome.
At Capital we have a large team of specialist employment lawyers with extensive expertise in Employment Tribunal litigation. We regularly advise employers on complex, high-value claims and the strategic use of ADR, including mediation and DRAs.
How can we help?
Please feel free to contact us today to discuss how these developments may affect your organisation and whether the time is right to consider alternative, and potentially much faster, paths to resolution.
