The pain of Employment Tribunal claims
Employment Tribunal claims are a big deal for employers. They take up huge quantities of valuable time, incur significant costs (win or lose), and there is always the prospect of some unexpected flaw in the employer’s defence. For these reasons, they provide an opportunity for an employee* to make life difficult for an (ex)-employer even when the employer may be faultless.
Of course, employers are not always faultless: untrained managers can be impulsive, matters may be overlooked and all too often employee issues do not follow “textbook” lines. And, sometimes, employers just have to take a risk.
But then the employee rushes to file an Employment claim and the employer finds themselves on the back foot.
What avoidance actions exist currently?
Once a claim is filed ACAS contacts both parties and sees if a compromise can be agreed. For the employer, a compromise is invariably sensible and the more commercially justifiable approach. From the employee’s viewpoint it is far less stressful, a reference can usually be negotiated as part of the deal, and any money you give them is theirs.
In a successful Employment Tribunal award the state benefits, that an employee might receive after dismissal, have to be paid back. This reduces the value of the award. The award is also reduced if the employee has found a new job in the time between a dismissal and the Tribunal hearing.
You might think that the benefits of a compromise would, in most cases, be overwhelming. But employees often do not see the benefit, employers sometimes get hung up on principles such as “I am not giving her a penny” and lawyers earn more from Tribunal Hearings than they do from settlements.
How do I reach a settlement?
The earlier you address an employee’s claim the less is it likely to cost you. If the employee has received “pay-in-lieu” then the financial pressure they are under may be less. They may also believe they will, and indeed may, find, alternative employment quickly. But if they have been out of work for some months bitterness may creep in.
Sometimes “the claim” can be settled even before it is made. If you, the employer, are culpable in some way then this may be the best course of action. You may realise that you or your managers have done something that is difficult to defend. You may be approached by the employee’s legal representative seeking redress. Or ACAS may contact you offering “pre-claim conciliation”. Indeed I once contacted ACAS (to their surprise) seeking pre-claim conciliation on behalf of an employer. It forestalled a claim and a very reasonable settlement was reached. Remember that once the employee is on the “treadmill”, of an Employment Tribunal claim, it may be challenging to get them off it.
Of course if you are not culpable then, obviously, pre-empting a claim would send the wrong message.
But if you receive a claim, then addressing it early invariably leads to a better outcome in terms of costs generally and the opportunity cost of time in particular.
So what is changing?
Obligatory pre-conciliation is coming in April and it will focus minds. It means that once a claim is made, employer and employee will be obliged to engage in a meaningful dialogue unless both parties independently agree otherwise. If they fail to reach agreement then the employee’s claim will be subject to a delay of a month.
Will it make a difference?
Clearly that remains to be seen. In my view it will certainly bring the prospect of conciliation to the attention of the employee. That may encourage them to settle. In our experience once encouraged to settle, employees generally do; and for much less then they might be awarded at a Tribunal (were they to “win”). The exceptions have been where the employee has been mesmerised by the prospect of a five or six figure sum; something that is rarely realised and never has been where we have been involved.
What about other changes?
We are already seeing the level of Employment Tribunal claims plummeting. There are several reasons for this:
- A two year qualifying period for employment service before an unfair dismissal claim can be brought
- Deposits are now required for claims and hearings. The employee is looking to invest over £1,000 before they get into a courtroom. That is quite an investment if all you want to do is “get at” your employer even though you have little or no case.
- Employers can now have “protected conversations” enabling them to settle matters even before a dismissal and sometimes without a dismissal.
- Recently, Employment Tribunals have shown more willingness to award costs to employers; meaning claimants may have more to lose.
Malcolm Martin of Employer Solutions – QCS Expert Human Resources Contributor
*Most Tribunal claims are made by ex-employees although they can be made by current employees (e.g. for discrimination). Ex-employees are generally referred to as “claimants” – at least once they have made an Employment Tribunal claim. But for ease we have referred to ex-employees, employees and claimants as employees as that describes the perspective from which they come.
