Having to make the choice between settling a potential claim or fighting it out can be a difficult call. It can feel like being stuck between a rock and hard place. It is a choice for the employee and a choice for the employer to make, balancing their own individual considerations, knowing there is only one path left if they cannot agree.
From a Claimant perspective, it remains a hot topic right now following the P&O Ferries debacle. In March 2022 P&O Ferries dismissed nearly 800 staff without any process and offered settlement agreements for them to not pursue any legal claims. They all had a very short time to consider their options and from what we understand all, except one, have decided to settle. It will be interesting to follow the claim lodged by that single rebellious employee.
It looks like the decision to settle would have been a difficult one to make. It appears that the severance packages offered would have been on the generous side. To go with the money may have, as such, appeared to be the sensible way forward. Fighting it out would have had its appeal on the basis that the Company has behaved so morally outrageously. The Claimant who has decided to go with this route has sought to incorporate claims for race discrimination. If those do not succeed it is likely that his financial compensation will be lesser than what was likely offered to him under a settlement. On the plus side there should be a public judgment condemning the Respondent and vindicating the Claimant’s position.
In practice, what do those options really look like from an employer’s perspective?
Settling – The Advantages
Settling a claim involves entering into either a settlement agreement or an ACAS conciliated agreement (COT3). The purpose of either of those is to settle existing and potential claims arising from the employment relationship which somehow has turned sour.
There are some clear benefits to this approach; it allows the employer to control the cost of the dispute and as such to budget accordingly. It provides certainty for the future; once the agreement has been signed, the relevant claims contemplated by the parties cannot be heard by the Tribunal. The matter is resolved once and for all. No need to worry about receiving some pesky tribunal correspondence asking for a response within 28 days. No more staying awake adding up the legal costs associated with a legal fight. No more incessant google searches trying to figure out what the worst-case scenario could be.
The employer can then focus on what they do best; running their business, growing their customer base, developing their strategy and supporting the rest of the workforce.
Settling – The Disadvantages
Let’s be honest here, it feels like giving in. Whilst it will of course be done without any admission of liability, this does not stop it feeling a bit like a failure. It is natural. It is a conciliated route so it will involve some element of compromise, from both sides usually.
It can also lead to paying out more than is actually warranted, to giving far too much credence to a worthless claim, and potentially rewarding a serial litigant or an unscrupulous Claimant. Despite the agreement usually calling for confidentiality to be maintained, there can be leaks, leading to a reputation of bending to undue pressure. Being a soft touch, an easy target.
As recently as March this year, a vexatious litigant was banned from bringing claims in the Employment Tribunal after filing 44 claims between 2012 and 2020 against companies that refused to offer him a job. The Employment Appeal Tribunal found that the claims were not just misguided but actually abusive and only a means to extract low value settlements out of those organisations, by threatening with unjustified legal action and bad publicity. Mrs Justice Eady commented that the Claimant’s actions amounted to a “weaponisation of the employment tribunal process” (Her Majesty’s Attorney General v Mr David Taheri:  EAT 35).
Fighting – The Advantages
After all, the justice system is there for a reason; we, as a society, have opted to defer to appointed judges the power to determine the outcome of a dispute we cannot resolve in other, less formal, ways. The Tribunal has the advantage of being composed of at least one legally trained judge who should be able to apply the law to the case at hand. In some instances (usually more complex cases) that judge will be supported by two lay members, an employer panel member and an employee panel member, representing respectively the perspectives of employers and employees. This aims to bring an element of impartiality to the dispute.
Fighting – The Disadvantages
Firstly, the cost and time involved in the actual process. A Tribunal claim can take years to reach its conclusion. In that journey it can be quite costly, directly in legal expenses and indirectly in terms of management time and resources. It can be a great source of stress for the parties involved, not just for a small business owner or manager who has been personally named as a Respondent, but for those giving evidence on behalf of larger organisations too.
A Tribunal case needs to be duly prepared. Relevant documents must be gathered and presented in the form of a bundle in advance of the hearing. As part of the duty of disclosure, some rather awkward emails or documents may come to light. On that note it is always worth thinking, before sending any email or writing any document, whether it would be problematic for it to be disclosed in the future; if so, think twice before sending/drafting it.
Witness statements should be drafted and reviewed very carefully. Witnesses need to be prepared to face cross examination on the day. Many cases are lost or won on the quality of the witnesses. It is essential that witnesses know to keep a cool head, remain professional, show the right amount of deference to the panel, and aim to present their evidence in an accurate, reliable and easily understood way. It is not the time for tempers to flare or personal animosity to show.
And of course, the outcome is outside of the parties’ control; the decision will be made by the judge or the panel (on a majority vote) and that will be binding. Any potential appeal needs to be based on alleged errors of law; disagreeing with the judge on their factual determination of the case will usually not suffice.
A hearing is a public forum and the decision could be made public (https://www.gov.uk/employment-tribunal-decisions). As such, there is a reputational element to consider. Some cases are never publicised, but some are reported in the media and, depending on the public mood, can spread like wildfire. Indeed, we ourselves blogged about a successful unfair dismissal claim against Iceland Foods Ltd quite recently. It was not an exceptional case in terms of the legal principles at play, nor was it noteworthy for the size of the award, but it made interesting reading from an HR perspective (i.e. how not to conduct a disciplinary investigation!).
Finally, the award itself can be substantial if the case is lost. Based on 2019/2020 data, the maximum award was c.£118,000 and this rose to c.£265,000 in respect of disability discrimination.
That takes us to the benefits of defending the claim and, with that, the best way to ensure they outweigh the disadvantages.
Why should you defend a claim raised against your organisation?
The obvious answer is probably because it can be worth doing so. Because you genuinely believe your position is worth defending. Because you have sought and received sound legal advice on the matter. Because you have strong representation to back you up and make this process as stress free as possible.
Sometimes, when other options have been explored unsuccessfully, the adversarial approach is the only option left in any event.
A good representative can make a world of difference. They will outline the pros and cons of going the whole way. They will let you know what the worst-case scenario looks like, but also the likelihood of this happening. They will outline the likely costs associated with defending the claim and will keep you updated every step of the way.
It’s important to remember that this is a legal process, not a personal attack. Be confident in your position and remember that the judge is human – he/she will make a decision based on the evidence and how that evidence is presented on the day. That decision may go your way, or it may not. If it does not, be prepared to learn from it. Again, having the right team by your side will make the process much easier.
Over the course of the last 35 years, we have defended thousands of tribunal claims on behalf of employers. We are not a big law firm with fees to match, nor are we a solicitor’s practice that prefers to keep clients at arm’s length. We are a long-established consultancy that provides tailored support on HR and Employment Law issues to organisations of all sizes and from all sectors.
Through our partners, Albion Legal (who are authorised and regulated by the FCA), we can offer an optional Employment Protection Scheme, which covers all legal fees, settlements and awards incurred in respect of any Employment Tribunal proceedings.
Of course, the priority should be to minimise the chances of a claim arising at all and we can provide robust employment documentation along with expert HR/ Employment Law advice, both of which can be invaluable in this regard.
So, if you are an employer facing employment issues which could result in litigation, or if you just want to take steps to protect your organisation from receiving a claim in the first place, please contact us for a confidential discussion without charge or obligation.