The view across the fence

If you are the employer

Nick Bloy

Employment tribunal litigation is on the increase. As a result, employers are asking themselves how they can limit the number of tribunal applications they face and what they should do if an employee does bring a claim.

Some statistics

Last year, employees lodged 151,000 claims with the Tribunals Service. Of these, unfair dismissal claims made up the largest proportion (35 per cent), with claims relating to equal pay and discrimination following closely in second and third place respectively. Unsurprisingly, with the recession forcing many employers to cut costs, the number of redundancy pay claims increased by 43 per cent to 10,839.

On a more positive note, not all claims make it to a full hearing. Last year, 33 per cent of claims were withdrawn (many as a result of the employee signing a compromise agreement) and 32 per cent were settled through the Advisory, Conciliation and Arbitration Service. Of those claims that did make it to a full hearing, only 40 per cent were successful.

Winning is not cheap

Unfortunately, even with odds of around three to two in favour of the employer, legal proceedings are both risky and expensive and employers should be aware that victory at an employment tribunal is likely to be bittersweet. The reality for most employers is that the price of victory can be high, with legal fees often just the tip of the iceberg. Ranging from £10,000 - £30,000 for a simple claim to six figure sums for more complex ones, these are easy enough to quantify; but the amount of management time taken up is far more difficult to assess. Managing the process itself can be time-consuming for human resources departments, without taking into account the need for witnesses being required to attend a hearing for several days. There is also the possibility of adverse publicity and the effect a claim may have on staff morale. Moreover, employers may be required to disclose adverse findings of discrimination during a public procurement tender.

For those employers who do fall foul of the complex array of legislation governing the employer/employee relationship, there is the added cost of having to pay compensation to the aggrieved employee. Last year, the median award for an unfair dismissal claim was £4,269 and the highest award was £84,005. For cases involving discrimination, the median award was £7,000, the highest being £1.4 million.

Recovering costs

It is quite rare for the winning party to recover costs in the employment tribunal, unlike in the civil courts. Even if an employer successfully defends a claim, costs can only be recovered where a claimant (or their representative) has, in bringing or conducting the proceedings, acted vexatiously, abusively, disruptively or otherwise unreasonably, or the claim is misconceived. Costs awards are the exception rather than the rule and subject to a cap of £10,000. Although this might appear less than generous, any order for costs is likely to fall considerably short of this amount, in the majority of cases.

Settlement considerations

Defending employment tribunal claims can be very expensive and commercial decisions need to be made, both at the outset and as the case progresses. The employer’s approach will depend on a number of factors including not only costs but the disruption caused to the business and the effect on staff morale. However, sometimes it may be necessary to go the whole distance to ensure that employees do not assume that lodging a claim will automatically result in an employer paying them to go away.

Limiting exposure to potential claims

Employment tribunals will generally be interested in whether an employer has acted reasonably. This might include, for example, implementing and training staff on policies dealing with equal opportunities, bullying and harassment, sickness absence or flexible working or ensuring that a fair procedure is followed when handling disciplinary issues.

Equal opportunities and harassment

With discrimination claims on the increase, employers should have clear policies on equal opportunities and harassment in place. In addition to avoiding adverse inferences being drawn by an employment tribunal, setting out clear policies also alerts employees to what is expected of them in the workplace. Providing training on equal opportunities and harassment is not only good practice but also a key factor in avoiding claims.

Disciplinary and grievance processes

Employers should ensure discriminatory behaviour by staff is not tolerated and is dealt with through proper disciplinary measures. It is in the employer’s interest to set up clear procedures for staff to raise concerns and complaints, and for dealing with such matters. An ACAS code of practice sets out minimum standards which employers should follow when contemplating dismissing an employee or when investigating an employee’s grievance. Although the code is not mandatory, failure to follow it may result in an award for compensation being increased by up to 25 per cent.

Nick Bloy is an employment and incentives lawyer at Lewis Silkin

If you are the employee

Howard Lewis Nunn

With the economic climate uncertain for social landlords it is more important than ever for employees to understand their rights. Bringing a claim in an employment tribunal can be a daunting prospect. There are a range of options available before turning to a tribunal. Below are some tips on how an employee can secure the best possible outcome.

What is the problem?

Take some time to think through the situation to understand the issues. What is it you are unhappy about at work? While employees have more rights than ever before, not every dispute in the workplace will lead to a legal claim. Employers should nonetheless seek to address issues in the workplace constructively.

Try to deal with the issue informally. Can you talk to the person about the problem? If you do not feel confident, is there someone who could assist you? It may be appropriate to talk to your manager or, if they are the problem, talk to somebody more senior or to the human resources department.

More formal action

If informal steps do not resolve the problem or it is more serious, raise the matter formally. All employers should have a grievance procedure for dealing with workplace problems. Basic procedure should require:

• the employee to set out their complaint in writing to the employer;
• the employer to arrange a meeting to discuss it;
• the employer to notify the employee of the outcome;
• the right of appeal.

It is in the interest of both sides to follow this procedure and seek a workable solution. If the matter does proceed to trial, the employment
tribunal will take into account any failure by either party to follow the grievance procedure and can vary any compensation award by up to 25 per cent against the culpable party.

Mediation

One option is mediation. This involves an independent third party working with both sides to seek to find a resolution to their problems avoiding both sides turning to litigation. The mediator can be an external third party or larger organisations may train up some employees to act as mediators.

Not every case will be suitable for mediation but it is worth thinking about, especially where you are still in employment and wish to remain so as the majority of cases mediated end in amicable resolutions - often in one day. As a matter progresses towards the tribunal, positions become more entrenched and it can be difficult for the parties to continue working together once litigation is over.

Bringing a claim

So, if you have raised a grievance, and tried mediation but the issues are not resolved, what then? The next step is to bring a claim in the employment tribunal. Before you do, consider whether you have a claim that is worth taking further.

The most common forms of claim are unfair dismissal and discrimination (on grounds of religion or belief, age, sex, sexual orientation, disability or race).

Seek legal advice so that you understand where you stand and what you can claim. Advice centres will assist people free of charge. Trade unions provide their members with legal advice and there are useful websites that are worth checking. Also, check any insurance policies you have - often insurers provide a free legal helpline and may even pay towards your costs.

Employment tribunals deal with all statutory employment claims as well as claims for breach of contract up to the value of £25,000. It is free to file a claim.

It is still possible to resolve the matter at any time before the hearing takes place. Discussions or mediation can be conducted on a ‘without prejudice’ basis. This means that the parties can talk freely about settlement without the tribunal knowing.

For most employment claims, the time limit for filing a claim with the tribunal is three months from the last act complained of, or in the case of dismissal, from the effective date of termination. For unfair dismissal, the employee must have been employed for at least one year in order to bring the claim unless they can show that the dismissal was for an automatically unfair reason such as pregnancy, health and safety issues or due to a transfer.

It is important to keep an eye on these time limits even where there are settlement discussions or mediation ongoing. It can become necessary to file a claim to protect your rights. This can be withdrawn on settlement.

One final thing to bear in mind with any dispute is how it can be resolved. If you can approach your employer with a constructive solution to a problem, it may be possible to reach an amicable resolution.

Howard Lewis Nunn is head of employment at Rochman Landau

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