Planning to merge? Beware tribunal claims

Comment08.08.17by Siobhan Fitzgerald

A Supreme Court ruling last month is set to lead to more tribunal claims – particularly for associations merging or restructuring. Siobhan Fitzgerald explains more.

The Supreme Court building in London

Last month, the Supreme Court held that the government’s requirement for employees to pay a fee of up to £1,200 to bring an employment tribunal claim was unlawful and prevented access to justice. In light of the Supreme Court’s judgement, the government removed the fee regime with immediate effect.

When tribunal fees were introduced in 2013, there was a sudden and sustained reduction in the number of claims made (by approximately 70%).

“Many housing associations will be at particular risk of an increase in litigation.”

With their removal, we anticipate a sharp increase in the number of claims made across the board in the coming months.

The types of claims likely to arise as a result of change programmes are often relatively low value. For example, a protective award in respect of a collective redundancy programme is capped at a maximum of 90 days’ pay (13 weeks’ pay for a TUPE transfer). Previously, bringing these low-value claims often made little financial sense for an employee required to stump up £390 to do so (or £1,200 for an unfair dismissal claim).

Without fees to act as a deterrent, employees will have little to lose.

Tribunal cases are time consuming and expensive to defend (legal costs in defending a case are rarely recoverable). Across the housing sector, resources, both financial and staffing, are at a premium.

It makes commercial sense to spend a little extra time reviewing and updating processes to prevent employees from wanting to make a claim in the first place.

Housing associations embarking on major change projects should ensure they have appropriate consultation arrangements in place. Key considerations include:

Appointing employee reps to consult with (elected if necessary)
Providing all information as required by law
Consulting when the proposals are still at a formative stage
Allowing sufficient time for meaningful consultation
Remembering to consult with employees who may be easily overlooked – like those on maternity leave, the long-term sick or those on secondment
For TUPE transfers, consulting on all envisaged measures – even relatively minor alterations like a change in pay date

In addition, where one housing association is acquiring another, or is taking on a service contract resulting in a TUPE change, we recommend undertaking proper due diligence on the terms and conditions of the transferring employees’ contracts. It is often easy to inadvertently breach an employee’s contract by being unfamiliar with its provisions.

Housing associations recognising a trade union should be particularly careful when embarking on change programmes, especially those necessitating union involvement.

“Defending appropriate claims where prospects of success are good can send a useful message to the workforce.”

The removal of fees may mean that unions are more willing and able to back claims financially, which could give rise to group claims in respect of any change programmes with which the relevant union objects.

Finally, ahead of the predicted increase in claims, housing associations should give consideration to their strategy and tactics for settlement. In recent years, many employers have grown complacent due to the relatively low level of claims being made, and have routinely settled cases brought against them.

This runs the risk of being seen as a ‘soft touch’ approach and prompting employees to bring unmeritorious claims just to obtain small settlement payments.

Defending appropriate claims where prospects of success are good can send a useful message to the workforce. If you are going to engage in settlement negotiations, consider tactics carefully – there will be less incentive now for claimants to settle to avoid fees.

Siobhan Fitzgerald, partner, law firm TLT