Tribunals: Is it (always) worth fighting a tribunal claim?
Employers who end up on the wrong end of a tribunal claim often decide to fight as “a matter of principle”. Although understandable, what factors must be carefully weighed up before going down this route?
Principles can easily add up
Just as employees’ rights have increased in recent years, so have your chances of receiving a tribunal claim. If you’re unlucky enough to get one, you might feel compelled to defend it, particularly to deter other staff from trying it on with a similar tactic. But this might not always be the best approach. So if faced with this situation, what are the main areas you should consider?
How strong is the claim?
Firstly, you need to know whether the employee stands any hope of winning. Details of their allegations will be set out in Section 5 of the claim form (ET1). This is sent out to you once the tribunal has accepted the claim. Go through each point carefully and see what evidence you have to counter it. At this stage, note down the strength of your evidence against each one, e.g. “strong”, “good” or “weak”.
Counter it. For example, they might have stated that they didn’t know about a particular policy. But if you have a copy of it with their signature, you are in a strong position; without it your own evidence is weak.
What is the likely compensation?
The next area to consider is the likely level of compensation (if any) that they could receive should they win. In reality, compensation payouts are considerably less than the media would have you believe. For example, the “average” award for an unfair dismissal claim in 2009/10 was just over £9,000. But this figure was distorted by a few six-figure payouts. In reality, the median is only £6,275.
Your own (legal) costs
From there, move on to assess the work and time involved in defending the claim, e.g. dealing with tribunal correspondence, obtaining witness statements and attending the hearing.
How much? Research shows that, on average, this costs employers £9,000. Bring in legal representation and the figure will be much higher. Plus, you won’t be able to pass all the work over completely, i.e. you’ll still need to spend time giving instructions, attending hearings etc.
Any damage to your reputation?
Finally, think about your reputation and whether your ability to attract staff (and customers) could be damaged by any local or national media attention. For example, if you lost a claim for failing to carry out a textbook investigation, it’s hard to see how any press coverage could be that problematic. But, if there were suggestions that you turned a blind eye to bullying or sexual harassment, the position could be very different.
The pros and cons. You need to be honest when looking at all these areas and decide whether settling the claim might be preferable; it could even be a lot cheaper in the long-run than standing by your principles.
Tip. Where an employee who is claiming unfair dismissal secures another job, it’s taken into account by the tribunal when deciding on compensation. It might even mean they’re not entitled to anything at all. Use this as leverage to negotiate a settlement, i.e. the claim isn’t worth that much now (assuming your assessment of it showed there was some prospect of success).
Study the allegations in the claim form (ET1) and consider the strength of the evidence you have to counter them. Assess what it could cost you to defend the case (including any solicitor’s fees), the likely compensation and any possibility of reputational harm. A negotiated settlement may be far cheaper in the long-run.
“Tips & Advice Personnel” 14.10.10