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Given that the most basic Employment Tribunal claim is likely to cost more than £25,000 to get to a full hearing and more complicated cases to cost upwards of £50,000, a sensible employer should make a decision early on as to whether or not to put up a fight. How do you make that assessment?
These are the points you need to consider:
- Are you likely to win? It sounds obvious but it is surprising how often employers plunge head-on into expensive tribunal proceedings without asking this basic question. Think about your written evidence and who you will need to rely on as witnesses. Are your key witnesses likely to vanish into thin air or collapse after a few artless minutes of cross-examination? There are cases which, on the face of it are bound to fail (e.g. because the employee has insufficient service to bring a claim or because a time limit has been missed), but in most cases, results are difficult to predict. Beware of the lawyer who guarantees you success. It is the easiest thing in the world to tell a client what they want to hear. What you need is someone who is prepared to be brutally honest and to test the veracity of the evidence that you are giving them.
- Find out what the claim is likely to cost if you lose. Do not be satisfied with the usual pat answer such as 'Unfair Dismissal claims are capped at £74,200'. Employment Tribunals do not pluck figures out of the air. A decent lawyer should be able to explain how a tribunal will calculate an award given a particular set of facts and the factors it takes into account when doing so. When you have the ballpark figure, add on your legal costs. Do you still want to fight or do you want to try and settle?
- Leaving the money issues aside, are there any other considerations in deciding whether to defend a claim? If a Tribunal awards compensation against you for unfairly dismissing a 35-year-old white male, it may not be such a big deal. How would you feel however if your business was associated with a particularly nasty sexual harassment claim? The flip side of this is not being seen as a soft touch by employees. An employer may gain a reputation for always settling every claim regardless of the merit, so a balance needs to be struck.
- If you use a lawyer how much is it going to cost you? It sounds obvious but what are the hourly rates, who will work on the case, what is the cost estimate for the next steps/taking the matter to a full hearing etc? And, do they actually know what they are doing? Just because someone is cheap does not necessarily mean that they are any good but whoever you instruct make sure they are upfront about the fees at the start. Also, make sure that you are realistic about the legal resource you require. It may make you feel really important to have a 'legal team' but do you really want to pay for a partner, two associates, a trainee and counsel if the claim is never going to be worth more than a few thousand pounds?
- What are the claimant's personal circumstances? Are they insured for their legal costs? If they are this is both good and bad. If the claimant is insured then they are more likely to have the financial means to take the claim all the way to the bitter end. However, their solicitor will also in all likelihood be under an obligation to report all reasonable offers of settlement to the insurance company. That means if you pitch a settlement offer correctly, the claimant may have to accept it whether they want to or not, or else have their insurance cover withdrawn.
- Be realistic about what you can hope to achieve by defending a claim. Employers often say that they want to be 'vindicated' - this rarely happens. It is unusual for one side to be entirely right and the other side entirely wrong. Even employers who win can face a backlash from senior staff and shareholders when they realise how much money they have spent on simply trying to prove a point. In any case, it is also an unfortunate truth that people are more likely to remember the fact of a juicy employment tribunal claim, rather than who won or lost.
- Finally think long and hard about how much you really want to see the case through to the bitter end. It is easy to be bullish when the hearing is several months away. Will you really feel the same when sitting in the respondent's waiting room, waiting to be called in to give evidence?
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