Why don’t my clients let me have my day in court?
I was due to represent an individual client in a three day tribunal hearing on 16, 17 and 18th February. Once again, the case has settled shortly before the hearing, just as I was clearing my desk of other work in order to prepare for the case. Whilst we have a very successful track record in the tribunals we aren’t there very often. In common with many employment lawyers, most of our cases settle. With a sudden absence of things to do, I decided to write about why.
Why do most individuals settle their claims?
The main reason is cost, irrespective of the strength of the claim.
In tribunal, the compensatory award is based on net loss of earnings between the date of the dismissal and the individual either starting a new job or a future date by which time the tribunal estimates that the individual will have obtained new employment. The tribunal makes deductions from this figure to account for a number of matters such as payments made by the employer, the employee’s own responsibility in his dismissal or the fact that the employee would have been dismissed fairly shortly after his unfair dismissal.
The aim of the tribunal is to award what they think is just and equitable in the circumstances. It is not to punish the employer, but to award the individual the appropriate financial loss.
In cases such as in discrimination or whistle blowing claims, the tribunal can make an award for injury to feelings. This type of award is rarely going to be in excess of £6,000, the lowest band in the award for injury to feelings.
If the employee is legally represented, the legal costs are going to be in excess of £10,000.
If the individual has found a new job by the hearing date, and can afford legal fees, they usually cannot afford to jeopardise their new job. Asking for time off to attend a tribunal hearing against their former employer is unlikely to put the individual in a good light with their new employer. If the individual puts in a holiday request to attend the tribunal, they take the risk that their new employer find outs what they have been up to.
If the individual has not found a job by the hearing date, in most cases he or she will usually not be able to afford to pay for legal representation or will not be willing to gamble on that cost. If an individual has a claim worth, for example, a maximum of £30,000, they will, in many cases, prefer to settle it for £10,000, rather than spending £10,000 or more on legal fees with a risk of not being awarded anything.
We have seen a recent increase in cases were legal fees are covered by insurance. Even when this is the case, the insurance scheme usually includes a term that the individual has to accept a reasonable offer, otherwise risk losing the insurance cover. If you are faced with your advisor telling you that if you don’t agree to accept the offer, you will be paying your advisor’s fees directly, you are more likely to agree than not.
This does not mean that we never go to tribunal for individuals. The cases that make it to the hearing tend to be ones where the individual feel strongly enough about principles to risk being financially worse off than if they accept a deal.
Why do employers settle?
The main reasons are cost, management time and the daunting thought of their decisions being scrutinised and criticised in the tribunal.
Employers face similar if not higher legal fees. The bulk of the fees is spent a few weeks before a tribunal hearing, preparing witness statements, documents and examination and cross examination questions. It is an intensive period and will generally involve the representative spending a reasonable amount of time with the client.
Contrary to other countries such as France, were employers send their lawyers to fight a paper case, the tribunal procedure in the UK requires the attendance of witnesses. These witnesses are usually going to be the individual’s manager, the manager who took the decision to dismiss if different and the person who heard the appeal. These are usually senior people who have got a business to run and would rather be doing that than attending the tribunal hearing. You can see why making an offer of settlement at around the legal costs is usually going to be worthwhile.
We also find that for clients, the thought of seeing their decision scrutinised by an independent tribunal becomes very daunting when it looks likely to happen. When a manager dismisses or reject the internal appeal, they have the last word in the company. Their opinion will usually always prevail without much challenge. When they realised that the individual or their representative will test their objectivity and fairness in front of an unbiased panel, getting rid of the whole thing can become tempting.
Finally, at the time the tribunal claim is lodged, many employers feel a sense of indignation at being sued. While the initial response may be to fight the case, by the time the tribunal hearing approaches it can all feel like it happened a long time ago and that there is more pressing business to be getting on with.
This does not mean that all our business clients settle. Sometimes there are good reasons to fight:
- Getting into the habit of settling cases may seem like a reasonable proposition, but the fact that a business does this out of habit gets around despite confidentiality clauses. You may not want your staff to think that you are a soft touch who will settle even the weakest of cases.
- Unrepresented claimants tend to have a very over inflated view of their claim and in our experience, they can be very difficult to settle at a reasonable value, particularly when the claimant has been watching too many courtroom dramas.
- Where the claim is so unmeritorious that it seems ridiculous to settle.
Coming back to the title of this blog, while I may enjoy the cut and thrust of cross examination (sad, I know), it can be an intimidating proposition for our clients and the impetus to settle is generally a good one. At the end of a settlement negotiation, you just hope that all the parties feel like their honour has been more or less satisfied.