Tribunal claims cost £8,500 each to defend

Posted on January 24, 2011 by Martin Malone

The British Chambers of Commerce (BCC) has undertaken research which shows that the average cost for an employer to defend itself at an employment tribunal is £8,500 whereas the average cost to settle is £5,400, making settlement the cheaper option. Last year there were more claims made than ever (236,100) and the current recession is unlikely to lead to anything other than a further increase this year.

The extent of disruption for employers who have to deal with an employment tribunal claim cannot be overstated. While most employers feel that they are able to answer the claims made the majority (51%) settle claims nonetheless in order to keep costs down and because it is convenient to do so (25%). While costs can be awarded against claimants who bring obviously unmeritorious claims, the number of these orders made is miniscule in comparison with the number of claims made and has decreased every year since 2004/05.

Dr Adam Minshall, Director of Policy and External Affairs at the BCC commented:

“The employment tribunal system is in dire need of reform. Currently, tribunals are too slow and overwhelmingly weighted in favour of the employee – whereas they should be fair for employers and employees alike.

“Small- and medium-sized employers across the UK tell us the current tribunal system creates risk and uncertainty. Ultimately, it’s a barrier to job creation because it distracts businesses from focusing on growth.

“The current system is perverse – forcing businesses to settle spurious claims rather than fight them, simply because it is more cost effective for them to do so. And those costs go beyond legal fees. The reputational impact of a tribunal can be hugely damaging to a business, particularly as they can be stretched over several months.

“We urge the Government to review the current system and consider introducing a fee for claimants to discourage spurious and baseless claims. Ministers must also commit to reducing the wait time for a first hearing – and making the system less of a barrier to business growth.”

Our experience shows that his assessment of delay and bias is correct. It is very hard for employers to avoid some technical defect or another which leaves them open to successful claims by claimants even though they have what they believe to be a thoroughly fair approach to employment relations. Many employment lawyers don’t grasp the nuances of how to deal with what has become an incredibly technical and complex area of law so it is hard to understand how employers themselves can reasonably be expected to understand what is required. Even employment judges have difficulty in grasping the issues as demonstrated by the number of successful appeals. As I’ve pointed out before it is remarkable that most claims in employment tribunals involve more complex legal issues than those dealt with in our civil courts but that is the reality. Whether that should be so is of no help to employers who have to deal with the legal system that we have.

That is why employers simply cannot rely on the outdated view that they haven’t encountered the claims which need to be dealt with by others and therefore don’t need to worry. An employment tribunal claim can cause untold inconvenience in terms of time, disruption and unexpected expense. It’s worth bearing in mind that many of the awards which can be made in tribunals are unlimited and can therefore cause the failure of otherwise successful businesses. Should this be the case? The government knows about the problem so there are headlines such as “Firms get powers to sack the slackers” and an “Employers’ Charter” which presage an extension of the time limit for bringing an unfair dismissal claim from the current one year to two years and the requirement for claimants to pay a fee for bringing an employment tribunal claim. Proposed fees are suggested as being in a range from £30 to £500 (according to the Financial Times) but the absence of legal aid for employment claims means that these proposed changes will be vulnerable to “access to justice” arguments.

These issues mean that employers cannot responsibly take the chance that they will get away without claims being made against them. It’s more important than ever to make sure that documents, policies and procedures are right up to date and that is how CLB Employment Solutions comes into its own. Our access to specialist employment lawyers removes the onerous requirement on employers to make sure that all their arrangements for employees are correctly drafted and up to date and that potential problems which arise with employees are dealt with properly and with a minimum of risk. Subscribers can also opt to obtain reasonably priced insurance to guard against both legal costs and awards of compensation. Can you afford not to have appropriate cover in place? For further information about our comprehensive employment law and insurance service please call free on 08000 320 974 or email enquiries@clbemployment.com.

newsletter – phoney discrimination claims

Posted on December 20, 2010 by Martin Malone

One of the problems with anti-discrimination law is that it sometimes results in “phoney claims”. The problem must, of course, be kept in perspective and overall the fact that the law is sometimes abused is a small price to pay for the valuable protections it affords to genuine victims.

The problems of phoney claims generally centre around job applications. At one time there were quite frequent newspaper reports of people with African or Asian names putting in two applications for the same job, identical in all respects except for the name. Typically the applicant would use a very anglo-saxon sounding name in one application and his real name in another. When the phoney anglo-saxon got invited to an interview but the real person did not, the real one would threatened to sue on the basis that the only reason for his not having been invited for interview must have been his race. Employers would be tempted to pay a few hundred pounds to get rid of the nuisance even if a tribunal would be unlikely to make an award if it was aware of the facts.

We haven’t heard much of that particular scam recently (no doubt many employers now have systems in place which weed out phoney “dual applications”). Instead a new version of the same scam has appeared, this time making use of anti age discrimination law.

This “age-discrimination” version is a little more subtle than the “race discrimination” variety as there are no relatively easy to spot double job applications. Instead an older job applicant applies for a job which is clearly most suitable for a young person and stresses his age in the application. If he is not invited for an interview he may claim, or threaten to claim, unlawful age discrimination. If the case goes to a tribunal and the tribunal is persuaded that the applicant never genuinely intended to take the job, the scamster is unlikely to get far. He will not have have suffered a detriment and so will not succeed in a discrimination claim (an example was an EAT case almost exactly a year ago – Keane v Investigo & ors).

In another case a Mr Berry, a man in his mid-50s, brought at least four sets of proceedings in the London (Central) Employment Tribunal claiming that job advertisements breached the (now-replaced) Employment Equality (Age) Regulations 2006 because words such as “recent graduate” or “school leaver” suggested that they were aimed at younger people. Mr Berry never actually applied for the jobs in question but nonetheless brought claims to an employment tribunal. He did so largely in reliance on a 2008 ruling by the European Court of Justice in which that court held that “Public statements by which an employer lets it be known that under its recruitment policy it will not recruit any employees of a certain ethnic or racial origin are sufficient for a presumption of the existence of a recruitment policy which is directly discriminatory…”. Mr Berry claimed in effect that what was sauce for the goose (EU immigrants) should also be sauce for the gander (British people of a certain age) and therefore that this 2008 ECJ ruling meant he had legal rights. He also claimed for good measure that the job advertisements breached his rights under the European Convention on Human Rights.

He lost his claims in the tribunal and, perhaps surprisingly, decided to appeal. In October 2010, Underhill J in the Employment Appeal Tribunal had no trouble in dismissing his appeals, stressing not only that the legislation is not designed to provide income for people who “complain of arguably discriminatory advertisements for job vacancies which they have in fact no wish or intention to fill” but also that those who did so are likely to be liable for costs.

While the cases show that employment tribunals will not support scamsters, notably job applicants and others who have no intention of taking up advertised jobs, the fact remains that in practice such claims can be a nuisance. Only too often it can be less costly and more convenient for an employer simply to pay off a potential claimant rather than fight a case. Notwithstanding the suggestion noted above by Mr Justice Underhill that an unmeritorious claimant is likely to be liable for costs, there is no certainty of a costs order being made and, even if it is, in practice there is no certainly of being able to enforce it against the scamster. The government’s plan to abolish the 65 so called “default retirement age” (see the previous item) will do nothing to help. However other government plans may – there are rumours that the official review of employment laws currently under way will consider recommending that more claimants should be required to put up some form of cash security before being allowed to bring cases to an employment tribunal. If so, this would no doubt deter at least some phoney claimants.

The moral for employers and especially employment agencies is that great care should be taken to ensure that job advertisements avoid use of any words, phrases or images which could suggest that a job is only suitable for people of a particular age unless they are quite sure that such a requirement can be justified as a “proportionate means to achieve a legitimate aim” (to quote the wording used in the relevant legislation). In any case of doubt you should contact us for advice.

unfair dismissal and misconduct

Posted on June 17, 2010 by Martin Malone

A couple of recent unfair dismissal cases have thrown new light on unfair dismissal law.

The first shows that an employer has a wide discretion as to whether to postpone internal disciplinary proceedings when there is an ongoing police investigation into the same allegations.

A prison officer (a Mr Mansfield) was accused of orchestrating violence among prisoners and planting drugs on them. An internal investigation was started in April 2006 and he was suspended on full pay. Eventually, after rather over a year, he was dismissed. He claimed unfair dismissal and won, essentially because the employment tribunal which heard his case considered that the delay in dismissing him was “lengthy and unacceptable”.

The employer, effectively the Prison Service, appealed to the EAT and has won.

What was crucial was the reason for the delay. This was that there was an ongoing police investigation into Mr Mansfield’s conduct. The EAT said “We consider that a decision maker forming a view on whether disciplinary proceedings should be continued alongside a criminal investigation has a wide discretion“. There was no basis for the Employment Tribunal to have held that the delay meant that Mr Mansfield’s dismissal was unfair.

The second case shows that the seriousness of the consequences for the employee of a finding of unfair dismissal can be taken into account in deciding whether an employer’s investigation into alleged misconduct was fair and adequate and therefore in deciding whether a dismissal was unfair.

A Filipino nurse, Ms Roldan, was employed by the Salford Royal NHS Foundation Trust from July 2003 until her summary dismissal for misconduct (mistreating a patient) in October 2007. She brought an unfair dismissal case. She won in the employment tribunal but the Trust appealed and the EAT ruled that the case should be sent back for rehearing. Ms Roldan appealed to the Court of Appeal and has won.

In coming to its conclusion the Court of Appeal pointed out that in deciding whether a ‘conduct’ dismissal is fair or unfair one of the important questions to be considered is whether the employer carried out as much investigation into the matter as was reasonable. In this case this would include taking into account that the employee had given service to the employers over four years, apparently without complaint and, significantly, that there would be a real risk that her career would be blighted by the dismissal if it was found to have been fair. A finding that the dismissal was fair would certainly lead to her deportation and destroy her opportunity for building a career in this country.

Accordingly the Court of Appeal restored the decision of the original tribunal that the dismissal was unfair. You can read more about this case in this blog post.

claimant arrested at employment tribunal

Posted on May 26, 2010 by Martin Malone

According to a report in the London Evening Standard a convicted child trafficker was arrested when she turned up at her own discrimination hearing at the Central London Employment Tribunal.

Peace Sandberg was jailed for 26 months when she bought a three month old baby in Nigeria for £150 and tried to pass it off has her own in order to be allocated a council house in the UK. The court heard from council staff that she had attended Ealing Council offices with the baby, demanding accommodation and benefits, but they recalled that she had not been pregnant a few weeks earlier. As well as being sentenced, she was deported to Sweden (she holds joint Swedish and Nigerian citizenship).

However, she continued to pursue a claim of sex and race discrimination against her former employer, The Peabody Trust and duly turned up for her hearing on 13 May at the Central London Employment Tribunal. In his opening address to the tribunal, counsel for the Trust stated “the police are on their way” and they duly arrived at about 12.30 p.m. They sat in the public gallery until asked why they were there. One said “How long is the tribunal going to last; we can come back”. However, when told it could run for seven days, another officer is reported to have said “We should probably nick her now”. She was duly arrested and led away in handcuffs.

You may reasonably have assumed that would be the end of the tribunal case but, according to Inside Housing the case has been adjourned so that she can give evidence at the resumption by phone, written submission or video link.

unfair dismissal – procedurally unfair but what if it might have been fair

Posted on May 17, 2010 by Martin Malone

Many employment judges regard the frequently made distinction between procedural and substantive unfairness as artificial and there is judicial authority to support that view.

Now that the ill-fated Employment Act 2002 (Dispute Resolution) Regulations 2004 (which imposed mandatory procedures) have been scrapped, the hoops which an employer needs to get through to avoid a finding of unfair dismissal or facing increased compensation are not as onerous as they were.

Employers can also rely on section 98A(2) of the Employment Rights Act 1996 which provides that:

…failure by an employer to follow a procedure in relation to the dismissal of an employee shall not be regarded for the purposes of section 98(4)(a) [need to act reasonably in all the circumstances] as by itself making the employer’s action unreasonable if he shows that he would have decided to dismiss the employee if he had followed the procedure.

However, what happens if an employer doesn’t raise this point specifically at an employment tribunal hearing. This was the issue for the Court of Appeal in Salford Royal NHS Foundation Trust -v- Roldan (13 May 2010). The appellant, a Filipino nurse, was recruited from Singapore and employed by the Trust from 2003 until she was summarily dismissed for gross misconduct in October 2007. It was alleged that she had ill-treated a patient. An appeal by way of a re-hearing was unsuccessful.

The consequences for her were severe. There was a police investigation and in addition to losing her job, she also lost her work permit and the right to remain in the United Kingdom. She was prosecuted but acquitted.

Employment lawyers often refer to a Polkey dismissal (after the House of Lords case of that name) which concerns what should happen if, where they have not, dismissal would hav been the result had fair procedures been followed. Put as simply as possible, if an employer satisfies an employment tribunal on the balance of probabilities that an employee would have been dismissed even if fair procedures were applied, the dismissal must be held to be fair. If there was a chance of a fair dismissal in such circumstances but less than a 50% chance, the dismissal should be found to be unfair but compensation can be reduced to take account of the possibility of a fair dismissal.

In Ms Roldan’s case the employment tribunal found that the procedure applied was unfair and that the dismissal was unfair. At a remedy hearing, the tribunal refused to apply a Polkey reduction because there was no evidence to suggest that dismissal would have followed if correct procedures were followed. The tribunal also refused to hear an argument on behalf of the employer concerning the application of section 98A(2) (above) because it had not been raised at the main hearing.

The Employment Appeal Tribunal disagreed and found that the alleged procedural failings did not in themselves establish unfairness. The EAT also took the view that the tribunal should have considered section 98A(2) and allowed further evidence from the Trust.

The Court of Appeal has disagreed with the EAT and restored the decision of the tribunal. The tribunal was entitled to conclude that the dismissal was unfair. Justification of the tribunal’s decision was reinforced by seriousness of the consequences for Ms Roldan (A -v- B [2003] IRLR 405 (EAT)). Perhaps the most important part of the decision is that the Court of Appeal decided that the tribunal was right not to consider submissions or further evidence concerning the possible application of section 98A(2). This should have been dealt with at the initial hearing and there was no error of law in the tribunal’s refusal to revisit the issue.

The case reinforces the need to make sure that all relevant submissions are dealt with at the tribunal hearing. In all cases in which the employer may be vulnerable from a procedural perspective, section 98A(2) must be raised in the course of the main hearing; otherwise it can be expected that the opportunity to do so will be lost.

An inconvenient truth: judicial mediation is a waste of time and money

Posted on April 23, 2010 by Martin Malone

So, at last, we now all know what we’ve been thinking for long enough but few would dare to say. Judicial mediation doesn’t work and, in direct contradiction of its stated purpose, generally ends up causing greater expense for the parties.

According to research conducted by the Ministry of Justice concerning Employment Tribunal discrimination cases reported in this week’s Law Society Gazette, the pilot study revealed “no discernible, statistically significant effect” on the number of cases settled or resolved without a formal hearing.

To compound matters, the research has also revealed that, far from reducing costs for the parties, those cases in which judicial mediation was used cost the parties an average £880 more in overall net costs.

Most experienced lawyers can identify more or less immediately those cases which are likely to have a reasonable chance of settling by mediation or some other form of alternative dispute resolution. Equally, we know that in most cases people pay lip service to attempts to mediate “to give the right impression to the court” but in the knowledge that any attempt at mediation is a complete and utter waste of time.

It is a farce that parties in litigation are obliged to consider mediation and other forms of alternative dispute resolution and that they can face costs sanctions if they cannot be seen to have done so. The sooner this illusory process is abandoned the better. Leave it to the lawyers to decide whether and on what terms there should be mediation. I can’t think of any lawyers I know who would push for a case to go to trial if they knew that a case could be settled by mediation. If some lawyers do engage in unnecessary costs building exercises, they will soon be found out by their clients.

The final irony is that the process was found to be “an expensive process to administer” and that the costs were not offset by the expected benefits. So it seems that judicial mediation costs the parties and the courts / tribunals and, on balance, brings no discernible benefits. Surely the time has come for the courts and tribunals to face up to the reality that introducing additional hoops for litigants to negotiate in the naive hope of reducing the administrative and judicial burden and saving costs is good for no-one and should be abandoned as soon as possible.