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Employment tribunal settlements on the up

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6th Aug 2012
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Most employers settle tribunal cases out-of-court, despite good odds of making a successful defence if pursued through the courts.

The Ministry of Justice figures for the first three months of the year indicated that employers tended to win most cases if they were pursued, with the majority being struck out or successfully defended.

Dan Peyton, an employment law partner at McGuireWoods, told HRZone.co.uk it was often cheaper to give in early rather than fight and win, and moreover just 13% of all claims disposed of by employment tribunals were successful.

Between January and March, 28,600 disposals were made - an 18% drop on the same quarter last year. The number of single disposed cases fell by 6% and the number of multiple ones by 28%.

Peyton added that because lawyers dealt with far more settlements than tribunals did, it was “safe to assume that the number of claims settled is much larger than the 186,000 claims that were presented to the employment tribunal in the past year.”

Richard Harrison, a partner at Laytons Solicitors, told AccountingWEB, “Legal proceedings are very expensive and most cases of any substance are dealt with on the basis of a detailed cost benefit analysis in which legal costs loom very large. As well as their own lawyers’ fees, litigants face the very real risk of being required to pay another party's costs. And even if you win you won't recover all your costs - so that's the sort of calculation people have to do when they're facing court cases.

“In employment tribunal cases there isn't usually what's called ‘costs shifting’, so it's rare to have to pay the unsuccessful party's costs. But in most commercial cases you do have that risk and it's a major factor.”

The number of tribunal claims made fell by 44% to 42,500, which was attributed to a higher number of multiple receipts, including resubmitted airlines cases. Multiple claims fell by 55% and the number of single claims by 2%.

It is usually cheaper for employers to pay employees off than defend a tribunal claim, even if they expected to win.

 “Why are employers paying off so many claims by employees, when the odds of successfully defending claims are good? Because costs are rarely awarded against unsuccessful claimants – instead the basis of the Tribunal costs regime is that, normally each party bears its own legal costs whether they win or lose,” Peyton concluded.

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By Roland195
06th Aug 2012 12:45

Are we supposed to be shocked?

I may be mistaken but I expect most of us knew this already. What would be really interesting and of relevance to us would be the adjusted statistics for the success of claims where the employer is a small business - I would expect they are much higher than 13% meaning that any put up or shut up payment calculation would have to factor this in.

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By justsotax
06th Aug 2012 13:27

Only one winner....the solicitors....

shocking news....

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By hazeljohnson
06th Aug 2012 17:14

Alternatively

It may be that the cases that settle are the cases the employer thinks they are going to lose, which is why few are successful at the tribunal.

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By weaversmiths
09th Aug 2012 12:32

Solicitors - Only Winners

It is a justsotax says.  I am ancient enough to remember when the Employment Tribunals started at Ebury Bridge House.  The idea was that an employee would represent him/herself and the panel would make the deicision - usually fairly.  You were not expected to be represented and you had to speak up for yourself.  I took an employer to court as he wouldn't pay me my holiday pay when I left and won easily.  I also successfully helped a colleague against the same unreasonable employer.  I wasn't allowed to speak for him so I wrote him a script (and then a further one then and there  when they started lying - luckily there was an adjournment for lunch for him and I to discuss matters). 

Now it is such big business and totally out of hand and  certainly one of the reasons why we gave up our china shop and now trade in a smaller way from home.  The partners in a  micro business could lose everything they own if their employees see an opening.  I have seen it happen more than once over the years with  my accountancy clients where they have paid off someone to avoid losing everything when the staff gang up, especially in low grade jobs in shops - a small  bakery client springs to mind.  Its just not worth it. 

TheAncientOne

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By zxcvb
09th Aug 2012 12:39

Not necessarily the employer's choice

We had a recent tribunal case which we were keen to fight, but it was our insurers who tried to reach an out of court settlement.

 

Luckily the ex-employee rejected all offers.

 

We won :)

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