Employment tribunal settlements on the upby
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.