Resist or Settle a Tribunal Claim? Shock outcomes for employers

photo of a man facing the camera with a shocked expression on his face. Image by David King from Pixabay

Managers may believe that it is wise to automaticially resist a Tribunal claim. Their aim is to wear the employee down and hope that he/she will give up or settle for a small sum. Appropriate maybe, if there was nothing remiss about the actions of managers and the facts support the management case. However, an adverse judgement by a Tribunal may have serious, hidden effects on your organisation

This article looks at several angles of whether to resist or settle a claim. A later article will look at the issues from an employee’s viewpoint.

Banned from Tendering for Public Service Contracts

If an Employment Tribunal finds that discrimination has occurred, your organisation may face disqualification from tendering or disqualification when bidding for public contracts in the UK or in the European Union. Legislation and State policies govern such decisions about the tendering process.

Tenderers may have to complete an ‘eligibility’ document which includes the declaration of any such adverse judgements. As Tribunal judgements are public, it will not be difficult to verify an organisation’s response.

A ban or other sanctions may result also from breaches of:

  • Health and Safety regulations;
  • National Minimum Wage legislation ;
  • Employing a person who has no right to work in the UK per the Immigration, Asylum and Nationality Act 2006
  • Equality legislation in the European Union – the ban could be for 5 or 3 years depending on whether a conviction or a lesser sanction was the outcome of a breach.

Some managers may be tempted to engage in legal tactics, such as entering an appeal, to ‘neutralise’ the effect of an adverse Tribunal decision. That is a risky course and may discredit you and your organisation.

What impact would such a disqualification have on your business? If the claim has some merit, would you be wise to continue resisting or try for a settlement?

Compensation Awards and Costs Mount Up

Occasionally, a high compensation award attracts the attention of the press. Many cases though result in low awards. That thought may mislead managers as compensation awards mount up if the issues below are a factor:

  • Discrimination and/or injury to feelings;
  • The facts are deemed to be an ‘automatic unfair dismissal’ 1 as that will lead to a minimum basic award of £6,9592 even before other heads of compensation are added to the Tribunal’s decision;
  • There are many heads of compensation and those can total up to thousands of pounds.

Other factors to consider are: the amount of time which managers will have to set aside for preparation, for hearings plus the costs of hiring a solicitor and, if necessary, a barrister. For the next year or so, the backlog of hearings will mean the matter will be hanging over managers for many months or even a year or longer.

The Tribunal claim may have been worded to include both the organisation and one of more directors as respondents. In that case, the Tribunal could decide that any award is to be made on the basis of joint and several liability. If you are named as a director, you may become personally liable for paying the award. At the outset, you should check your organisation’s insurance for Directors Liabilities, or similar insurance, to see if your costs and the compensation award would be covered.

Damage to Your Personal and Organisation’s Reputation

Employment Tribunal hearings are normally held in public and may attract the attention of the press or social media circles. Depending on the nature of your business/service and the issues exposed at the Tribunal, customers and suppliers may prefer to deal with another organisation in the future. Assessing the risk is difficult as it may depend on the angle taken by the journalist or social media writer. As the news filters outwards, other harm can arise in several ways.

Professional Reputation – Managers who are members of a professional body may face an investigation by that body and sanctions if a breach of the professional conduct code is serious.

Reputation as an Employer – Staff will be watching to see how you deal with the issues and that often affects the trust that they have in you as a manager and employer. The sense of fair treatment for a colleague runs deeper than managers realise and it is unwise to shrug it off with a quip that ‘staff have short memories’.

Difficulty in recruitment my arise and staff turnover may increase if the treatment of an individual is perceived as deeply unjust.

A realistic view should be taken of the time and financial costs of dealing with a Tribunal case.

Check whether the facts that emerge reveal that there are ingrained issues which will lead to a repeat situation if reasonable action is not taken by both managers and senior managers.

We all realise that there will be times when it is right to resist a Tribunal claim or the threat of one. That angle is considered below.

Solid Reasons to Resist A Claim

If an individual’s conduct or performance is unacceptable, it is appropriate to intervene to address the issues. That will not always be successful and so dismissal or serious disciplinary action will be necessary. Some managers hesitate because of their perceived risk of a Tribunal claim. Such fears should not be allowed to overcome the appropriate way forward. Remember that staff will be watching and their confidence in senior managers will be undermined if they see a member of staff ‘getting away’ with a serious breach especially of safety, the organisation’s values or other key requirements.

Where to start? Be clear about the facts of the complaint and the internal processes adopted to both investigate and to hear the individual’s explanation of his actions or omissions. That should give an indication as to whether the actions of managers throughout the process have been appropriate and if the decision taken was reasonable in all the circumstances.

However, we have to recognise that there are often stro;ngly held personal grounds which propel an individual to make a claim. For example, an individual who remains very aggrieved about a disciplinary decision. Some individuals may believe that entering a claim is likely to lead to a pay out even though the grounds may be weak.

Balancing the Likely Outcome

The notes of the disciplinary hearing and any appeal can be helpful. The employer will have to show that his actions were reasonable and in line with any relevant ACAS codes of practice. The claimant will need to persuade a Tribunal of the justification of his complaint when completing form ET1 to begin a claim. That may give further clues as to the relative strength or weakness of both his and your arguments.

What is the crux of the employee’s claim and how strongly are those views held? One way to discover those is by agreeing take part in the Early Conciliation Process which is run by ACAS3. The service is free, independent of the Tribunal service and not binding unless the final agreement is signed off by the individual and the employer. The process can lead to the following benefits:

  • Managers and the employee will learn more about each other’s reasons and evidence in support of or contradiction of the claim;
  • Greater insight into the reasoning of the individual for making a claim and any pertinent facts which you may have overlooked;
  • Key issues for the employee – an employee may attach greater value to a reasonable, supportive reference (if that is appropriate) or other matters, which the individual hold as crucial to a settlement;
  • The ACAS Conciliator will try to help the parties to see their key points of difference and whether those can be overcome;
  • Early Conciliation may lead to a reasonable and cost effective settlement for both parties and thus avoid the unexpected outcomes noted earlier in this article.

Key Reflections for an Employer

Be aware of and manage, if practical, the potential external and internal effects of an adverse decision of an Employment Tribunal. Legal costs and management time are a factor but so are protecting the organisation’s reputation amongst both employees, job seekers and current and future customers and consumers.

Managers may find that their confidence in the organisation is strained by how a case is handled especially if the employee has violated key operational requirements and ‘let off’ or if the outcome for the member of staff is viewed as disproportionate and unjust. It can take a long time to heal such feelings and in the meantime. staff with deep knowledge of the effective workings of the organisation may be lost – another hidden cost to be reckoned.

1 For more information see Key HR Facts Unfair Dismissal – ‘Automatic Unfair Dismissal’ heading.
2 Rate as at June 2022 – for current rates see Key HR Facts.
3 ACAS Early Conciliation Process – outline.

[Editor’s note – some text amendments made 13/06/22]

© 2022 Jim Harrington, HR Management Dimensions

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