The Employment Tribunal: Settle or Fight?

When an employer is faced with an employment tribunal claim, the first reaction is to defend the claim as many employers feel personally attacked, and will not want to reward an ex-employee for what the employer sees as undeserved. However, before making the decision as to whether or not to fight a claim, it is imperative to take the following crucial factors into consideration:

1. Chances of success and merit of the case: It is important to consider if you are in a very strong or weak position or if the case is evenly balanced. Based upon the evidence, witnesses, documentation and information available, it may be possible to make an early assessment of the likely chances of successfully defending the claim.  If those chances are 50% or less, it may be a good idea to settle at an early stage. You will need to bear in mind that an outcome of an employment tribunal claim is never certain and, allowance should always be made for the unexpected.

• Costs and remedy: It is important to consider what compensation the Claimant may be awarded if they are successful and how much defending the claim may cost, as this will not only affect your decision to offer settlement but also, what amount it may be appropriate to settle at. A cost analysis of continuing to fight the case should be undertaken throughout the claim and comparisons should be made against possible settlement outcomes.

• Wider implications: You will need to take into consideration publicity and precedents.  Employment tribunals generally publish claims to the public, including the press, therefore, if you are worried about how publicity associated with going to tribunal may affect your business, settlement is likely to be a priority. However, as an employer, you may not want to be seen as someone who just settles as other employees may want to go down a similar route, therefore you would need to consider if it is necessary for you to fight the claim to set a precedent so it doesn’t lead to further claims.

• Time: You will need to consider the time strain on your management and employees in investigating, pursuing or defending the claim. It can be extremely time consuming for the key personnel involved and you will incur the time spent for preparing documentation and attending Court to give evidence.

• Relations between the parties: It is common that defending an employment tribunal claim will involve other employees in the organisation, and it is also possible for a claim to be brought by an employee whilst they are still in employment. Therefore, as an employer, you may want to consider the impact an employment tribunal claim will have on the relationship between the employee and other employees at the organisation.

• Supporting your Managers: Whenever a tribunal claim occurs, it will often involve a challenge by an employee to a decision taken by management.  Whether that decision is the dismissal of the employee, a deduction from pay in some manner, a refusal of holiday or any other instruction by management, settlement of a claim may send a message that managers are not supported and that can undermine the hierarchy in the business and make managers nervous about taking decisions in the future.   

Here at Machins Solicitors, we can support you by providing early advice on the merits of a claim and/or potential settlement. If you have a claim issued against you and are unsure of next steps please contact us. Furthermore, if you would like more information about the issues raised in this article or any aspect of employment law, please contact our employment team.