Settling a Tribunal Claim
The call from ACAS or the arrival of an ET2, the notification of a complaint to an Employment Tribunal together with the ET1, details of the complaint, and the ET3 response form can be a major shock to many SMEs and require a very carefully considered reply within a set 28-day period.
An ex-employee can initiate a claim at no cost to themselves, whereas you as an employer will always have a cost even if this is just the time spent responding to a claim with no financial compensation awarded. Defending and winning a straightforward tribunal will cost on average £5-8,000. The most extreme case of loss at a Tribunal was £4,452,206 for sex and race discrimination.
While you may have some idea of the potential claim following a dismissal there is a lot of work in your decision as to how you are going to respond.
Compensation at an ET can be very expensive particularly if you have not followed your own policies or the ACAS Code of Practice. You have two options, settle out of court or defend your decision at an employment tribunal, this will depend on how strong you feel your case is.
Out of Court Settlement
As mentioned the highest award at an ET was over £4.4M so you have to know when to settle out of court and there are three ways this can be achieved, ACAS COT3, mediation, or a legal settlement agreement. The advantage of an out of court settlement is that this can avoid the nature and financial value of the agreement being made public. Very helpful if the publicity could damage your company's reputation.
ACAS COT3: The Advisory Conciliation and Arbitration Service will initially contact the employer to ask if they are interested in settling the claim out of court, if so they will carry out a conciliation between the two parties to achieve an agreed settlement which will be written up on the ACAS Form COT3. The ACAS officer will take a neutral stance and highlight the options available to each side to assist the parties in reaching an agreement. Once signed by both parties the claim cannot proceed to a tribunal hearing. If no agreement to settle then the Claimant will be given an Early Conciliation Certificate, allowing the individual to commence the Employment Tribunal process.
The use of an independent mediator, outside of ACAS, can also be a path to settle the issues out of a tribunal, this can be set up by the employer or suggested by an employment judge at an early stage of a tribunal hearing. While this will incur costs you will have more say in the financial settlement involved.
When you realise that the organisation has made an error and that you are likely facing a serious level of compensation at the tribunal, it is well worth looking at a settlement agreement. Settlement agreements do involve a negotiation with your employee regarding the nature of the dismissal and the compensation you are willing to offer. Once again the negotiation can be undertaken by an internal manager, external solicitors, or an independent consultant. the advantages are that again you are in more control of the financial settlement. However, once an agreement is reached, the draft agreement has to be reviewed by an independent solicitor who is authorised to review such agreements and advise the employee before signing. The employer has to contribute to this cost, not the full amount but at a fair level which will usually depend on the seniority of the individual.
Defending at the Tribunal
Defending an employment tribunal should only be undertaken following a very close examination of the evidence and weighing up the chances of success. You have 28 days in which to respond to the ET1 on the ET3 confirming the accuracy of the information from the claimant and the outline of your defence. Early advice is key and this is where we can support you to ensure you have covered all the key points. Once submitted to the tribunal office the case will be reviewed and a case management review could be ordered with both parties to clarify any issues. It is possible the employment judge may at this stage warn the claimant that they have a very weak case and if they proceed and lose, costs could be awarded against them.
Preparing for the hearing is time-consuming deciding on which witnesses to call and the writing of witness statements and the potential duration of the hearing, while many can be heard in 1-2 days others can take 5 or more.
Engaging a barrister to represent you at an ET will be expensive, with hourly rates of £300 - £600 quite common. Currently, with the tribunal offices under pressure, it can take anything from 6 to 18 months for a case to come to court.
You need to know which ones to fight and which ones to settle out of court.