Tribunal cases – should you settle or fight?

Times Higher Education reports that St Andrews University spent £204,000 fighting a constructive dismissal claim and a subsequent appeal. It won the case but the employee concerned would probably only have received £20,000 if the university had lost. In other words, the university could have settled with the employee for one tenth of what it spent in legal costs.

Now £200k is a hell of a lot to spend on legal fees. I don’t know the details of the case but it must either have been very complex or else the management at St Andrews were ultra-cautious and sought legal advice at every turn. But it raises a more important question; if you will probably spend more fighting the case than it would cost to pay the employee off, should you just settle and forget about it?

It depends on the details of the case, of course, but, if you’ve got a good case and have investigated the claims properly, for the most part, it is better to fight, even if it’s going to cost you a bomb. If you pay off every employee who brings an unfair or constructive dismissal  claim, it will simply encourage all the other disgruntled troublemakers in your organisation to have a go too.

Although the statutory grievance procedure brought in by the last government has thankfully been repealed, it has left behind a grievance culture in many organisations. Employees who resent organisational change, new working practices or closer supervision, or who simply don’t like their managers, are far more willing to raise formal grievances than they were before 2004. For some, it has become a first rather than a last resort. As one HR director, desperately trying to turn around an ailing organisation, explained to me:

Each time we focus on a new department and try to improve its performance, the grievances start to flood in. If you have been used to coasting along, it’s easier to lob in a grievance than to try to meet the new performance targets.

A former colleague of mine, now a senior HR executive in a large organisation, refers to vexatious grievances as ‘please send money letters’. An employee gets a bit fed up at work, remembers something that happened a few months ago which was a bit unpleasant, then lodges a formal complaint, hoping to be paid off.

The only way I have ever seen managers break these grievance cultures is to investigate each grievance quickly and, where there is no case to answer, throw it out and tell the employee to get back to work. Allowing employees to keep on raising vexatious grievances, or to stop a disciplinary process while you hear a grievance, is madness. Tackle the performance issues and the grievances at the same time. If employees resign and bring constructive dismissal cases, you must be prepared to fight them all the way. At first it may cost you more than simply paying people off but it will send out a clear message: mess us about we will make sure you leave with nothing! Once people get this message the grievances tend to dry up. 

The only way to break a grievance culture is to face down the spurious claims and, if necessary, be prepared to fight them in court. If you opt for a quiet life and pay up, the litigants will just keep coming. That will cost you even more in the end.

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3 Responses to Tribunal cases – should you settle or fight?

  1. Pingback: Tribunal cases – should you settle or fight? - Rick - Member Blogs - HR Blogs - HR Space from Personnel Today and Xpert HR

  2. I quite agree that spurious claims should be resisted, whether that is internally in a grievance or externally in the employment tribunal. The question that that gives rise to, however, is how much resource should be channelled into that?

    £200,000 seems a lot to spend on a constructive dismissal case that just goes as far as the EAT. The facts of the case were complicated – the claimant was alleging ten breaches of mutual trust and confidence – but the issues were not legally complex. I would query why it was necessary for the University to brief a QC for the initial tribunal hearing and if I were running the case from the employer’s side I would want to have kept a very close eye on how many billable hours were being spent on preparation. It could be that the case was overprepared (can’t say for sure without more info) with the need to win overriding any commercial assessment of what was really at stake. I think it is up to employers to control their legal costs in this sort of case and impose limits on how much work their lawyers should do – and at what level – that is proportionate to the risk they are facing. That may involve using an expensive law firm for the complicated stuff and a rather more basic firm for run of the mill cases.

    Of course, to do that the employer needs to know a bit about employment law so they can challenge the advice they are receiving and make appropriate decisions (plug: perhaps some form of training?). Employment law is too important to be left to employment lawyers.

    Similar principles should apply to the handling of grievances. The amount of resource devoted to them should depend on their cogency and seriousness. Trivial or clearly misconceived grievances should be handled swiftly and easily – a prompt meeting and an appeal soon after if need be. Where serious and apparently credible allegations are made then a more detailed investigation and process is justified. This again relies on some expertise and judgement on the part of the managers dealing with the issue. Its all about effective risk management.

  3. “Employment law is too important to be left to employment lawyers.”

    As an employment lawyer I’m sure that’s absolutely right. Darren makes some really sensible points. Lawyers can only deal with the claim in front of them and the instructions of their clients. Yes, some law firms are more aggressive then others and a “Rottweiler” approach to litigation doesn’t always pay dividends.

    I would question the £200,000 figure though. The TES report refers to it as being legal costs but in my view the media get confused over legal costs. I wonder whether the 3200k was actually wholly solicitors’ & counsels’ fees or if it included some quantification of lost management time as well? The moral of the story is that employers should understand the basics of employment law and procedure and take pro-active legal advice before situations deteriorate.

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