Defending an employment tribunal claim is never an ideal situation for an employer, but it’s entirely possible that your company could be required to do this at some point, if an employee is looking to resolve a dispute. Expert advice is recommended from an early stage to ensure any financial and reputational damage to your business is minimised.
Here we’ll be covering:
- Common types of employment tribunal claims
- Avoiding employment tribunals: conciliation before a hearing
- Responding to an employment tribunal claim
- The employment tribunal process for employers
- Calling witnesses
- Time limits on employment tribunal claims and responses
- Losing at an employment tribunal
- Winning at an employment tribunal
- Is it worth getting employment tribunal insurance?
- What if your business becomes insolvent?
Common types of employment tribunal claims
There are several employment claims that an employee might be able to bring, depending on their individual facts and circumstances. Below are some of the more common claims:
- Unfair dismissal – an employee would be successful in this type of claim if they were not dismissed for a fair reason (capability or qualifications, conduct, redundancy, breach of a statutory duty or restriction and “some other substantial reason”) and/or the employer has acted unfairly in dismissing on the basis of that reason. In order to bring an unfair dismissal claim, an employee will need to have worked for an employer for a continuous period of at least two years, except for in rare circumstances such as for automatic unfair dismissal (for example, dismissal because of whistleblowing by the employee).
- Breach of contract – where an employee claims that one or more of the terms of their employment contract (whether written or verbal, express or implied) has been breached by the employer.
- Wrongful dismissal – where an employee is claiming that the manner of their dismissal was in breach of the terms of their contract of employment. The employee will be successful in claiming damages if the employer, in dismissing them, breached the contract causing the employee to suffer loss. For example, if an employer has not given the correct notice to terminate an employee’s contract of employment (either serving that notice or by way of a payment in lieu), this could give rise to a successful wrongful dismissal claim.
- Discrimination – This could be a claim by an employee relating to any of the protected characteristics (disability, age, race, marriage and civil partnership, religion or belief, sex, pregnancy or maternity, gender reassignment, sexual orientation). It can be direct discrimination, indirect discrimination, harassment, victimisation or instructing, causing, inducing and knowingly helping to discriminate on any of those protected characteristics.
Avoiding employment tribunals: conciliation before a hearing
If grievances, appeals, mediation and settlement discussions have not been successful or are not helpful in the circumstances, before an employee is able to bring an employment tribunal claim they must complete an ACAS Early Conciliation (EC) form. ACAS will then contact both parties to establish if they are prepared to engage with the conciliation process to try to settle the outstanding claims. The EC process can last up to six weeks, and the ACAS EC form must be completed in most cases before a claim form to the employment tribunal can be submitted, as an employee will need the number on their ACAS EC Certificate to complete the ET1 claim form for the employment tribunal. If the discussions lead to an agreed settlement, this will be recorded in a written COT3 agreement signed by the claimant and on behalf of your business. If either the employer or the employee does not want to engage in settlement discussions or cannot be contacted, then an ACAS EC certificate will be sent to the employee so that they can commence employment tribunal proceedings, if they wish. ACAS EC pauses the time limit for a claim being submitted, allowing the opportunity to resolve issues without recourse to an employment tribunal in some cases.
Responding to an employment tribunal claim
Once an Employment Tribunal receives an ET1 claim form from your claimant employee, as the respondent employer, your business will be given the opportunity to respond. It is critical that somebody with experience responds thoroughly to all the allegations being made, referring to all of the legal issues involved with as much consistent factual detail as possible and that that person responds on behalf of the business, on time. If the employee has made a breach of contract claim, you may be able to bring an employer’s contract claim, and this should be included in the ET3 response. You may wish to seek legal advice in managing the response and you should do this as soon as you are able after the ET1 is received, to give your legal adviser the maximum amount of time to prepare and to assist you with collecting all your evidence.
There should be a procedure in place when an ET1 is received so that it is handled by the correct people and so that the ET3 response to the claim arrives by the deadline. This means that the ET3 form must be received by the tribunal office, either by post or online within 28 days of the date it was sent out, otherwise without a specific extension granted by a judge, the response will not be accepted and judgment may be given against the employer.
Before completing the ET3 response, here are some things you might want to consider:
- Has the employee contacted ACAS and been through the Early Conciliation process before making an Employment Tribunal claim, as discussed above? If not, was this required?
- If a detailed risk assessment of the claim has not been carried out during the Early Conciliation process, the strength of the employee’s claim and strengths and weaknesses of the business’ defence should be considered at an early stage after receipt of the ET1 claim form. This will include looking at settlement from a commercial perspective, as this may be cheaper than defending a claim to final hearing and taking the risk of litigation.
- Has the employee brought their claims in time? Again, you may wish to seek legal advice from one of our experts on this point, but many employment claims have a strict 3-month time limit, which is rarely extended and if they are out of time. It may be that you or your legal representative can apply for the claimant’s claim to be struck out for being out of time, in part or in full.
- Does the employee satisfy the requirements for the specific claims they are bringing? For example, do they have two years or more of continuous service to bring an unfair dismissal claim?
- Are the claims which have been brought within the tribunal's jurisdiction? For example, claims for breach of contract claims exceeding £25,000 would have to be pursued in the courts and not the employment tribunal and if the claimant is not based in this country, this may need to be dealt with cross-border.
The employment tribunal process for employers
|Pre-hearing/preliminary hearing||A preliminary hearing may be required to clarify the issues to be resolved, whether whole or part of a claim should be dismissed, or whether a deposit should be paid and if so, how much. It may also be used to decide on orders which may need to be made about documents and witnesses and the date, time and length of the final hearing. |
You may have been ordered by the tribunal to exchange documents with the claimant employee, but even if you have not you must make sure that the other side has reasonable notice (at least seven days) of any documents which you plan to use at the hearing to support your case. If you are relying on any documents, including witness statements you should bring these and copies for the other side and tribunal to the final hearing.
As a respondent you should prepare to give evidence at the hearing about why it would not be possible to reinstate the claimant, if you do not believe it would be, especially if the claimant has already indicated that they are seeking re-engagement or reinstatement as a remedy. You should also be prepared to state what you consider to be appropriate compensation and how that sum has been calculated. If the claimant was a member of a pension scheme, you must bring information relating to whether the scheme was a defined contributions or a final-salary scheme and if it was a final-salary scheme, the value of the deferred pension, retirement age under the scheme and the amount of the employer’s contribution to the scheme. If you do not give the tribunal the necessary information, a further hearing may be needed which could lead to an order for costs being made against you.
|The final hearing||This is where a decision on the whole claim will be made, including whether the claim is successful and, if it were, what the remedy would be. A final hearing can be by way of a full tribunal including an Employment Judge and two lay members or by an Employment Judge sitting alone, depending on the type of claim. It may be that even if you have represented yourself up until this point, that you may wish to have a lawyer assist with a final hearing. |
On the day of the final hearing when you arrive at the tribunal, a clerk will ask about your witnesses and discuss any document queries with you. Usually, in an unfair dismissal case the respondent employer will give evidence and call any witnesses first, while in a discrimination case the claimant will normally be first to give evidence followed by any witnesses, but there is no absolute rule on this.
Once all the evidence has been heard, both sides can sum up before the tribunal retires to consider their judgment. Unless the tribunal ‘reserves’ its judgment, the Employment Judge will announce the judgment and the reasons for it at the end of the hearing. If the judgment is reserved you will receive it, and the reasons for it, in writing at a later date. This may happen in complicated cases or if there is not enough time on the day of the hearing to announce the judgment. The tribunal will normally expect to deal with compensation issues at the same hearing.
|After the hearing||You will usually be provided with a copy of the tribunal’s judgment on the day of the hearing, otherwise, you or your representative will be sent a copy of the written judgment as soon as possible after the hearing. Written reasons for the judgment will also be given if you ask for them at the hearing or make a written request within 14 days from the date that the judgment was sent to you. The Employment Tribunal judgment is legally binding. |
The unsuccessful party then has the option to accept the tribunal’s decision, challenge the tribunal’s findings by either requesting that the tribunal reconsider its decision within 14 days of being sent the judgment (if they believe it necessary or in the interests of justice) or by appealing to the Employment Appeal Tribunal (EAT). The appeal needs to be submitted to the EAT within 42 days from the date the tribunal’s written reasons were sent to the parties. An appeal to the EAT can only be made if the unsuccessful party believes that the tribunal has made an error of law (for example, by getting the law wrong, applying the incorrect law, not following the correct procedure which impacted on the decision, if there was no evidence in support of the decision made or unfair bias towards the successful party can be shown).
You are permitted to bring witnesses to the hearing to give relevant evidence. Generally, a preliminary hearing will be the opportunity to discuss who your witnesses are and how many there are. But even if you have not been told to, it is helpful if you let the tribunal know how many witnesses you plan to bring, in advance of the final hearing.
The tribunal may order parties to produce written witness statements and if they do not you may want to do so anyway. If the parties have been ordered to exchange witness statements, these will stand as the witness’s evidence and in most cases will not be read out in the Tribunal. You or your witnesses can be asked questions by the other side (cross-examined). You or your witnesses can then give further evidence to clarify matters which came up when being asked questions by the other side (‘re-examination’). Finally, the Employment Judge and members may ask some questions which both parties can answer. If a witness has produced a statement, your witnesses should attend the hearing to give that evidence, as the Tribunal will place very little weight on the statement of a witness who is not present. You can request that the tribunal issues a witness order to summon a reluctant witness if the evidence they will give is relevant to your case. To do this you must apply in writing well in advance of the final hearing, providing the contact details of the witness; what the witness will say and how it will help your case; and, if known, why the witness will not attend the hearing voluntarily.
Time limits on employment tribunal claims and responses
It will depend on the specific claim being brought as to when the deadline for bringing an Employment Tribunal claim is. In respect of an unfair dismissal claim, there is a limitation period of three months from the Effective Date of Termination (EDT), which is the last date of the employee’s employment. Any claim should be commenced before the expiry of three months from the EDT and usually long before that the claimant should start the Early Conciliation period with ACAS to see if the matter can be settled without litigation. In respect of discrimination, the time limit is three months from the date of the act complained of or the date of the last act complained of if there are a series of linked complaints. A breach of contract claim can be brought in a civil court up to six years after the breach complained of. If you have any specific questions about limitation periods you should seek professional legal advice from an expert employment solicitor.
Losing at an employment tribunal
If you lose a case at an employment tribunal you could be ordered by the tribunal to reinstate the claimant in their previous role, pay the employee compensation, pay damages or loss of earnings and/or pay costs or expenses. You may also need to pay back any benefits the claimant received whilst bringing their claim to tribunal. If this is the case the tribunal and the Compensation Recovery Unit will tell you how much to pay and how. If you do not follow the court order you can be publicly ‘named and shamed’ and brought to court for enforcement action to be taken. If it is not possible to reinstate an employee, it is advisable to make the employment tribunal aware of this at an early stage, particularly if you are aware that this is a remedy being sought by the claimant.
Winning at an employment tribunal
As a respondent, in most cases, you will not be awarded compensation if you win at tribunal. It is possible however, if the claimant acted unreasonably or had no reasonable prospects of succeeding in their claim, that you can apply to the tribunal to be awarded costs. Cost orders in favour of respondents are more common than they once were. If you are preparing a press release or similar announcement you may wish to hold this off until you know whether a claimant is looking to appeal the decision.
Is it worth getting employment tribunal insurance?
Like with all insurances, whether employment tribunal insurance is worthwhile will depend on your business’ particular exposure to the risk of claims and the amount of such claims versus the cost of premiums. Whilst it may be easy for you to assess certain risks in your business and what needs to be insured in terms of stock or even key individuals, it may not be as easy to quantify the risk and potential costs of any future employment tribunal claims.
Whether you decide that this type of insurance is worthwhile will be entirely up to you. But if your business has been well advised from an early stage on any employment issues and has well drafted employment policies and procedures which are followed by well-trained staff, there is a significantly lower risk of losing an employment tribunal claim. Further, you can look at seeking legal advice to minimise any damage and settle claims by way of a settlement agreement. Even if a claim is brought and your business loses and must make a compensation payment, the median award is under £15,000 in discrimination cases and around half that in unfair dismissal cases, and so the costs may not be as high as you anticipate. If you need any advice on how to best reduce the chances of employment claims being brought against your business, our specialist employment solicitors can help.
There is a range of tribunal indemnity insurance available, including insurance against all legal and compensation costs arising from a tribunal claim, just legal costs in respect of claims or nothing at all because your business breaks the rules. A pitfall of this type of insurance, like with many others, is that all your costs are unlikely to be covered, as management time in preparing witness statements, will not be covered by insurance, and depending on the level of insurance you have opted for and depending on how many clauses in the tribunal indemnity insurance allow for the insurer to avoid paying out, none of the costs may be covered. The risk with tribunal indemnity insurance can sometimes be that an employer genuinely believes that they are covered, only to find that the insurance company will not pay out.
Sometimes insurance is offered as part of a wider set up involving your business’ human resources service, and if the employer doesn’t consult the service provider and follow the advice given, the insurance will be invalidated. This can mean that the human resources service provider is terrified of invalidating the insurance and so does not give definite advice. So, whilst employment tribunal insurance can offer peace of mind, ensuring that your business has strong and compliant employment policies and sticks to them is arguably preferable.
What if your business becomes insolvent?
If your business becomes insolvent and the official receiver, liquidator or trustee, receives notification of proceedings being brought against that business in an Employment Tribunal by an employee, the Tribunal and the claimant should be informed of the insolvency proceedings and reminded that proceedings may not be brought or continued without the leave of the bankruptcy court.
Some claims, such as unfair dismissal, could result in payment being made from the National Insurance Fund if successful. In those cases, the official receiver should not object to that claim proceeding if no order is made against the property of your insolvent business or the official receiver personally, and should write to all parties advising of this.