Employers – Burdened by Regulation or Misinformation?

by Charles Millett

The decision by the Supreme Court to deem unlawful the employment tribunal fee system that had been in place since 2013 surprised most, if not all of us.  

It has triggered a rush of publicity from either side of the argument.  Pick up your local paper and you might find a half page advert from a law firm telling you that “Access to Justice for Employees is Restored”.  Read blogs from business advisers and business-friendly organisations and you would be forgiven for thinking an army of P45 chasing lawyers is about to spring up from the dark side and choke the tribunal system with hopeless claims.  I have even seen reference to “bogus Claimants”, a concept I am still struggling to fathom unless it is being suggested that phantoms have also now attained access to justice too. 

Whilst some comments have been made with genuine analytical regard, other comments might best be described as the would-be polemic ramblings of the woefully uninformed.

Perhaps it is time a balanced view was offered to employers and employees alike.  Roughly half of my workload consists of advising employers on how to comply with employment law in a way that minimises the risk of claims against them whilst allowing them to operate their staffing in a way that is appropriate for their business.  An annual retainer for such advice costs surprisingly less than those who portray solicitors as money-grabbers might imagine.  And before anybody thinks this is an advertising ploy for Morecrofts HR & Business – we are by no means unique in the industry in respect of offering retainers based on that model.  

But what if the employee now puts in a claim even if there is no merit?  The employer will still have to pay up to settle it because it will cost them more to fight it, surely?  Well, to start with, it won’t if the employer has insured against the risk of being taken to tribunal.  Such insurance policies can be as little as £300 a year for the smallest businesses.  

The next question to consider is why exactly would a Claimant’s solicitor take on a hopeless employment case on a no win - no fee basis?  After all, at best they can only recover 35% of what their client receives under a settlement or an award.  This is because of the rules governing damages based agreements (no win - no fee agreements) in employment tribunals.  In a case that settles for £2,000 for example, the most the solicitor can recover is £700, which when VAT is taken into account is £583.33 + VAT.  When you take into account how many hours go into analysing, preparing and then running a tribunal case from the day you first see the client potentially to the end of the hearing, the solicitor is hardly going to thrive on such pickings, are they? 

The other half of my caseload includes assisting employees with settlement agreements or with pursuing employment claims.  Given what I have explained above, why would we take on a claim that had no merit?  We wouldn’t.  Why would other solicitors do so?  Well they wouldn’t if they wanted to make any profit whatsoever. 

This leads me to where I see the situation now.  Until a case has been analysed properly by a competent legal adviser, be they a solicitor or other suitably capable individual, it is difficult to know whether the case has genuine merit.  Even then it will depend on the evidence, both in document form and in witness form.  This is why we have tribunals – to hear the evidence and decide whether the claim should succeed or fail.  

There already exists a process for analysing if a claim is misconceived.  Tribunals can order costs against a Claimant who is found to have brought a misconceived claim.  They can alternatively order the Claimant to pay a deposit at an earlier stage if the claim seems weak.  I have seen no mention of this in the stories put out this week by business advisers.  

There is equally no doubt that a small business owner could handle a process properly and yet still find themselves out of pocket when having to defend a claim.  Unfortunately, this is one of the hazards of employing people.  This is not to sound unsympathetic – on the contrary, as a business owner myself, I can empathise fully.   Yet for the reasons explained above, the risk does not have to be so great if the employer avails themselves of affordable protection from those best placed to provide it.  

So are we at threat from ambulance chasers?  As one knowledgeable commentator on the subject noted earlier in the week, I have never seen an employment lawyer pursuing an ambulance.