Employment tribunals: cheaper for employers to settle?
13 Aug 12
Employers are choosing to settle employee disputes out of court in order to save legal costs, a law expert has suggested.
The claims come from employment law specialist Dan Peyton, who said it was often cheaper for employers to settle tribunal cases out of court, despite good odds of making a successful defence when pursued through the judicial system.
It follows figures from the Ministry of Justice (MoJ) that revealed in the first quarter of 2012 employers won the majority of cases pursued to court, with cases being struck out or successfully defended.
Only 13 per cent of claims processed by employment tribunals were successful for the claimant.
Around 28,600 disposals were made between January and March this year, an 18 per cent drop on the previous year. The fall came in both single and multiple cases - multiple claims are where two or more people bring cases against a single employer, or are claiming under very similar circumstances, and are processed together - with a drop by 6 per cent and 28 per cent respectively.
Peyton suggested it was 'safe to say' lawyers were dealing with far more settlements than presented to the employment tribunal in the past year. The Magistrates court says it received 186,300 employment cases in 2011-12.
Peyton put the figure for employers facing employment disputes closer to 500,000 a year.
He explained that employers were choosing to pay off claimants because costs are 'rarely awarded against unsuccessful claimants.'
"Instead the basis of the tribunal costs regime is that, normally each party bears its own legal costs whether they win or lose."
This meant that it was usually cheaper for employers to pay employees off than defend a tribunal claim, even if they expected to win, he added.