Unrealistic Claimants – A Better Way?

There are few scenarios that are more frustrating for a business than dealing with an employee or former employee who has an inflated view of the value of his/her claim. Sometimes the employer knows it hasn’t covered itself in glory and is fully prepared to settle for an appropriate amount. In other cases, the claim has no merit – the business would prefer to settle on the basis that it will be more cost effective than fighting the claim, but not for the exorbitant sums demanded by the claimant. In either scenario, the individual often refuses to accept that, even if he/she wins the claim, the damages awarded will be far lower than he/she is demanding to settle.

Unfortunately, the Employment Tribunal process does not usually help to manage the individual’s expectations, leaving the employer with limited options:

a)     Try to resolve the dispute through ACAS during the early conciliation phase.

b)     Try to mediate the dispute either through the Employment Tribunal’s mediation service or through a private mediator.

Even if these avenues do result in a settlement (they often fail, especially at the early conciliation phase), the employer will typically have to, as a minimum, go to the time and expense of preparing a defence to the claim and attending a preliminary hearing. Often, settlement discussions do not become meaningful until after disclosure, which can be the most expensive aspect of the litigation.

What if there were a better way? We think there might be and it would work like this:

1. Following submission of a claim, the first stage in the Employment Tribunal procedure (before even the filing of a defence by the employer) would be an initial quantum hearing.

2. For that hearing, each side would submit written arguments about the potential value of the claim. This could include, for example, evidence about the job market for the employee’s role, which is relevant to how long it would take the individual to find a new job.

3. The judge would consider those arguments and provide an opinion on what he/she thinks is the maximum value of the claim(s) were the individual to succeed.

4. The employer can then choose whether settlement at that value is preferable to defending the claim. In some cases, the employer may want to defend the claim on principle grounds or because it thinks it will successfully defend the claim and that will result in a better outcome than paying the maximum value determined by the judge.

5. If the employer were to make a settlement offer at that maximum amount, the individual could either be compelled to accept it or, alternatively, be required to pay the employer’s legal fees if he/she refuses the offer and does not recover a larger award at the conclusion of the litigation.

This procedure would enable the Employment Tribunal, at an early stage, to make clear to the individual what the realistic value of his/her claim is and give businesses the chance to settle claims at a realistic level if desired.

The individual would not be prejudiced – if the case is settled for what the judge considers is the maximum realistic value of the claim, he/she will have been fairly compensated and received that compensation more quickly compared to fighting the claim.

In some complex cases, in particular those involving disability where detailed medical evidence is required in relation to how long an employee will be unable to work, this process would not be suitable, but it should assist in the vast majority of cases.

Just a thought…