Employment tribunals - the cost to an employer to defend them can be huge. Not only in terms of money, but also potential damage to reputation from the publicity that these cases can bring.
So how do you decide when to settle and when to fight? Areas to consider are:
Time: how much management and legal time and resources are needed? What disruption will this bring?
Cost: Lawyers fees vary enormously so get some quotes to get a feel for the potential cost and outcome.
Sizing the Claim: this may seem like an impossible task but you need to consider the following:
- the chance of success. There will always be the potential for a case to go against an employer. but it is easy to make a good prediction.
- the likely remedy. You need to consider what will happen if the employee wins. How much will they be awarded? For unfair dismissal the maximum compensation is £88,519 (from 6 April 2020). In discrimination cases there is no maximum amount.
- the wider impact a successful claim would have. A case may set a precedent and have an impact across entire industries. The employer needs to take account of whether or not the attempt to settle will prompt further similar claims from other employees.
Reputational damage doesn't rest on the outcome of the case alone. Tribunal judgements are now posted online so can be seen by anyone. Any negative aspect of the case highlighted by the tribunal will be available to anyone.
An employer's first instinct may be to fight a case, rather than settle. As you can see there are various aspects to be considered before making this decision. Exploring the prospect of settling from the outset should always be an option.
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