When is it appropriate to settle an employment tribunal claim?

There are times when an employer needs to, and should, take a stand when facing a claim in the employment tribunal and there are times when it makes commercial sense to settle.

A long-standing manufacturing client of the firm sought our advice when a former employee began unfair dismissal proedings in the Employment Tribunal. The employee had been made redundant.

The employee alleged that his scoring in the redundancy process had been unfair. He had scored the lowest in his pool due to a written warning he had been given a few months earlier. The warning had been given to him after he ignored management instructions to keep an internal announcement about potential redundancies confidential.  Instead, just hours after the announcement, he told two suppliers about the proposed redundancy exercise, which directly led to concerned enquiries from the suppliers about the financial health of the company.

The company felt that the warning they had given him was justified in the circumstances and that they had carried out a fair redundancy process.

Nick Hobden and Ben Stepney were instructed to strongly defend the claim. A detailed defence, denying all the allegations was submitted on behalf of the company. An application for an early case management hearing to determine the issues in the claim was requested. We also requested that the hearing be listed for 2 days instead of the one that it had initially been allocated for to deal with all the issues appropriately.

Shortly after the employee saw the company’s defence, he put forward an offer to settle his claim for £3,500, despite claiming to have a larger compensation claim for on going loss of earnings.  Given the amount of the offer to settle and the costs of running the matter to a fully contested final hearing even though the company had extremely good prospects of success, it made commercial sense to us and our client to seek to settle the matter for a nominal sum. We disposed of the case for the client for a nuisance value pay-out of £1,500 with no admission of liability. As a result we saved the company considerable management time and expense. The outcome reflects the true position in this case namely that the claim brought against our client had no prospects of success.