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Derbyshire NHS Trust “scandal”: when should an employer give in?

Defending a claim in a tribunal will usually involve significant legal fees and risks irreparable reputation damage, so when should you settle?

A recent employment tribunal decision has placed Derbyshire Healthcare NHS Foundation Trust at the centre of a tabloid frenzy, with headlines proclaiming it cost taxpayers £1.5 million.

The case involved the trust’s former director of workforce and organisation Helen Marks. The employment tribunal found that the trust’s chairman, Alan Baines, pressured Marks to have a sexual relationship with him and, when she rejected his advances, he engineered spurious and unfounded allegations of bullying and harassment against her in an attempt to secure her dismissal. Marks eventually resigned, claiming constructive dismissal. She was found to have been unfairly dismissed and subjected to unlawful discrimination, harassment and victimisation, and was awarded over £800,000 compensation.

Steve Trenchard, the trust’s former chief executive, was found to have assisted Baines in covering the matter up and preventing any proper investigation. He has since resigned, following a seven month suspension and allegedly receiving a £75,000 pay-off.

The weakness of the trust’s defence, the significant legal costs incurred (apparently over £400,000) and the pay-outs involved, have fuelled allegations that the case was grossly mishandled. The acting chairman, Richard Gregory, has since issued a public apology to the community and Marks.

This case acts as a stark reminder of the risks that litigation poses to public and private employers alike. Defending a claim in a tribunal will usually involve significant legal fees and even with legal representation is likely to require the involvement of key employees whose resources would no doubt be better used elsewhere. In addition, employers (and their employees) face the risk of irreparable damage to their reputation.

When to settle and when to fight?

The tribunal is a public forum, open to anyone to attend (the judge may even request witness statements to be made available to the public). And it’s not uncommon to find reporters at a tribunal looking for cases with scandalous details that will make a good headline.

Regrettably, some claimants use the fear of adverse publicity to their advantage, slipping salacious allegations into their claim with a view to improve their negotiating position.

This leaves employers in a difficult position: settle and avoid the tribunal litigation or stand their ground as a matter of principle? This is never an easy decision, and employers will need to consider whether the allegations have any truth, the likely fees, management time and risk (and the associated level of likely compensation).

It’s worth bearing in mind:

  • If an employee raises irrelevant and/or untrue allegations a strike-out application and/or a costs application may be appropriate. However, a hearing is likely to be needed to enable the tribunal to hear the evidence.
  • An alternative is to give the employee a costs warning – i.e. explaining in writing why their conduct is vexatious, abusive, disruptive or unreasonable and warn that if they continue you will pursue them for costs. It is important to word such a warning carefully, and not to be too heavy-handed, particularly where the claimant is unrepresented;
  • If there’s some truth in the allegations, settlement may be attractive. If the employee is being unreasonable, mediation is potentially an alternative way to approach matters. This is a confidential setting and has a good success rate. The legal fees and management time of an early mediation will inevitably be less than proceeding to a full hearing;
  • If settlement is achieved via a settlement agreement or COT3 agreement make sure there are tightly drafted confidentiality provisions, and that payment of the settlement sum is tied to these provisions;
  • If you go to a full hearing, ensure that you adopt the right tactics; too often parties will deny an allegation despite stark evidence to the contrary. Honesty is the best policy, and a witness who holds their hands up and accepts they made a mistake will come across as credible (whereas a claimant who stretches the truth or makes spurious allegations will not).

Understandably employers will not wish to be held hostage to unscrupulous employees, but the right course of action is not always obvious, particularly given the employment dispute can often be emotionally-charged and personal. An objective viewpoint (at an early stage, and hopefully before positions have become entrenched) will be helpful, and employers should be prepared to accept where there have been failings.

Keely Rushmore is associate in the employment team at SA Law