While the vast majority of employment disputes settle, the Eva Carneiro case (a high-profile spat between a doctor and her ex-employer Chelsea Football Club) is a good example of how not to publicly settle such a case.
While Carneiro and Chelsea FC mostly avoided the full details and very public gaze of a tribunal (Carneiro settled with a generous figure of up to £5 million, according to media reports), the case highlights the risks of fighting employment disputes all the way to court, which can do more harm than good to an employer.
Contesting a dispute with an employee in a tribunal is often described as a lottery. The outcome can be so hard to predict and be swung by any number of factors. For example, even the strongest of cases can quickly disintegrate because of the poor performance of a witness on the day of testimony. Likewise, the tribunal panel of adjudicators consists of only one legally-qualified member – the chairman – and two wing members. So the panel may be easily influenced by non-legal issues or be swayed by their own sympathies and perspectives.
There is also no loser-pays-costs rule for employment disputes so even if an employer is found not to have acted unlawfully they will usually still be stuck with a large legal bill. Given the cap on potential awards for certain claims, legal fees may dwarf any award of damages or a settlement.
It is not just financial expense. The greater cost is frequently to public image. Tribunal hearings are (save for exceptional cases) conducted in public so the reputational winner may not be the same party as the victor. The press and the public do not wait for the legal verdict. The pictures, headlines and allegations make much better copy. Accusations such as discrimination, even if eventually proved untrue, are not always quickly dismissed in the court of public opinion.
Lengthy employment disputes also waste management time. It is crucial not to underestimate the impact on the business of the loss of senior management spending days in tribunal, not to mention the preparation time.
The good news is that, Carneiro aside, settlement offers usually do not get played out in the tribunal or the press. They are made on a without prejudice basis and confidential between the parties and possibly ACAS; the tribunal panel is unaware of the details.
If settlement does occur there is a time and a way of doing it. Frequently it is done before the barrister’s brief fee (often five figures) is incurred, and for a high-profile claimant or defendant certainly before the press gets hold of the tribunal listing. If mandatory conciliation has failed, arguably the best time to try to re-open a settlement dialogue is before the real meat of the legal expenses is incurred; pre-discovery or pre-witness statements being prepared.
Sometimes an employer has to fight. If a business needs to take a stand on a point of principle then settlement offers should never be made on commercial grounds. Alternatively, sometimes employers need to disrupt the culture of an organisation that has fallen into the norm of 'lazy settlement' – employees all 'take a pop' on the way out and a culture develops of employers frequently paying out relatively small nuisance sums. If staff know employers will always roll over and pay cases have to be fought even if they are sometimes lost.
Employers would be well-advised to consider settlement early and often. The risk profile of employers differs widely and settlement needs to work for both parties.
Jules Quinn is a partner at law firm King & Spalding