Category Archives: employment law

Costs in the Employment Tribunal

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Employment Tribunal

The rules in relation to costs and cases in the Employment Tribunal are different to the rules in the Courts as laid down by the Civil Procedure Rules 1998.

The Employment Tribunal rules are governed, inter alia, by the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004. The general principles are that costs are not recoverable by either side.

There are exceptions to this rule. Under Rule 14(1) the Employment Tribunal has powers to award costs if a party, or his/her representative, has acted vexatiously, abusively, disruptively or otherwise unreasonably, or the bringing or conducting of the proceedings by a party has been misconceived.

This means that a party bringing proceedings needs to think carefully about the merits of their case, and the way they conduct proceedings during the case. If for example, they consistently miss Tribunal deadlines or withdraw the case at a late stage without good reason then there is a good chance that the other side will make an application for costs against them.

 Employers defending cases should also think carefully about whether they can make an application for costs at the end of a case. The Barrister will ultimately present this argument to the Employment Tribunal on the grounds of unreasonable conduct by the Claimant.

The Employment Tribunal also has a discretion to request that a party asking for a postponement or adjournment pay any costs cause by that adjournment.

The Employment Tribunal has the power to award costs to either side up to a maximum of £10,000.

Both sides need to consider how they conduct the case. If the case if frivolous or they act disruptively or abusively the Employment Tribunal will not take kindly to this and there is the risk of a costs award.

So whilst generally speaking costs awards are unusual, both sides need to understand the risks involved if they do not conduct their cases properly.

The other issue that both sides need to consider is funding. There can be significant expense in bringing a case to the Employment Tribunal. One point to bear in mind is that ACAS will get involved with cases on an early basis and attempt to conciliate/instigate settlement between the parties, thus avoiding the full expense of proceeding the a full Tribunal hearing. The parties will need to pay for a Solicitor to prepare the case up to hearing and a Barrister to present the case at the Employment Tribunal.

Employers should consider whether they wish to make a settlement offer, even on a commercial basis, at the start of proceedings. They should also consider whether they have insurance cover in place to cover the legal costs associated with defending a claims as well as the costs of any award made by the Employment Tribunal.

Employees should think carefully about how they will fund a case to the Employment Tribunal. They should review any legal expense insurance policies that they have. It is sometimes the case that home insurance policies provide legal expense insurance cover. This often relates to employment fees, with the standard position being that they will provide funding once the case is issued with the Employment Tribunal. Funding will be dependant upon a Solicitor agreeing to their terms and conditions. The Solicitor will need to provide the provider with regular updates and review any settlement offers. Generally speaking a legal expense insurance provider will only fund a case with a +55% chance of success.

Claimants should bear in mind that once an award is obtained it will then need to be enforced against a company. They should consider carefully the solvency of that company and their ability to meet the judgment. There is nothing to be gained by succeeding in a claim against an insolvent company who will then not be able to meet the judgment against them.

It is important that all parties consider the commercial aspects of bringing a claim, or defending a claim, in the Employment Tribunal from an early stage. Advise should be sought and you will need to balance the costs and risks involved. A case will take some time to be resolved and long term financing must be resolved at the beginning. Failure to do so will jeopardise the case both from a Claimants point of view and a Respondent. A defence or claim cannot be managed properly without correct funding in place.

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Redundancy quick guide

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Redundancy Procedure

Legal background

The Employment Relations Act of 1996 defines redundancy as a dismissal due to the employer ceasing to carry on the business for the purposes of which the employee was employed or if the employer is ceasing to carry out the business in the place where the employee was employed. This technical definition is narrow, in fact redundancies also cover a lot of other situations.

 

Fair or unfair dismissal

 

In theory dismissals by redundancy are fair however it will usually be up to the Tribunal to decide whether the employer has acted reasonably and whether the redundancy was  within a range of reasonable actions available to the employer. In this area, procedural fairness, being seen to have carefully and objectively considered all options, is paramount for employers. Everything should be docvumented to show a genuine consultancy exercise hjas taken place with employees.to dismiss the employee.

 

The Employment Relations Act 1996 laid out statutory redundancy pay and a formula for how this is to be worked out. Half a weeks pay is awarded for each year worked between an employee’s 18th and 22nd birthday, one weeks pay is awarded for each year worked between 22nd and 41st birthday and one and a half’s week pay is awarded for each year worked after 41st birthday. In working out this formula, only the most recent 20 years are to be taken into account. If an employee is to receive contractual redundancy pay, this will be in conjunction with their statutory redundancy award.

 

For an employee to be considered for redundancy pay they must have at least two years continuous employment.. The statutory maximum amount of pay that will be awarded to an employee is £400 per week. If an employer is wishing to encourage voluntary redundancies they may take the step of offering more than £400 in order to incentivise some of the volunteers.

 

An employees’ service before their 18th birthday will not count towards any awards for redundancy, the same is in effect for any periods of work an employee carries out over the age of 65.

 

Employer good practice

 

In order to reduce the risk of having an action of unfair dismissal brought against the employer, it may be wise for the employer to identify a pool of people to include in  the redundancy process. However, when doing so it is pertinent to ensure that the pool of people were selected fairly otherwise the employer risks the dismissals being seen as unfair. It is not advisable to simply rely on length of an employee’s service as the sole criteria for the pool of people for many reasons including the fact that that older people may have been employed by the company for the longest and therefore it could be seen as being age discriminatory against younger people.If an employee is offered alternative by the employer or other suitable employment and refuses this he becomes ineligible for statutory redundancy pay. It also works in the alternative such as if an employer has alternative work and fails to offer this to the employee than the redundancy process would be deemed to be unfair and the employee would be entitled to a greater compensatory award.

 

Selection of employees who are employed part-time should also be carefully assessed. Part-time workers are entitled to the same employment rights as full-time workers. Redundancies are a last resort for companies and it is an action which should be taken after all other avenues have been explored by the company. It is not permitted for the company to keep paying overtime or hiring staff elsewhere in the business as the same time as going through a redundancy process.

 

TUPE & Redundancy

 

If an employer is buying another business it is very important that they are aware of the TUPE regulations in relation to the employees of the business that they are buying. If the business is to be bought by an asset purchase, the TUPE regulations will apply. If this is the case the only way for the employer to dismiss an employee would be under an ‘ETO’ exception. An ‘ETO’ exception is an exception on the grounds of an economic, technical or organisational reason. It is advisable for an employer to seek legal advice if they believe that they may have triggered the TUPE regulations.

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