The Real Costs to Employers of Defending Employment Tribunal Claims

Many Employers initial reaction to an employee pursing an Employment Tribunal Claim is to want to fight that claim no matter the cost. However, deciding to fight a claim is not just a question of the merits of any defence against that claim. It is also a question of the costs involved and the management of time involved. Employment Tribunals rarely award costs to the winner of any claim. This means that even if an Employer successfully defends the claim pursued by a former employee, they will still have significant costs to bear. Those costs should not just be measured as legal expenses.  The costs involve the management time involved in defending those claims which can often be significant. A recent survey has shown that it can take up to one month of management time to defend an Employment Tribunal.

So how can Employer’s seek, to lessen the risk of being involved is an expensive and time-consuming defence of an Employment Tribunal Claim.

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The Steps to Follow

-Prevention is better than cure. If an Employer is considering dismissing an employee, then it is cost effective to take advice first. Getting it right at the point of dismissal, could ensure that an Employment Tribunal is avoided. This may mean the advice is to reach agreement for commercial reasons because entering into a Settlement Agreement is much more cost effective than legal costs and the management time involved in defending an Employment Tribunal claim.

-If, however, a claim is being pursued by an employee, then again the earlier an Employer takes advice, the better. This can lead to a discussion as to whether it is commercially sensible to settle a claim. Settlement cannot of course, be at any price, but it should be an important consideration. Many Employers initially want to fight the case to a Tribunal, but as that process drags on for up to two years, Employers begin to realise that an early commercial settlement might have been the better option. The balancing act here is of course not to always settle claims and become an easy target for employees. However, it is important that a sensible commercial view is taken at the outset. If, however, a settlement is not achieved, then are their other ways to avoid the significant cost of Employment Tribunals.

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Other Options to Consider

-Defending an Employment Tribunal claim is a lengthy process. One option that could lead to a quicker resolution, and ultimately less cost, is to consider a mediation.

-Mediation in the Employment Tribunal system can either be a Judicial Mediation, which is run by the Employment Tribunal, or the parties agreeing to appoint a Mediator to see if a resolution can be reached.

-A Judicial Mediation requires the agreement of the Employment Tribunal and even if the parties agree that mediation is the way forward, it is only likely to be adopted by the Employment Tribunal where they consider an Employment Tribunal Hearing will take more than two days.

-However, the parties do not have to wait on the Employment Tribunal and can agree between themselves to appoint a Mediator to see if a resolution can be agreed.

-Whether it be a Judicial Mediation or a private mediation, the parties would normally meet for a day and work towards reaching a mediated settlement. If the parties reach a settlement, then that is documented in the form of a Settlement Agreement. A mediation avoids all the costly procedures that have to be followed within an Employment Tribunal.

-If a mediated settlement is not reached, then the parties will continue with the Employment Tribunal process and the fact there has been a mediation would not be referred to in the Employment Tribunal.

Summary

It is probable that in 2026 there will be a significant strengthening of Employment Rights for employees. That is likely to lead to a significant increase in Employment Tribunal claims which shall mean further delay within the system. Employers should look at other ways of dealing with claims as outlined in this article to seek to reach an early resolution at a more cost-effective way. The key takeaway is that Employers should seek advice at an early stage and Fraser Dawbarns Employment Team would be delighted to provide that advice and help Employers to save money and management time.

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To contact a member of our team, you can fill in our online enquiry form, email info@fraserdawbarns.com, or call your nearest office below. If you’d like to speak to a member of our team at one of our offices across Norfolk and Cambridgeshire, visit our offices page.

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This article aims to supply general information, but it is not intended to constitute advice. Every effort is made to ensure that the law referred to is correct at the date of publication and to avoid any statement which may mislead. However, no duty of care is assumed to any person and no liability is accepted for any omission or inaccuracy. Always seek advice specific to your own circumstances. Fraser Dawbarns LLP is always happy to provide such advice.