Guidance for employers on the claims process, the tribunal hearing and settlement of claims
COVID-19: The employment tribunal system has evolved during the pandemic and is likely to be changed permanently as a result. The courts and tribunals are using video technology to enable remote hearings so that physical attendance will only be used where needed in the interests of justice. The system was already under strain from the volume of cases and there is now a backlog which is likely to grow with the ending of the furlough scheme on 30 September 2021 and the predicted increase in redundancies.
For more on tribunal procedures, see our factsheet: The role of employment tribunals.
Brexit: The legislation and case law on tribunals procedure is mostly not derived from the EU and, therefore, is not directly affected by Brexit. However, a small minority of employment law cases have raised arguments that the proceedings have been a breach of Article 6 of the European Convention on Human Rights (ECHR), which includes the right to a fair trial. There have been no suggestions so far about taking the UK out of the ECHR, which suggests the Article 6 right may remain.
Tribunal claims are inextricably linked with the procedures employers and employees should follow before disputes reach the tribunal (see our Discipline and grievance procedures Q&As).
Northern Ireland has its own dispute resolution and tribunal system (see our Employment law: key differences between Northern Ireland and Great Britain factsheet).
Most employers and employees will make efforts to resolve disputes in the workplace either by:
- talking to each other directly
- using a private mediator or arbitrator
- using a mediator supplied by Acas (this is different from early conciliation).
Claims may be settled at any time during the tribunal process and a compromise agreement drawn up (see our Settlement and compromise agreement Q&As).
The fees system introduced in 2013 was removed in 2017 when the Supreme Court ruled that its introduction was unlawful in R(Unison) v Lord Chancellor. However, a replacement fees could be introduced in the future and employers should keep the situation under review (see Fees below).
These Q&As should be read in conjunction with our Case law on employment tribunals.
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Acas has a preventative role in workplace disputes.
The Acas Code of practice on disciplinary and grievance procedures has an important role (see also Discipline and grievance procedures Q&As). A failure to follow the Code will not make an employer liable, but tribunals will take this into account and adjust any awards made in relevant cases by up to 25 per cent for the employer’s unreasonable failure to comply with any provision of the code. If it is the employee who has failed to comply, then their award may be reduced by 25 per cent.
Acas provides a helpline service with opening hours from 8.00 am to 8.00 pm Monday to Friday and 9.00 am to 1.00 pm on Saturday.
Before an employment claim reaches the tribunal stage, the employee is required to contact the Acas early conciliation service before issuing proceedings (see below).
Acas role in resolving disputes
Acas’ role in tribunal proceedings can be summarised as:
- early conciliation (see above)
- post-claim conciliation
- binding written settlement agreements
- issuing codes of practice and providing a helpline service.
Acas will try to achieve conciliated settlements both before and after a tribunal claim has been presented. If the early conciliation service does not avert a claim then, once it has been commenced, Acas officers automatically receive copies of the completed claim (ET1) and response (ET3) forms to enable them to contact both parties again with a view to trying to achieve a negotiated settlement and end the need for a tribunal hearing.
A conciliation officer will try to promote a settlement between the parties if the claimant (usually the employee) and respondent (usually the employer) both ask for this assistance. If there is no such request, the conciliation officer will still try to promote settlement if they consider that there is a reasonable prospect of successfully negotiating one. Once a claim is submitted, post-claim conciliation through Acas is still available even if early conciliation has failed.
Acas can play an important role in promoting a settlement, especially when dealing with unrepresented claimants. Anything an employer says to an Acas officer is likely to be repeated to the other side, but it will not be admissible in any tribunal proceedings unless the employer consents to it being admitted.
It is worth noting that in unfair dismissal claims the conciliation officer may seek to promote the reinstatement or re-engagement of the employee by the employer, or an associated employer, on terms the conciliation officer considers equitable. If the employee does not wish to be reinstated, or this is not practicable, a financial settlement can be promoted. The same options for reinstatement or re-engagement apply in early conciliation.
Binding written agreement
Most Acas settlements are concluded by way of a binding written agreement known as a COT3.
If an Acas officer has not been involved in the settlement discussions, they will not simply 'rubber stamp' an agreement which the parties have concluded. Therefore to protect their position organisations should enter into a compromise agreement (renamed ‘settlement agreement’ from summer 2013) with the employee (see Settlement and compromise agreements Q&As).
Employers should be careful when discussing settlement terms with an Acas officer if there are any doubts about whether to accept the terms. This is because a settlement is binding once terms have been agreed with the Acas officer, even if only agreed orally.
If the parties reach a settlement via Acas shortly before the hearing, the Acas officer will normally contact the tribunal to advise it that a settlement has been reached. An automatic dismissal of proceedings should occur where the parties to an Acas settlement have confirmed in writing their understanding that the proceedings covered by the settlement will be dismissed and the claimant has withdrawn the claim.
It is sensible, however, to check with the Acas officer that they will do this, especially if the hearing is fast approaching.
Acas also runs a voluntary arbitration scheme which is a complete alternative to the tribunal process. This provides an alternative, less formal venue for unfair dismissal disputes. It also covers flexible working claims (see Requesting flexible working Q&As).
Alternative dispute resolution
Over recent years, various forms of alternative dispute resolution (ADR) have become widely available in employment and other civil disputes. Wherever possible, tribunals are required to encourage and facilitate the use by the parties of the services of Acas, judicial or other mediation, or other means to resolve their disputes by agreement.
The advantages of ADR include:
- Minimising or avoiding the stress and expense of tribunal proceedings – some forms of ADR are free.
- Speedier solutions, as tribunal cases can take many months and some forms of ADR can be concluded in under a month.
- Lengthy tribunal proceedings can distract senior employees from the workplace.
- A better understanding of the issues can be reached.
- Finding solutions on the parties’ own terms.
- Covering matters that may not be covered in a tribunal judgment, such as references, moves to other departments etc.
- ADR can happen early, before a permanent breakdown of the employment relationship.
- May provide confidentiality (most tribunal hearings are public).
- Voluntary solutions whereby both parties agree to participate in ADR and can change their mind at any time.
The main forms of ADR available for employment disputes include:
- internal workplace mediation
- private mediation or conciliation services
- free Acas pre-claim conciliation
Internal workplace mediation is more commonly used by larger employers for less serious matters where the employment is continuing. It can involve the employer’s own trained in-house mediators, HR departments, an unbiased manager from a different department, or an external specialist mediator.
Commercial private mediation services are also available. In most cases the employer pays for it, although the cost can be split between the parties.
The key points to understand about mediation are that:
- the mediator does not impose their own solution but is trained to assist both parties to reach a mutually acceptable solution
- it’s voluntary, so both the employee and employer must agree to become involved
- it can take place at any stage in a dispute.
The primary difference between mediation and conciliation is that in some conciliation cases, the conciliator plays a more active role in resolving the dispute such as putting forward solutions. In mediation, if no agreement can be reached, the process fails.
Arbitration also involves an independent third party but the arbitrator’s resolution is a legally binding decision. There are very limited grounds for challenging the decision. Usually, appeals can be made only if the arbitrator erred or behaved unreasonably. More information is available from the Chartered Institute of Arbitrators.
Making a claim (ET1)
For a tribunal claim to be accepted, it must be on an approved form (ET1). The form must detail the name and address of the complaining party, the name and address of the respondent employer, and the details of the complaint. If the claim is accepted, a copy will be sent to the respondent employer.
Once an ET1 claim form is presented, the Tribunals Office will notify the employee promptly if the claim is accepted.
Copies of the claim and response forms are available from HM Courts and Tribunals Service.
The employer must send the completed response form (ET3) to the tribunal within 28 days, although employers can ask for an extension to the time limit, otherwise a ‘judgment in default’ can be entered against the employer.
Prior to the COVID-19 pandemic (see Introduction) there were two ways for employers to return a completed response form:
- by fax, by hand or by post to the originating tribunal office
- by completing the form online.
Since the pandemic, claimants are encouraged to present their claim online.
The time for presenting a response begins to run when a copy of the claim is sent to the respondent by the tribunal, not from its receipt.
Time limits for presenting a claim
All tribunal claims must be made within set time limits. If an employee does not comply with these, the employer may succeed in preventing the employee from pursuing the claim.
Note that all the main time limits listed below (apart from wrongful dismissal claims) may attract extensions.
Main time limit for application to tribunal: three months from effective date of termination.
Is an extension possible? Yes, to enable early conciliation or if the employment tribunal is satisfied the ‘not reasonably practicable’ test applies.
Statutory reference: Employment Rights Act 1996, section 94.
Main time limit for application to tribunal: Six months from the relevant date.
Is an extension possible? Yes, to enable early conciliation or if the employment tribunal is satisfied the just and equitable test applies.
Statutory reference: Employment Rights Act 1996, section 135.
Main time limit for application to tribunal: Three months from the last act complained of.
Is an extension possible? Yes, to enable early conciliation or if the employment tribunal is satisfied the just and equitable test applies.
Statutory reference: Equality Act 2010
Main time limit for application to tribunal: Six months after termination.
Is an extension possible? Yes, to enable early conciliation or if the claimant was under a disability and/or if the employment tribunal is satisfied the just and equitable test applies and/or the employer concealed some crucial fact.
Statutory reference: Equal Pay Act 1970.
Main time limit for application to tribunal: Three months from effective date of termination (in the civil courts, the time limit for this claim is six years).
Is an extension possible? Yes, to enable early conciliation or if the employment tribunal is satisfied the not reasonably practicable test applies.
Statutory reference: Employment Tribunals Act 1996, section 3.
Although time limits for presenting claims are strictly enforced, but there may be extensions:
- to enable Acas early conciliation to take place (see above)
- to carry out the ‘not reasonably practicable’ or ‘just and equitable’ tests.
‘Not reasonably practicable’
In cases such as unfair dismissal, the tribunal may allow the claim to be presented after the usual time limit has expired if it is satisfied that it was ‘not reasonably practicable’ for the employee’s complaint to be presented before the end of the three-month period. The employee must show that:
- it was not reasonably practicable to present the claim in time, and
- the claim was eventually presented within a reasonable period.
The tribunal has a wide discretion to decide whether to grant an extension, but examples of cases where time has been extended include where significant postal delays beyond the claimant’s control prevented the claim being presented in time, and where the employee has been seriously ill.
The employer can try persuading the tribunal that it should not extend the time limit.
‘Just and equitable’
Late applications are subject to a different test in discrimination cases. The ‘just and equitable’ test provides the tribunal with even greater discretion than the ‘not reasonably practicable’ test.
Applications for extensions of time are matters of fact and judgment which are decided by tribunals on a case-by-case basis. There is no mandatory checklist for tribunals dealing with time-limit cases and some of the case law decisions are therefore contradictory.
In some serious discrimination cases, claims have been permitted many years after the events giving rise to them. For example, a local government officer brought a race discrimination claim nine years after the discriminatory act complained of. He had been given a lower grade than the job he had applied for but discovered this only when he inspected his personnel file many years later (London Borough of Southwark v Afolabi, 2003).
If organisations mention the time limit for bringing a claim, they should tell the employee the correct time limits or suggest they take advice from a solicitor. However, an extension of time will usually not be allowed by a tribunal where a solicitor representing one of the parties in a tribunal claim is at fault.
Responding to a claim (ET3)
The response form (ET3, available from HM Courts and Tribunals Service) must be completed in a measured, concise and accurate way. It is best to take advice from a solicitor before completing it as employment claims can result in significant awards of compensation.
Once the response form (ET3) has been filed by the employer, the tribunal sends a copy of it to the employee (the claimant).
If an employer is late returning the response form to the employment tribunal, or if the response is not on the approved form, this may result in the tribunal making an order by default (a default judgment). An employer that needs more time should try to either:
- complete the form as fully as possible and submit it within the time limit, but mention that further information is required, or
- obtain an extension of time well in advance.
An employer that does not enter a response in time may not be allowed to defend the employee’s claim. The employer should explain why it is late in writing. The tribunal will decide whether to allow the employer to enter a late response form and whether any costs are involved. Employers can ask for an extension to the 28-day time limit for responding to a claim and seek an extension after that time limit has expired. However, it is safer to simply comply with the time limit in the first place.
It is best to complete the tribunal form as fully and accurately as possible from the outset, but if one of the parties has omitted something important, an application to amend the form may be made to the Employment Judge before the main hearing.
Whether the judge uses their discretion to allow the amendments depends on several factors, including:
- whether there has been any delay in making the application
- why the application was not made earlier
- whether the claim was wrongly formulated
- whether or not there is a new cause of action which is now out of time and, if so, whether the time limit should be extended under the usual rules
- the relative injustice and hardship involved to both parties in refusing or granting an amendment.
Once a hearing has started, the tribunal will usually refuse permission to raise a completely new claim, and a tribunal should not allow a new claim to be added out of time by amending a current claim, unless the criteria for allowing extensions is met.
In July 2013, the government introduced a fees system for bringing an employment tribunal claim: an initial fee for presenting a claim, and a further fee for a hearing to take place. The size of the fee depended on the type and complexity of the claim involved. The fees triggered a dramatic reduction in tribunal claims of between 66-70%.
Tribunal fees were subsequently abolished by a decision from the Supreme Court in R(Unison) v The Lord Chancellor, 2017 and the situation returned to the position that existed prior to July 2013.
A government refund scheme opened on 15 November 2017 for any tribunal fees paid between 2013 and 2017. Although most refund claims were from employees, employers who had a tribunal claim brought against them were also able to claim refunds.
If an employer was ordered by the tribunal to reimburse tribunal fees paid by a claimant employee, then the employer, rather than the employee, could reclaim the fee. As well as being refunded the original fee, employers and employees obtaining refunds were entitled to interest of 0.5% from the date the fees were paid.
Future fee systems
The Supreme Court ruled that the fees regime established in 2013 was unlawful but did not decide that any employment tribunal fees system will be unlawful. This means the government could decide to introduce a new system of fees which is more proportionate and affordable, and which does not have such a deterrent effect on those seeking to enforce their legal rights.
(Extract from Future developments and edited)
Any new tribunal fees legislation would be politically contentious and there would have to be a consultation beforehand to ensure that the fees were not discriminatory and were set at an appropriate level to maintain employees’ access to justice. House of Commons committees looking at the previous fees system in 2016 proposed reducing the level of tribunal fees, removing the distinction between different types of claims when assigning fees, increasing the financial thresholds for fee remission, giving special consideration to maternity and pregnancy discrimination claims, and reviewing the three-month time limit for bringing most claims.
Funding legal costs
In most cases, employers and employees involved in an employment tribunal claim will have to pay their own legal costs, whether they win or lose. The loser will often pay a significant proportion of the winner’s costs and fees in the Employment Appeal Tribunal, Court of Appeal and Supreme Court.
However, in most employment tribunal cases, an employer cannot claim its legal costs. It is, therefore, extremely important to arrange for funding of legal expenses in the most cost-effective way possible. Overall legal costs will depend on the charge-out rate and expertise of your solicitor and the complexity and length of the case.
The whole tribunal procedure, including the hearing, is designed to be used by those representing themselves. However, some cases involve such complex issues of employment law that it is prudent to obtain specialist legal advice.
Employers and employees can represent themselves in an employment tribunal. It is far more common for employees to do this. However, in smaller companies the employer may ask HR (or a member of management) to conduct the hearing to save on legal costs.
The most common way for most employers to conduct claims in an employment tribunal is to pay a firm of solicitors with experience in employment law to deal with matters for them. In complex matters (and for advocacy during the hearing) many solicitors will instruct a barrister. The solicitor’s costs will include time charged for each hour spent on the case and, usually, for expenses and the barrister’s fees (if applicable).
The type of funding arrangement will vary between solicitors and from case-to-case. The solicitors may require payment based on an hourly charge-out rate or offer a form of fee agreement.
Contingency fees and conditional fees
A ‘contingency fee agreement’ is a generic term describing arrangements between solicitors and clients, where payment is linked to the result of the litigation or arbitration. This arrangement would not be allowed in the civil or appeal courts.
Also known as 'no win, no fee' arrangements, under this type of agreement the solicitor charges a base fee plus a ‘success fee’ unrelated to the damages recovered.
A ‘conditional fee agreement’ is an agreement with a solicitor which provides for their fees and expenses to be paid only in certain circumstances – usually only if the client wins the case. Such agreements are permitted only in certain limited circumstances. To enter into a valid conditional fee agreement, strict requirements about notification to the other parties must be complied with.
Steps have been taken to protect employees and employers from unfair fee arrangements. The Damages Based Agreements Regulations 2010 restrict solicitors’ ability to enter into contingency fee agreements (that is, a percentage of the award) in employment claims.
Specifically, the regulations:
- make any damages-based or contingency fee agreement unenforceable, unless it complies with certain specific requirements
- control the costs and expenses payable and set requirements concerning the reasons for setting the fee at the agreed level
- ensure the client is well-informed before the agreement is signed
- make the agreement unenforceable if the formalities are not met, and the solicitor will be unable to recover their percentage
- require the client to be informed about other methods of available funding
- require the client to be informed about reviews of the costs and expenses incurred
- impose a maximum costs percentage (35% of damages, including VAT)
- allow a claimant to terminate the damages-based agreement at any time and limits their costs liability to the reasonable costs actually incurred (at an hourly rate) for work undertaken.
Legal expenses insurance
Some employers and some individuals may have legal expenses insurance. These policies may cover employment claims but great care should be taken to ensure the extent of any such policies.
Employers faced with employment tribunal claims have no access to legal aid or public funding in England and Wales.
A very small number of employees (who must qualify on low income grounds) may have limited public funding for an initial legal consultation. For employment cases in the civil or appeal courts there may again be limited public funding for qualifying individuals. There is also limited legal aid in Scotland.
If employees are a member of a trade union at the time their employment ceased, the trade union may pay for a solicitor. Other organisations, like the Free Representation Unit or the Equality and Human Rights Commission, may help to fund or prepare appropriate cases.
Acas early conciliation
Acas provides a free early conciliation service for those workplace disputes that cannot be resolved internally and are likely to become tribunal claims. The aim is to resolve potential claims at an early stage, before either party incurs the costs associated with issuing proceedings in the tribunal.
Since 2014, Acas early conciliation has been compulsory for those wishing to bring an employment tribunal claim. If a claim is commenced in an employment tribunal, Acas must try to reach an agreement between the parties, thereby settling the claim before it gets to a hearing.
Acas receives copies of tribunal claim forms automatically and contacts the parties to promote settlement. Six weeks is allowed for the early conciliation process. If an Acas officer decides conciliation is not possible or does not achieve settlement within that timeframe, they will issue a certificate and the claim proceeds to the tribunal. The early conciliation certificate confirms to the tribunal that a claimant has complied with the early claim requirements.
The conciliation process stops the clock for lodging a tribunal claim, so the normal time limits do not expire during the conciliation period.
Acas must issue an early conciliation certificate if:
- the Acas conciliation officer concludes that it is not possible to achieve a settlement, or
- the conciliation period ends without agreement.
If an early conciliation certificate is issued, the employee will have at least four weeks from the date of the certificate to lodge a claim, even if the normal time limit would have expired before then. This means that in many cases the ‘new’ time limit for lodging claims will be one month after the date of the certificate.
Acas also provides a mediation service for employers and employees (which is charged for) for parties who have issues to resolve, but which have not yet reached the stage of imminent proceedings.
If the parties cannot find a resolution using such methods, then the employee may present a claim form. The employee will usually only be able to do this if Acas has issued a certificate confirming that the claimant has complied with the early conciliation requirements.
Every case is reviewed on paper initially by an Employment Judge to confirm whether there is an arguable case and defence. This happens once an employer’s response to a claim has been presented.
During this initial sift, the judge checks that the case falls within the tribunal’s jurisdiction and gives case management orders. The judge will identify claims which, for example, are:
- out of time
- weak or with no reasonable prospect of success.
If such claims are identified, the judge will write to the employer or employee to reply by a fixed date setting out the reasons why their claim should not be dismissed. If that party does not respond the claim (or response) will be struck out automatically. If the party does reply, then the Judge will decide whether to hold a preliminary hearing to look into the matter further.
Weak or vexatious claims
Within the employment tribunal rules there is a mechanism for weeding out weak claims or claims by those known as ‘vexatious litigants.’ The following options are considered:
- Mediation or other forms of dispute
- A preliminary hearing may be requested by either party (usually the employer) or the tribunal may decide to hold one, which may result in a hopeless case being thrown out
- A tribunal can make a deposit order as a condition of pursuing a particular allegation or argument. A deposit order may be granted where the employee’s claim or the employer’s defence, or an aspect of it, is relatively weak.
Depending on the type of claim, employees whose claims succeed can expect an employment tribunal to order some or all the following by way of remedy from the respondent employer:
- Compensation – may include an amount for injury to feelings and aggravated damages depending on the claim
- Recommendation – used in discrimination cases, tribunals may recommend that the employer take specified action to remove a source of discrimination or prevent further discrimination
- Reinstatement – restoring a claimant to the same job they were in before dismissal
- Re-engagement – offering the claimant a different job or the same job, but without continuity of service
- An additional compensation award for failure to consider reinstatement/re-engagement
- An equal pay audit
- A declaration as to the rights of the parties
- Financial penalties.
Most claimants seek compensation as a remedy. Tribunals will calculate lost earnings and fringe benefits, past and future and may increase or decrease compensation awards by up to 25% for an unreasonable failure to comply with the Acas Code of practice on disciplinary and grievance procedures.
In discrimination cases, compensation can include injury to feelings and aggravated or exemplary damages. Unlike unfair dismissal, there is no legal limit on the amount of compensation that can be awarded (see our Unfair dismissal Q&As).
The power to recommend actions an employer should take to remedy acts of discrimination or harassment is rarely used. Reinstatement, which puts the employee back in the same job they were dismissed from and revives the original contract as if the dismissal had never happened, is also rarely ordered.
Re-engagement means taking the employee back, but not necessarily in the same job. This remedy is like a new start, as it breaks continuity of service. The employment tribunal must consider the employee’s wishes, as well as whether it is practical for the employer to comply with the order. Employers can’t be forced to comply with re-employment orders so additional compensation of between 26 and 52 weeks’ pay may be ordered instead.
Claimants who know their former employer won’t want them back often threaten to apply for re-employment so as to negotiate larger settlement offers (see our Settlement and compromise agreement Q&As). The employment tribunal can only make a recommendation which directly benefits an individual claimant. In practice, as the claimant has often resigned or been dismissed, no recommendation can be made because future improvements by the employer would not benefit the claimant.
Compensation in equal pay cases can differ from that in other discrimination cases. For example, where an employment tribunal finds that there has been an equal pay breach it will usually order the employer to carry out an equal pay audit (see our Equal pay Q&As).
Employment tribunals have the power to order an employer that has breached a worker’s rights to pay a financial penalty of between £100 and £5,000 where the breach has one or more ‘aggravating features’. This is in addition to any award for compensation which the employer is ordered to pay to a claimant. Money from the financial penalty goes into the government. The penalty is reduced by 50% if it is paid within 21 days. There is also a penalty regime for unpaid employment tribunal awards applicable from April 2016.
Once a discrimination claim has been established, the tribunal will consider compensation based on what is ‘just and equitable.’ Only losses that could be predicted to follow from the discriminatory treatment can be recovered by claimants but there is no cap on the award (unlike in unfair dismissal claims).
Lost wages and benefits
Compensation will be for financial loss incurred between the date of the discriminatory act and the remedies hearing and includes estimates of losses after the hearing. If the discriminatory act was a dismissal, foreseeable ‘losses’ include net wages, overtime, pension contributions, and all contractual benefits. The employee must mitigate their losses by trying to obtain alternative employment.
Injury to feelings
As well as lost wages, most discrimination claims will also include an award for injury to feelings. The effects of the discriminatory treatment on the complainant is used to assess the extent to which the person’s feelings were hurt. The tribunals use guidelines originally set out in Vento v Chief Constable of West Yorkshire Police (2003) and Da’Bell v National Society for the Prevention of Cruelty to Children (2009) containing suggested bands for injury to feelings. New bands for injured feelings in discrimination claims, now known as ‘Vento bands’, are now reviewed annually (see ‘Compensation limits’ on our Statutory rates and compensation limits page).
Complications can arise with injury to feelings compensation if there are two or more forms of discrimination. In the claimant established both race and disability discrimination. The Employment Appeal Tribunal held that if different forms of discrimination arise from the same acts, the injury to feelings may be assessed together. If there were different discriminatory acts, the injury to feelings must be assessed separately. The total figure must be proportionate and not involve double recovery (see Jumard v Clwyd Leisure Ltd, 2008).
Extra compensation and interest
In particularly serious cases, compensation for injury to feelings may also include an added element of extra compensation known as aggravated damages.
Tribunals must consider interest on an award. The Employment Tribunals (Interest on Awards in Discrimination Cases) Regulations 1996 (SI 1996/2803) sets out how such interest will be calculated.
Awards of compensation in discrimination cases can be increased or decreased by up to 25% for non-compliance with the Acas Code on disciplinary and grievance procedures (see Acas Code above).
Three types of costs may occur in tribunal claims:
- Compensation payable to the employee if a claim is successful
- Legal costs payable to solicitors or barristers involved in the case. Usually each party bears its own legal costs
- Possible fines or penalties payable to the government.
In addition, tribunal claims can absorb significant amounts of management time.
The employer will not be able to claim its legal costs in most cases. Each side usually bears its own costs. In unusual cases the tribunal can make:
- costs orders in favour of legally represented parties
- preparation time orders in favour of represented parties, and
- wasted costs orders against either the employer's or employee’s representatives.
Costs may be claimed if, for example, the tribunal considers a claim to be so weak it should not have been brought or – at the extreme end – if an employee is found to have lied on their claim form (see Daleside Nursing Home Ltd v Mathew, 2009). Lying does not automatically justify a costs award, however, especially if the lies are not central to the case (see Yerrakalva v Barnsley Metropolitan Borough Council, 2010).
Usually, a costs order is made only if the receiving party is legally represented and may be awarded if either a claimant or respondent or their representative acted vexatiously, abusively, disruptively or otherwise unreasonably, in bringing or conducting of proceedings or that the proceedings were misconceived. If proceedings were misconceived or conducted unreasonably the tribunal has a wide discretion as to the amount of costs to be awarded. Costs may also be awarded if a party has not complied with a tribunal order or practice direction or is responsible for postponing a hearing.
When considering whether to make a costs order, tribunals will take into account the ability of the paying party to pay (including trade union backing). Deposit orders may be available for claims identified at an early stage as having little prospect of success. These orders require a deposit to be paid by a claimant or respondent, thereby creating a risk of costs if the claim fails.
Although costs orders are rare, tribunals will prevent employers being held to ransom by employees with vexatious or unfounded claims. In extreme cases, the tribunal may make a significant costs order in the employer’s favour (see Khan v Kirklees Metropolitan Borough Council, 2007).
Costs can even be awarded against a solicitor or other representative personally. In one case, Jackson v Cambridgeshire County Council (2011), an initial order for wasted costs of £16,037.04 against the representative was later overturned. The representative was a solicitor specialising in banking law and a cousin of one of the employees. Wasted costs orders will not usually be made against a representative who is acting on a not-for-profit basis such as a relative, trade union representative, Citizens Advice Bureau adviser or representative from voluntary bodies.
An employer can recover costs in respect of time spent by an in-house solicitor (see Ladak v DRC Locums Ltd, 2014).
Fines and penalties
Employers that lose tribunal claims may be ordered to pay a financial penalty on top of any award made to an employee. The penalty – which is payable to the Secretary of State, not to the employee – only apply if the employment tribunal decides that the employer’s breach has 'one or more aggravating features'. These may arise where an employer has overtly discriminated, ignored an employee’s grievance or dismissed the employee with transparent unfairness.
The financial penalties are:
- discretionary, so the employment tribunal can choose to impose a financial penalty or not
- based on the total amount of the award made by the employment tribunal
- calculated as 50% of the total award so that the level of the penalty is proportionate to the award
- subject to a minimum of £100 and a maximum of £5,000
- reduced by 50% if paid within 21 days
- affected by the employer’s ability to pay (in other words, the employers’ financial circumstances are taken into account).
If a non-financial award is made, such as for reinstatement, the employment tribunal can ascribe a monetary value to the award so that an appropriate financial penalty can be made.
One of the practical effects of these penalties is that employers may have to factor in an additional amount when negotiating an appropriate settlement agreement. Although the penalties are not paid to the employee, but to the government, the employee can effectively negotiate with the employer on the basis of the extra costs involved if the case reached the employment tribunal.
Failure to pay tribunal awards
A claimant who has not been paid a settlement sum or tribunal award can ask BEIS to issue a penalty of 50% of the outstanding amount, subject to a minimum of £100 and a maximum of £5,000.
The penalties will be paid to the government and not the employee. A warning notice will be issued by an enforcement officer giving the employer at least 28 days to pay the sums due.
Can secretly recorded evidence be used in a tribunal?
Whether an employer or an employee can use evidence obtained by a secret recording device in employment tribunal proceedings is a complex question governed by many areas of law including the Regulation of Investigatory Powers Act 2000, The Employment Tribunals (Constitution & Rules of Procedure) Regulations 2004 and Article 8 of the European Convention on Human Rights.
Good practice would be to always obtain the consent of both parties to the recording and to sign an agreed transcript.
It is possible for a covert recording to be used as evidence in an employment tribunal hearing, provided it is relevant to the issues, but you should think carefully about the associated risks to privacy, reputation, and wider employee relations.
Must an employer answer an employee’s questions in a discrimination and/or equal pay claim?
An employer should try to answer an employee’s questions.
Employers need to understand how to respond to employees’ questions relating to an actual or prospective claim. Although the former statutory questionnaire procedure was replaced in April 2014 with Acas ’informal’ guidance, the employment tribunal can still draw adverse inferences from an employer’s refusal to respond or evasive answers.
The Acas guidance has a six step question process to help employees establish the facts about conduct which they believe to be discriminatory and a template designed to help employees frame questions.
Step 1 - the questioner sets out his or her name and address and that of the person or organisation and others whom he/she thinks may have discriminated against them.
Step 2 - the questioner must identify which protected characteristics may have been the subject of the unfairness he/she has experienced.
Step 3 - the questioner describes the treatment to which the complaint relates and the circumstances leading up to that treatment, including the date, time, place and number of instances of the treatment.
Step 4 - the questioner needs to specify the type of discrimination that might have occurred.
Step 5 - the questioner sets out why the treatment might be unlawful.
Step 6 - the questioner can ask other appropriate questions about treatment, including statistical information to show how people with this protected characteristic are treated by the employer.
There is a three step process for the responder (usually the employer) to consider:
Step 1 - the responder considers if it agrees, agrees in part or disagrees with the description of the treatment the questioner alleges he/she received. The responder should investigate and then set out its version of the events.
Step 2 - the responder can then explain if it consider the treatment was justified. The Acas guidance sets out some situations which may be objective justification. (Employers should be careful when setting out potential justification as only indirect discrimination and age discrimination claims can use the justification arguments).
Step 3 - the responder then needs to consider and answer each question. If a responder thinks some questions are irrelevant or unclear, it can check the purpose of the question.
If the responder decides not to answer a question, it should explain why.
A timeframe is not given within which employers have to respond. However they should not delay unreasonably in answering. In practice the old eight week time limit is likely to be a helpful indication of an appropriate period.
Acas emphasise that questions about potential discrimination at work should be dealt with seriously and promptly by the employer.
The employer should consider carefully the most appropriate way to respond given the possible implications of any response.
The employer is not under a legal obligation to answer questions. However an employer who refuses to provide appropriate replies may find that the tribunal takes this failure into account when deciding a case. Tribunals can still draw adverse inferences from an employer's refusal to respond or provision of evasive answers.
As employers are not legally required to provide a response unless the tribunal orders them to, some employers may decide to wait to see if the employee pays the non-refundable tribunal fee to commence the claim before responding to the questions. Under the normal tribunal rules of procedure, employees and employers can both raise further and better particulars and ask additional questions and to seek specific disclosure of electronic and paper documents.
The Acas guidance is not as yet a Code of practice. If it becomes a Code rather than guidance, then employers failing to follow it will risk adverse inferences from the employment tribunal. It is likely that larger employers who have greater administrative resources to respond to informal questions will not be looked upon unfavourably if they refuse to respond.
Employees will always need to ask some questions, especially in indirect discrimination cases as they need to show that the employer's provision, criterion or practice (PCP) has a disproportionately adverse impact on them because of their protected characteristic. Statistical information will be needed to establish this, for example, a breakdown of an employer's distribution of employees of a certain age, or race.
Can an employee sue both an employer and a manager together?
Yes. This often happens in discrimination claims where the employee can bring the claim against both the employer and another employee who committed the act of discrimination. In addition to naming the employer in any application to employment tribunal, it is common to name the individual perpetrator and join them as parties to proceedings.
An employment tribunal can order that the employer and the employee who committed the act(s) of discrimination are both liable for compensation, so the employee who committed the discriminatory act can be held personally liable. The whole amount of compensation awarded can be recovered from either the employer or the employee who committed the discriminatory act. This is what is meant by ‘joint and several liability.’
This legal term covers a number of situations where one person is held responsible for the actions of another person. Employers are often liable for the acts of their employees, provided it can be shown that the acts occurred in the course of employment.Employers can only avoid vicarious liability for the acts of their employees if they have taken all reasonable steps to prevent such acts from occurring. Maintaining an anti-discrimination and equal opportunities policy will reduce the risk of being held vicariously liable for any discriminatory acts committed by its employees.