From 6th April 2017 the limit on unfair dismissal compensation payable increases from the lower of a year’s gross salary or £80,541. These are upper limits of course, but what do tribunals actually pay, and when should employers decide to fight vs settle a case? Our article looks at the average awards by category and provides an analysis of when to fight, when to settle.
Our article on new compensation limits revealed that from 6th April 2017 the limit on unfair dismissal compensation payable increases from the lower of a year’s gross salary or £80,541.
Big numbers potentially, but what actually do tribunals award, and what do employers have to be aware of when contemplating whether or not to fight an employment tribunal claim? Figures from 2015 – 2016 show that were 83,000 claims in total (up from 61,000 the previous year but down from the pre-fees heyday when 200,000 odd claims were the norm) and of these:
Unfair dismissal claims paid on average £7,332 (using the median, or most common award)
Race discrimination was £13,706
Sex discrimination was £13,500
Disability discrimination was £11,309
Religious discrimination was £16,174
Sexual orientation discrimination was £20,192
Age discrimination was £8,417
Awards are impacted by a range of circumstances including the service of the employee, the likelihood of their finding another job, injury to feelings, the employee’s actual loss and of course the extent of the employer’s wrongdoing.
Fighting a tribunal case you think you’re going to lose would seem rather silly, but there are considerations too even for cases you think you might win, particularly if they are not cast iron. Before deciding to fight a tribunal it is important to consider the award that might be made if you were to lose Vs the cost of defending a claim.
The cost of defending a claim can be considerable. If you happen to be a myHRdept retained customer it will be less in monetary terms, but will still eat a considerable amount of time – not just on tribunal day, but on the preparation for it. At myHRdept we will typically hire a barrister to represent clients at £1,500 – £3,000 per day – some cases (e.g. discrimination) can be listed for 5 days. In addition to barrister fees, if you need to use an employment solicitor to prepare your tribunal case (i.e. if you don’t have access to a service like myHRDept) then this can easily add £10 – £15K to your barrister costs. Not insubstantial then, and remember that even you win, you might not get the costs back.
Although it might stick in an employer’s throat, it is sometimes sensible to consider an economic settlement. If for example we assess an award at an estimated £10K and the case is 50:50, a settlement of £5K to avoid extensive legal fees would seem prudent, not to mention time economical. Further the employee will probably be using a no-win no fee lawyer and so may expect to lose a third of their award, or if they have a charging solicitor the entire lot might get swallowed up in fees, and so starting with a settlement offer in the £3k territory with a worked explanation might just do the trick. Here £3 – £5K in the context of days of time and unrecoverable lawyer/barrister fees (even if you should win) does seem an attractive option, if only on economic grounds.
Some employers will of course want to fight on principle. Principles can be expensive, and tribunals can make some very odd decisions.
If you’re thinking of outsourcing your HR why not contact myhrdept.co.uk. With full service Premium Plus packages from only £120 per month (and start-up packages from just £70 per month) from and fixed price HR support options available for one-off issues, we believe we offer the best combination of quality and price available in the UK. Call us on 01628 820515 to discuss your requirements or email us and we’ll call you back.