If a workplace dispute cannot be resolved, employers may be forced to defend a claim before the employment tribunal. By understanding how the tribunal process works, including the steps involved and potential outcomes, employers can assess the most cost-effective way of dealing with an unresolved dispute while managing the employment tribunal costs that come with litigation.
How much are employment tribunal costs?
Under current rules, employees do not have to pay a fee to file an employment tribunal claim, but they do risk being liable for their employer’s cost if they lose.
Employers are responsible for covering a number of costs when defending a tribunal claim. There is a wide range of workplace disputes that could result in a tribunal claim, such as claims for unlawful deduction of wages, unlawful discrimination, or unfair or wrongful dismissal. Since all cases are different, it is difficult to arrive at a typical or ballpark figure to defend an employment tribunal claim. Costs vary, depending on factors such as the nature and circumstances of the claim, the complexity of the case, the volume of documents, number of witnesses and the level of damages sought. Typically, the overall cost will be commensurate with the complexity, size and value of the case.
The costs associated with defending tribunal claims fall broadly into three categories:
Legal fees
For all but the simplest of claims, employers will need to instruct a solicitor or barrister, or both, to help prepare and present their defence. Most tribunal claims can be complex, so employers will typically need suitable legal representation to stand any chance of successfully defending a claim. Except where the claimant has acted unreasonably, or their claim had no reasonable prospects of success, the employer will rarely recover their legal costs. In most cases, each party will bear their own costs, regardless of the outcome.
Damages
If a claim is successful, the tribunal has the power to make a number of different orders, including an order for damages. This is a sum of money that the employer will be required to pay to compensate the claimant for any loss or harm suffered as a result of the employer’s wrongdoing. Tribunal awards can vary, depending on the claim, although compensation can often run into thousands of pounds, sometimes more.
Time
When defending a tribunal claim, even where legally represented, the time involved in preparing any defence can be significant for an employer. This can include collating relevant documentation and liaising with legal advisors, as well as time taken out of the business for staff to give evidence at a hearing, or for a suitable representative of the business to be available to make decisions about the conduct of the defence. On average, tribunal hearings will last no more than 1-3 days, although in complex cases they can run into several weeks.
Additionally, the cost to the employer in defending a tribunal claim isn’t limited to legal fees, damages or time out of the business. The employer must also factor in the potential cost to their business reputation and employer brand. The press and public are usually allowed to attend tribunal hearings, and to listen to the evidence and outcome, where adverse publicity surrounding allegations or findings of employer wrongdoing can be extremely damaging.
What is the process to defend a tribunal claim?
However, even for small and straightforward claims, the cost of defending the claim will start adding up almost straight away and will continue to accrue throughout the course of the proceedings. This is because there are various important procedural steps involved in defending a tribunal claim that must be complied with before the case is heard by the tribunal.
The steps involved in defending a tribunal claim will typically involve:
Filing a defence
Once a claim has been lodged by the claimant using form ET1, the employer will be required to file a defence, using form ET3, within a period of just 28 days. This will need to set out the legal and factual basis upon which the claim is defended. If the employer fails to respond, or is late in filing a defence, default judgment can be entered automatically in the claimant’s favour. Employers can ask the tribunal for an extension of time in writing, although the tribunal will only grant an application where it’s fair to do so.
Dealing with case management orders
The employer will be required to disclose any documentation relevant to the case, even if it helps to support the claim. This can include evidence such as the contract of employment, pay slips, minutes of meetings, internal memos, and emails or correspondence. Both parties will also be ordered to exchange witness statements, providing a written account of any oral evidence to be relied upon. Employers must therefore carefully assess what evidence they will need to defend any claim, and ensure that this is exchanged within the prescribed time limits. The employer will also usually be responsible for preparing any document bundle to be used at a tribunal hearing.
Attending hearings
In complex cases there may be multiple hearings. These can be held in person, by telephone or via video conferencing. Where held in person, this will usually be at the tribunal office closest to where the claimant works, or previously worked. In some cases, a representative of the business need not attend, where the employer can instruct their solicitor or barrister to attend on their behalf. However, where witness evidence is required, typically at a final hearing, the employer will need to have their witnesses present, ideally with someone from their business to liaise with the witnesses and legal representative.
Do employers have to attend tribunal hearings?
Depending on the complexity of a tribunal claim, the employer can expect to attend a number of different hearings, or be required to instruct a legal representative to attend on their behalf. These can include preliminary, liability, remedy and appeal hearings:
Preliminary hearings
A judge will decide whether a claim requires a preliminary hearing having considered the ET1 and ET3. In many cases, the judge will issue standard case management directions, with time limits for compliance although, in complex claims, a preliminary hearing may be deemed necessary prior to any final hearing. This hearing will be used to set a timetable for exchange of statements and documentation. It can also be used to determine specific issues in the case, such as whether elements of the claim should be struck out, or if the claimant is disabled in the context of a discrimination claim. In some cases, it may even be necessary for witnesses to attend to give evidence.
Final hearings
If a claim cannot be resolved, the matter will proceed to a final hearing. Witnesses will be required to attend this hearing, either in person or remotely, unless their evidence is to be given in writing. The tribunal will hear oral evidence from both sides, providing each party with an opportunity to cross-examine any witness. The parties will also be given the chance to make oral submissions, although in complex cases the tribunal may request submissions in writing. The tribunal will go on to consider all the evidence and arguments before making a decision. The parties may be informed of the tribunal’s decision on the day, or this will be provided in writing a few days or weeks after the hearing.
Remedy hearings
If the claimant is successful, the tribunal can make a number of orders depending on the nature of the claim. Examples include ordering the employer to give the claimant their job back or pay them compensation. If complex, the issue of remedies may be adjourned to another hearing. Typically, a remedy hearing will be to discuss the amount of compensation to be paid to the claimant, where the parties will be given directions on how to prepare for the hearing and what additional documentation they will need to provide.
Appeal hearings: either party may ask the tribunal to reconsider its decision, for example, on the basis that a mistake was made in the way it reached its decision or there’s new evidence. An appeal can also be made to the Employment Appeal Tribunal if any party thinks the tribunal made an error in law. In either case, the employer may need to provide written representations and additional documentation. They may also need to attend a hearing, either remotely or in person, or instruct a solicitor or barrister to attend on their behalf.
What compensation can an employer expect to pay?
The compensation that an employer can expect to pay will differ for every type of claim, as well as how much money the claimant has lost because of the employer’s actions. This may be money that the employer owes to the employee under the terms of their employment contract, for example, where the employer has wrongly deducted money from their wages or failed to provide them with the correct notice period on dismissal. It can also include an amount of money to compensate the claimant for being treated unfairly.
In claims for unfair dismissal, compensation is made up of a basic and compensatory award. A basic award is a fixed sum, calculated to a statutory formula using the claimant’s age, length of service and salary. A compensatory award is to compensate the claimant for money they’ve lost as a result of being dismissed, including loss of earnings and loss of statutory rights.
In unfair dismissal claims, when calculating the basic award, there is a prescribed cap on the employee’s weekly pay, plus a limit on the length of service. This means the maximum basic award is limited to £16,320. The compensatory award, in the vast majority of unfair dismissal claims, is also subject to a statutory upper limit. This is currently set at 52 weeks’ gross pay or £89,493, whichever is the lower. However, in claims for unlawful discrimination, there is no such cap. The claimant can also claim for injury to feelings in discrimination cases. In the most serious cases, the upper bracket to compensate for the negative impact of discrimination on an employee’s emotional wellbeing is an additional £27,400 to £45,600.
Can employment tribunal costs be reduced or even avoided?
Even where an employer has a robust defence, the cost of successfully defending a claim can often far outweigh the cost of early settlement, especially where a claim is relatively low-value. Defence costs can quickly escalate, not least where a case is complex, or where the claimant is acting in person, often making the process even more frustrating and time-consuming. This means that settlement may be the most cost-effective option for an employer, notwithstanding the absence, or proof, of any wrongdoing on their part.
By securing expert legal advice at the earliest possible opportunity, employers can consider the best way to approach and, where appropriate, settle a claim. Employers should also be prepared to engage in the ACAS early conciliation procedure, where available, using this chance to explore any potential basis for settlement without the need for legal proceedings.
Employment tribunal costs FAQs
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Legal disclaimer
The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.
Author
Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.
Gill is a Multiple Business Owner and the Managing Director of Prof Services - a Marketing & Content Agency for the Professional Services Sector.
