Settlement Agreement or Employment Tribunal Claim?

If you believe you have received poor treatment in the workplace by your employer, or any other grounds for a claim, you will be faced with the choice of whether you should pursue an Employment Tribunal Claim or try to settle your claim, usually via a ‘settlement agreement’ contract.

Let’s break down the most important factors to consider when deciding which avenue to take.

  1. What potential claims do you have, and how likely are those claims going to be successful?
  2. What outcome are you seeking from an Employment Tribunal Claim?
  3. Is settlement an option for you, or is an Employment Tribunal Claim a point of principle?
  4. What impacts could a claim have on you in the long term?
  5. How committed are you to the process an employment tribunal claim?

What potential claims do you have and how likely are those claims going to be successful?

The first step is to determine what potential claims you may actually have based on the circumstances of your case. Have you been a victim of workplace harassment, discriminated against, victimised or unfairly dismissed?

The nature of claims you choose to pursue will of course have a significant impact on your chances of success and the value of any Employment Tribunal Claim. You will also need sufficient evidence to reinforce the particular claim(s).

What outcome are you seeking from the Employment Tribunal Claim?

Generally speaking, if you are only pursuing an Employment Tribunal Claim to seek compensation (a financial payment),  it is more likely that you will be able to settle your claim. If you are looking for another form of remedy, however, then you might have to seek this through a successful claim in the Employment Tribunal (as it is normally difficult to persuade an employer to re-engage you through a settlement agreement).

Is settlement an option for you or is the Employment Tribunal Claim a point of principle?

There is very little point in entering into a settlement agreement negotiation if you aren’t interested in a settlement. If you are strongly set on not settling from the get-go, then your time and effort are best focused on preparing your Employment Tribunal claim.

On the other hand, if you are open to settlement, then it is best to approach the other party at an early stage to negotiate and agree upon the terms of the settlement.

What impacts could a claim have on you in the long term?

The public nature of an Employment Tribunal should be considered as early as possible. All Employment Tribunal judgements are now published online and the parties to the litigation will therefore want to think carefully about what impact any publicity could have on their careers or business.

How committed are you to the process of the employment tribunal claim?

The process of an employment tribunal claim can be stressful and daunting. However, using a no win no fee employment solicitor like ourselves, your stress can be alleviated as we guide you through the entire process from initial assessment to making a claim.

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‘Phoenixing’ a Continued Problem

A whopping £390,000+ worth of employment tribunal claims went entirely unpaid last year following the employers in question being placed in administration or being dissolved or liquidated. Experts have stated that these figures may indicate the continued struggle with ‘phoenixing’ businesses avoiding tribunal debts.

It was revealed, thanks to figures from the Department for Business, Energy and Industrial Strategy (BEIS) by People Management under a freedom of information (FOI) request, that 56 awards (worth a total of £394,505) were unpaid due to insolvency in 2017. This figure was broken down further, bringing to light that of the 56 unpaid awards two (worth £20,695) were unpaid due to administration, twenty six awards (worth £87,544) went unpaid due to dissolution and twenty eight awards (worth £286,267) were unpaid because of liquidation.

A company is placed in administration as a means of attempting to save it from insolvency. This involves control being handed over to an administrator, who will attempt to pay off, or reach a deal with, as many creditors as possible, as to reduce the company’s debts.

A company is liquidated when, as a means to pay off debts, its assets are sold off. This usually occurs after administration is unsuccessful. Finally, a company is dossolved once it is struck off the Companies House register.

The particular companies in question were not revealed, however the figures suggest that there is a continued issue of ‘phoenixing’, the unscrupulous practice of company owners avoiding tribunal awards or other penalties by making their business insolvent only to set up a very similar, new company afterwards.

Croner associate director, Paul Holcroft stated ““In the current climate, where we hear of town centres being depleted of their shops and pubs at an alarming rate, there will be very many genuine insolvency situations which mean tribunal awards go unpaid, however, with the possibility that ‘phoenixing’ is contributing to that number, employers may well be intentionally circumventing the system.”

“Without detailed analysis, it is difficult to tell which are genuine insolvencies and which aren’t, but anecdotal evidence from claimants has suggested that many insolvent ex-employers are now trading again.”

It’s clear that phoenixing is a common problem that continues to grow. However, the Taylor Review on Modern Working Practices, which was published in July 2017, called for the government to take further action against companies which dodged paying tribunal awards, and to establish a “naming-and-shaming” system for those who did not pay awards within a reasonable time period.

As stated on gov.uk, UK law allows directors, owners and employees of insolvent companies to set up brand new companies and carry on a similar business as long as the individuals involved aren’t personally bankrupt or disqualified from acting in the management of a limited company.

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Brexit & UK Employment Law

Last week a 98 page White Paper was released that outlines the UK Government’s suggestion for the future relationship between the UK and EU. Also, the post-Brexit status of the UK’s employment legislation derived from European Union law appears to be no longer in doubt. The document indicates that there tends to be no intention to repeal or amend equality or employment law, including a commitment to the “non-regression” of labour standards. This “Brexit Blueprint” also states that the European Court of Justice (ECJ) won’t have any further sway over the UK’s legal decisions, therefore bringing accountability of UK laws back to the UK.

The paper states that “existing workers’ rights enjoyed under EU law will continue to be available in UK law at the day of the withdrawal”, referring to the United Kingdom’s plan for their relationship with the EU in the future by suggesting that it will commit to a “non-regression of labour standards”. Therefore any UK employment laws which are based on EU law will remain unchanged after Brexit.

The blueprint offers a new framework where EU workers who are previously established can apply for ‘settled status’ and remain in the UK. Any Irish workers can remain in the UK indefinitely under ‘special status’ – Irish and UK citizens alike will be able to freely move between the UK and Ireland (the Common Travel Area). However, without an agreement in place, EU and UK workers will no longer be able to freely move between each other’s countries without certain restrictions.

There has been an indication that there will be a commitment to a “mobility network” so that EU and UK citizens can travel between their countries to work and study. However

Whilst the white paper supports the notion of there being ‘no automatic right’ to work in the UK, it does suggest that possible ‘reciprocal arrangements’ could take place that would mean businesses can relocate “talented staff” in particular situations.

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