The Employment Tribunals Service (ETS) recently issued quarterly statistics regarding the cases dealt with by the Tribunals in the period January to March 2011. In combination with the annual statistics for 2009/2010, which were published in September 2010, it is possible to learn some general lessons about the exposure for businesses in respect of employee litigation.
Although each case is different, as an employment solicitor you are often asked not what the maximum exposure could be but what an average Tribunal award could be.
While it would be remiss to suggest that claims do not need to be considered on a case by case basis, the statistics are a useful tool when assessing the realistic value of claims or when predicting how an Employment Tribunal will deal with a case. Knowing average awards can also be used to tactical advantage during negotiations toward settlement.
I am going to concentrate here on two pieces of information that can be found from the statistics, the first being what percentage of claims succeed, are unsuccessful, settle or are struck out by the Employment Tribunal. Secondly, I will produce and analyse the latest statistics relating to the average awards for the broad categories of claims that can be brought against a business by its employees.
Results of Employment Tribunal claims 2010/2011
|Total claims disposed of 2010 to 2011||244,000|
|ACAS conciliated (settled)||71,400|
|Default judgment (Claimant wins because Respondent fails to lodge response)||14,400|
|Successful at Tribunal (Claimant wins)||28,100|
|Struck out (not at a hearing)||25,500|
|Dismissed at a preliminary hearing||5,000|
|Unsuccessful at hearing (Respondent wins)||21,200|
This information does not include claims that may have been settled in a Compromise Agreement either prior to termination of the employee’s employment or prior to the claim being lodged. Furthermore it does not take into account any claims settled by ACAS in pre-claim conciliation. However, you can see that once a claim has been lodged only 20% of the cases actually make it to the final hearing (49,300 out of 244,000). The vast majority do not get as far as the final hearing.
If you split these outcomes into those that would be positive for a Claimant (settled by ACAS, successful, default judgment) and those that would be negative for a Claimant (struck out (not at a hearing), struck out (at preliminary hearing), unsuccessful, withdrawn) just under 47% of Employment Tribunal claims fall within the positive outcome for a Claimant.
A more worrying statistic for employers is that of those cases that did reach an Employment Tribunal hearing, the Respondent was successful in only 43% of claims whilst the Claimant was successful 57% of the time. This is all the more significant when you consider that many Claimants will initially lodge multiple claims with the Court, including weaker claims. These weaker claims would be taken account of in the statistics and should bring down the percentage of claims which are successful but nevertheless Claimants are far more likely to win than the Respondent if the matter is determined by a Tribunal Judge.
These statistics tend to reinforce the widely held view that the Employment Tribunals are more sympathetic to an employee than they are to an employer. In my view, the statistics also suggest that tactically a Respondent would be well advised to fight the case strongly as early as possible to avoid an eventual Employment Tribunal by achieving favourable settlement or forcing the Claimant to withdraw. The statistics do show that withdrawal is fairly common at 32% and is in fact more common than settlement (29%). When considering this, it is important to bear in mind that the Claimant is very unlikely to withdraw their claim unless someone exerts pressure to make the Claimant re-evaluate the merits of their claim. In my view, strong legal representation at the earliest point after receiving notice of a claim is vital.
Mean, median and highest Employment Tribunal awards
|2009/2010||Highest award||Mean award||Median award|
|Sexual orientation discrimination||£163,725||£20,384||£5,000|
The above table contains figures taken from the Employment Tribunal and EAT statistics 2009/2010, first published by the Ministry of Justice on 3 September 2010.
The first thing to note is that potential awards are substantial. Mean awards are often skewed by unusually large awards in the relevant period and in the year 2009 to 2010, we can see that disability discrimination has been affected most by this, with the highest award of some £729,347 bringing the mean award up to £52,087. However, it should be noted that the median award which would cancel out the extreme high awards is still significantly larger than the other medians in the table. Disability discrimination claims should therefore be considered as the highest financial risk on the basis of these statistics.
One thing that should be very clear from these statistics is that in discrimination claims, there is no limit to the amount of award that could be made and where losses can be justified, a Tribunal will award very substantial sums. Awards into 6 figures are unlikely to occur unless there are large salaries involved but are certainly not beyond the Employment Tribunal’s remit.
It would be interesting to know how many of those claims in the highest award column could have settled for a fraction of what was eventually awarded by the Employment Tribunal and furthermore what legal costs were incurred in the unsuccessful defence of the claims.