People often call in to didlaw telling us that they want to start a legal claim against their employer. They might be angry or upset about the way they have been treated at work. A lot of our work concerns discrimination which can be particularly unpleasant and extremely damaging to health.
At didlaw we try to find solutions. Litigation in the Employment Tribunal is rarely a solution. We believe that most situations are capable of resolution. The situations we fail to resolve are more often than not due to the conduct of lawyers advising employers. There is almost always a compromise to be had and rarely does it happen that a point of principle makes litigation worthwhile.
Looking at this from a different lens there are very good reasons why a settlement agreement is preferable to litigation. A tribunal has a very limited number of options available to it in terms of remedies. It can order compensation for discrimination and other breaches of law. It can order reinstatement (giving you back your job) in limited circumstances if you have asked for this. It can report matters to a regulator if you have asked it to.
The main thing clients misunderstand about the Employment Tribunals is the extent to which they have the power to order substantial compensation. Unfortunately the press and media focus on cases where there are big payments made but the vast majority of tribunal decisions concern payments of a much lower level. Big payments will only apply in cases where the conduct of the employer is so egregious and the employee (or their career) is irreversibly damaged. They are not routine. You will almost always achieve a better outcome with a settlement agreement given that any legal costs you spend on a claim must be taken from your award. Unlike civil courts the Employment Tribunals do not award costs against the losing party: legal costs in the ET are yours to bear and have to be offset from anything you gain.
So, what else is a settlement agreement good for other than certainty and avoiding litigation?
In a settlement agreement you can agree pretty much anything provided it is not unlawful. You cannot prevent someone from blowing the whistle or reporting unlawful conduct to the Police. You cannot prevent someone from bringing a personal injury claim for an industrial injury they are not aware of at the time of signing the agreement (i.e. asbestosis). You cannot prevent someone from suing you for unpaid pension contributions.
You can agree the messaging around your departure to protect your reputation. Non-derogatory remarks clauses are common.
You can agree that no disclosures are made about your health or your performance (with the exception of regulated persons, teachers, and some other professions).
You can agree a departure date and any arrangements for working until that date.
You can agree an internal or external announcement or both to protect your name.
You can agree for medical and other costs to be paid that an ET judge has no power to award.
You can agree what happens to company property: do you get to keep your laptop or phone or must you return it?
You can agree to keep your phone number.
You can be sure of securing an agreed sum of money. A claim may succeed in tribunal but the amount of money will never be certain.
You can agree what happens to private health, to your company car and a host of other arrangements.
You can agree a neutral reference which is most helpful in securing a new job.
There are a whole host of things that can be agreed in a settlement agreement that the tribunal has no power to order. Itâs worth thinking about before you embark on litigation which will take a long time and cost you a lot, and not just money. The time, the effort, the stress. Sometimes the circumstances will not resolve or an employer will not engage with a negotiation but it is always worth a try as a prelude to formal litigation. An honest lawyer will explain this to you and will try to resolve the situation to spare you the longer-term pain and stress.
