The complexity of the case brought against you, will determine the cost of defending an employment tribunal claim. 

Preparing a coherent response to a claim from an employee may involve costs such as; advice and representation from solicitors and 3rd party experts; preparing witnesses and documentation; the costs of time taken away from your business while you focus on the claim.

While there is no fee for the Employment Tribunal hearing itself, the process may include preliminary, liability and remedy hearings. All of these require preparation and thoughtful communication with other parties. That costs time and money.

If the Judge rules in favour of the claimant, you may be required to pay them compensation. Alternatively you may decide to settle early, paying the Claimant a sum before you get to the hearing in order to save time and money.

According to Gov.uk, In the year 1 April 2019 to 31 March 2020 a total of 103,984 employment tribunal applications were made with the highest compensation awards going to cases involving discrimination by age, race and disability.

Out of those cases, the median award for disability discrimination was £13,000, while the median award for unfair dismissal was £6,646.

Summary of employment tribunal costs

When preparing to defend an employment tribunal claim against your business, it makes sense to get expert legal advice. The costs of defending your business fall into the following common categories:

• Legal costs for an employment law solicitor to help prepare and act as your defence
• Costs of 3rd parties e.g. witnesses, medical experts and barristers (if needed to help with advocacy)
• If witnesses are employees, directors or owners of the business, then they will still need to be paid while investing time away from their daily operations and on the case.

An additional cost is the potential damage to your business’ reputation in the long term if you don’t conduct yourself in the right manner throughout the process.

Are some employment tribunal claims more expensive to defend?

Former and existing employees usually have a time limit from the incident in question, to when they make a claim (e.g. 3 months after the incident). 

Common employment tribunal claims include:

• Unfair dismissal
• Redundancy
• Discrimination (For example – age, sex, race)
• Unlawful deduction of wages
• Breach of contract

The compensation awarded from an employment tribunal is often closely tied to the type of claim involved. For example, discrimination cases are potentially one of the most costly claims an employer can defend against, with one age discrimination claim in the period of April 2019 to March 2020 costing the employer £243,636 in damages.

However, the cost of each claim to the employer depends on some of the following factors

• The length of the hearing – there may need to be preliminary hearings to settle before the case goes to the “full merits” hearing.
• How complex is the case? If the argument against you is complex, then there will be more legal arguments in response, as well as documentation and potential witnesses who may need vetting or even coaching. Complex cases may also require additional hearings depending on the approach of the other side. 
• How many 3rd parties are involved – solicitors, barristers and other experts (e.g. medical) may be used to strengthen your argument.

Keeping costs down

By avoiding employment tribunal claims, you’ll avoid the costs associated with them. 

It’s worthwhile having procedures and contracts in place that make it difficult for employees to win a tribunal claim against you and more importantly, to reduce the chances that they’ll want to make a claim in the first place. 

You should seek employment law and HR legal advice on everything from employment contracts to redundancy and unfair dismissal. By staying on the right side of the law and communicating well with employees, you can dramatically reduce the chances of an Employment Tribunal claim  being made against you.

Resolving an issue with an employee, without the need for a hearing can be a cost-effective solution for businesses. Mediation and consultation are great ways to ensure your employee (or former employee) feels like they have been listened to.

If the employee wishes to pursue the claim against you, it could make more commercial sense to settle the claim early by making them a settlement offer. 

An employment law solicitor can advise you on whether that is a good idea and what you stand to lose or gain by taking this approach.

However, if the dispute is unable to be resolved internally or after conciliation and mediation, then the claim may escalate to an Employment Tribunal hearing, where an independent judicial body will step in to mediate the claim and decide whether any compensation is due.

Other potential ways to reduce costs include:

• Checking whether the deadline for the employee to make the claim has already passed, making the Claim unlikely to proceed.
• Identifying the potential costs to the business and drawing up a settlement for the claimant to mitigate this if necessary.
• Reviewing documentation to ensure there are no issues where the company may be considered liable.
• Ensuring that a calm and respectful disposition is maintained by those representing the business, as all members involved in the tribunal will be much more receptive if this disposition is upheld. 
• Testing your witnesses prior to the hearings, making sure that they will be an aid to your cause and will not lose you the case with an emotive outburst or distrustful demeanour.

See 8 things you need to know about Employment Tribunal claims for more.

Why you need an employment law solicitor

The money you invest in an employment law solicitor can be vital as you’ll get help with the following (among many other things):

• Reviewing the claim against you including any documents, emails and text messages and witness statements to identify weaknesses from the other side and advise on your chances of winning. 
• Respond to ACAS with regard to the early conciliation process.
• Formally respond to the claim and any correspondence from the other side as well as correspondence from the Employment Tribunal.
• Help you understand the potential to settle or negotiate about the claim.
• Taking and drafting witness statements and reviewing the other side’s witness statements.
• Preparation and attendance at any hearings including preliminary hearings.
• Advise on what to do after the hearing and whether an appeal is required.

• Hidden costs of setting up a business

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