Stella English the winner of “The Apprentice” has lost her claim in the Employment Tribunal for constructive and unfair dismissal.

Lord Sugar was vociferous in both his defence of the claims and in his comments regarding Ms English. His reported comments included “What has happened here is representative of a new wave of claim culture where some employees file spurious claims …I believe this case was brought…with the intention that I would not attend the Tribunal…and that I would settle out of Court”.

This may ring some familiar bells for employers. The presumption by a claimant is often is that employers will not want to attend a Tribunal because of the time and cost involved but instead will settle claims out of court.

Commercially it can be sensible to settle claims rather than fight them.  This is because the rules regarding costing in Employment Tribunal proceedings are that win or lose both parties will have to bear their own legal costs, save in limited and exceptional circumstances. Claimants may opt to represent themselves on the basis that they have nothing to lose but everything to gain, whereas for employers facing the prospect of having to pay out, to proceed without legal representation is not realistic. Where the value of the potential claim is small, the commercial option may be to pay to settle the claim irrespective of its merits. Further, a Tribunal Hearing involves a lot of work and management time for the employer, the costs of which will not be recovered.

However, for some employers this is a very dangerous precedent to set.  Although when claims are settled it is common to have a clause requiring the claimant to keep the fact and terms of the settlement confidential, the reality is that if that requirement is breached this can be very difficult to show and even more difficult for the employer to show any loss from the breach. Therefore there is always going to be a risk that however tightly a settlement agreement is drafted the terms of the settlement will become common knowledge. This can then lead to employers facing more claims from employees as they will know what the employer’s attitude to settlement is.  A commercial settlement may be a short term gain but one that stores up problems for the future.

The new rules in respect of fees for issuing Employment Tribunal proceedings (see our Blog 24 July 2012) are designed to deter unmeritorious claims, however what real effect this may remains to be seen.  We will, of course, keep you posted. If you require any further advice about this issue, please contact me by emailing alexandra.carn@edwincoe.com.

Please note that this blog is provided for general information only. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content of this blog.

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