As a follow-up to my blog posts last year regarding the claims brought by Evan Carneiro against Chelsea FC and Jose Mourinho, I thought it would be worth looking at the value of settling a claim.
It is a fact that most claims that are commenced before an Employment Tribunal do not make it to final judgement as they are often withdrawn, settled or struck out before they get to that point.
Why settle the claim?
As we now know Ms Carneiro settled her claims against Chelsea and Mourinho, but if you feel you are in the right why would you settle the claim?
In many instances settlement of a claim has benefits to both parties. Litigation risk – all litigation carries risk – the risk that you might lose or the risk that, even if you win, the compensation awarded may be less than the legal costs. Settling affords a degree a certainty and control over the outcome of a claim.
Legal costs – in the Employment Tribunal apart from in exceptional cases each party bears their own costs. As an employee this means, even if successful, the legal costs will diminish or potentially totally extinguish the compensation that is awarded. Alternatively, an employer may still find itself out of pocket after successfully defending the claim. Settling a claim especially at an early stage will mean that the level of any legal costs in much more limited and therefore can be attractive to both sides. For this reason, some employers will settle weak claims on a purely commercial basis simply to avoid paying the legal costs associated with defending a claim.
Time – bringing or defending a claim doesn’t just cost money. It also costs time, stress and the opportunity to devote resources elsewhere. Legal proceedings can take a long time before they come to a final hearing. These final hearings can in some instances last for weeks rather than days. Settling claims shortens this process.
The terms of the agreement – a settlement can provide an opportunity to get your opponent to agree to something that Tribunal cannot order. For example agreed references can be included in the settlement agreement which the employer will then be bound to provide upon request from a prospective employer. It surprises some people that there is no general legal requirement to provide a reference for a former employee and, even where an employee has won a claim, the Tribunal has no power to order them to do so. This is therefore a key benefit especially where there has been a dispute or perhaps even a prior allegation by the employer that the employee has committed an act of misconduct. An employer can require that an employee agree to confidentiality clauses or other restrictions as part of a settlement again this is not something that a Tribunal can order.
Although the terms of the Eva Carneiro appear to have been made confidential, it is reasonable to conclude that part of the terms of the agreement was that statements were made on behalf of Chelsea FC and Mourinho. The statements we heard from Chelsea apologising for the distress caused to Ms Carneiro were very likely to be have been agreed word for word by the parties and recorded in the settlement agreement. This partial apology and official statement from Chelsea vindicating Ms Carneiro’s actions may have been a key element of what she wanted to achieve from the proceedings. Claimants do not just bring claims for financial reasons. They are often brought to provide vindication or an apology. Again, if Ms Carneiro had won her claim at Tribunal then she might have felt a degree of vindication but the Tribunal would have had no power to order Chelsea to make a public statement in the way that they did. Having said this, it is rare even through a settlement agreement to achieve a public apology.
Privacy – A further benefit of achieving a settlement is that it avoids the parties having the claim discussed in the public forum of the Employment Tribunal. This is normally of greater concern to employers who do not wish for even unmeritorious claims to be discussed in public. Employees may also wish to avoid the lack of privacy that comes with a tribunal if there sensitive details to the claim or because they may fear that future employers may hear of a claim and brand them troublemakers.
Tactical – Sometimes it may be best to achieve a settlement for tactical reasons. There may be a weakness in your case that you are aware of but your opponent is not. You may know, for example, that there is a key document which undermines your case or a key witness is either unavailable or perhaps does not even exist. Alternatively, a claimant may have insufficient funds and therefore no intention of taking it all the way to tribunal but may be able to bluff their way into a settlement agreement by threatening proceedings.
The benefits of settling claims are not just felt by the parties but also the public purse. The Employment Tribunal system is funded by the taxpayer and therefore the fewer claims that make it to full hearing the lower the costs should be. This was a fact recognised, and a motivation behind, the introduction in 2014 of the compulsory ACAS early conciliation scheme. Under this scheme employees must contact ACAS and conclude the procedure before they are permitted to issue their claim. ACAS will then liaise with both the employee and their employer to see if any kind of settlement can be agreed. There is no charge for this service and it provides a facility which increases the chances of early deals being reached.
As outlined above, the advantages of settlement are many and varied. It might therefore seem crazy not to go down the settlement route but, of course, convincing the other party that you are prepared go all the way to Tribunal is key to getting the best settlement possible. Knowing how best to represent this and use the many other tactics is crucial and requires good quality legal advice for experienced employment law experts.
James Haley, Solicitor & Director – Just Employment Ltd