Most employment cases tend to settle. This a good thing and the regime in place in employment cases encourages parties to settle. In employment cases the claimant is first required to submit an application for early conciliation through the Advice, Conciliation and Arbitration Service (ACAS). An ACAS officer will ask the claimant for an outline of their case and what they are looking for. These details are relayed to the respondent who then has the opportunity to resolve the matter before it proceeds to a hearing. In many cases we note that early conciliation fails (the parties cannot agree) and ACAS issues the certificate following which the claimant then issues their claim in the employment tribunal. In a large number of these cases the matter is eventually settled before or even at the hearing. Between the end of early conciliation and final settlement a lot of needless legal costs could have been incurred on both sides which could have been avoided if the matter was settled at the outset such as in early conciliation or thereafter. In our experience early conciliation and settlements generally tend to fail for the following reasons:

·        The claimant has unrealistic expectations about the amount they would win at tribunal

·        The parties have radically different views as to the merits of their respective cases making it difficult to reach agreement on the level of settlement

·        Personal feelings of animosity from a respondent manager who ‘on principle’ will not settle because of their feelings towards the claimant or the claim itself. (We see this a lot in race cases where employers do not want to be seen to even be settling a race claim for reputational reasons)

·        In early conciliation this will usually be the first time the employer is haring about the claim and they will be taking time to assimilate what the claim is about, get over their own feelings of outrage and take legal advice. In essence the employer is often simply not in a mental space to consider and engage in a settlement process which is itself limited to a month unless the parties extend the period by agreement.

In order to prepare for an effective settlement when acting for the claimant the starting point is the schedule of loss which provides a breakdown of the compensation the claimant is seeking. If a solicitor draws up the schedule of loss it is very tempting and common to ‘overstate’ the amount being claimed especially in discrimination claims. This is often because it is expected that the respondent will inevitably counter with a lower sum or that the tribunal itself will assume that the schedule of loss is an overstatement and award a lower sum. The problem with overstating the value of the claim is that a claimant may genuinely believe the figures in the schedule to represent what they are ‘entitled to’ making it impossible for them to be flexible in settlement discussions later on as any offers from the respondent will invariably be lower. A claimant’s perspective can be hard to shake even after they have received advice about what they can realistically expect.  We have seen a number of reasonable settlement opportunities missed because the claimant held on to unrealistic figures in their schedule of loss and in some cases seen such claimants go on to be awarded less than was offered or even lose the claim and get nothing!  As such we prefer to be realistic in the schedule of loss and certainly in all cases that the claimant be told in writing what they can expect in reality so they approach settlement with a correct perspective.

The actual settlement process (outside of early conciliation) will often consist of the exchange of offers and counter offers. Those acting for either side should consider the strengths and weaknesses of both sides and be prepared to deploy your best arguments to seek to persuade the other side to move to your position. If you are a solicitor acting for either side your advice will also involve advising on the risks to their case succeeding of course but ALSO any risks to the amount of any award they are seeking to claim or resist as the case may be. In a recent case we had to remind a claimant in an unfair dismissal case that the effect of the Polkey rule meant that her compensation would be half of what she had claimed. This made the settlement offer from the respondent a very fair one which was accepted.

If you require advice or assistance preparing your schedule of loss or settling your claim please call Winston Brown on 0208858 5996 or 07894219314 or email to winston.brown@brownandcosolicitors.co.uk