Wednesday 25th April 2012 at 6:00am
“Protected conversations”: a bully’s charter
Part of the government’s call for evidence on compensated no-fault dismissals also deals with the latest wheeze to come out from the Department of Business, Innovation and Skills, which is to introduce what the government is terming “protected conversations”.
In the words of the latest consultation document, “We will consult later in the year on introducing a system of ‘protected conversations’, with the aim of enabling employers to more confidently raise issues such as poor performance in an open way, free from the worry it will be used as evidence in a subsequent tribunal claim”
The rationale goes something like this. It is presently common, in workplaces where a union is recognised, for an employer who is in the process of dismissing a worker to invite in the worker’s union representative for an informal and off-the-record (in lawyers’ speak “privileged”) meeting. At the meeting, the employer may make a settlement offer to the worker, sometimes a generous offer, which (if accepted) cuts off the possibility of a protracted dispute, saving both sides emotional distress and money.
The conversation has to be off-the-record because otherwise it might unfairly prejudice a party making an interim concession for the purposes of settlement only. EG an employer might say “for today, I’m willing to consider that the dismissal is unfair, in order to work out how much it might be worth to the worker, and so that I make a credible offer.” That doesn’t mean the employer actually thinks the dismissal is unfair, and if the worker was able to rely on that concession in later proceedings, you would simply never get any settlement at all.
Why not, the government suggests, introduce a similar process to benefit workers who aren’t represented, either by unions or solicitors?
The problems with the proposal are legion. Here I’ll focus on three:
1. The reason why protected conversations work between representatives is that (usually) neither side has an emotional engagement in the conversation. If you had the conversations directly between a worker and a dismissing manager, at around the time of dismissal, the worker would be constantly saying “I don’t want to be sacked” and the manager would be justifying the dismissal. IE save in the most unusual case, people wouldn’t focus on the merits or otherwise of settlement, but simply on the original decision. So “protected conversations” won’t get the benefit that’s intended for them.
2. One reason why the present system works is that there are safeguards built in for the worker. If the outcome of the conversation is an offer of settlement, that isn’t the end of the process. The worker also has the protection, before settlement is finalised, of advice from an independent representative. They may be a trade union rep, although usually it’s a solicitor and many solicitors use this process to genuinely interrogate the settlement offer.
At the same time as introducing protected conversations, the coalition is also contemplating allowing employer’s personnel departments to sign off settlement agreements on behalf of workers. IE the employer would formulate a settlement proposal, and the employer would decide whether it was a fair offer. This process is unbalanced, and very clearly opens up the possibility of protracted legal disputes – as soon as the worker gets to see an advisor of their own, and the advisor says to them: “you do know that the claim you settled for £500 was worth ten times that?”
3. One of the reasons the current system works is that – on the employer’s side – generally the negotiator isn’t the manager who took the original decision to dismiss, etc.
The government’s proposal is to push back “privilege” to an earlier stage: as the quote above from the BIS illustrates, the conversations they have in mind would be ones long predating a dismissal.
Experience of life teaches that employers generally support their own dismissal decisions, and generally react with unease (and sometimes anger) when they are challenged. This is one reason why claimant lawyers dislike unrepresented Respondents at least as much as respondent lawyers dislike unrepresented Claimants (or if anything slightly more). Owners of small companies fight over every penny and often have real difficulty granting legitimacy to workers who sue them (even when, from the perspective of lawyers or the courts, the workers are obviously right to do so).
Protecting dismissal-related conversations directly between the employer and the worker will mean that the worker will not be able to tell the Tribunal what was said to them during their dismissal. IE rather than protecting genuine settlement discussions; it will simply mean that the Tribunal can’t know what the worker was told when they began to challenge their dismissal.
In all sorts of routine circumstances – eg a standard misconduct dismissal – it may be that the employer will have said something that is genuinely prejudicial to their case. EG the worker asks “You’re telling me you think I had a fight with Harry, and we both punched each other. So why are you sacking me, but not Harry?” The Tribunal may genuinely want to know the employer’s original, unguarded answer. If the answer was given during a protected conversation however, the Tribunal could not be told.
But the worst of it would be if the employer blustered during the conversation, or became aggressive, or (as happens depressingly often) tried to bully the employee into resignation (perhaps because the employer did not understand that a worker who resigns can still, potentially, bring an unfair dismissal claim). Why shouldn’t a worker be able to bring this conduct, if it was oppressive, and if it casts light on the dismissal, to the attention of the Tribunal?
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Monday 5th March 2012 at 9:00am
Charging Fees in Employment Tribunals (2)
In my last post, I said that I would respond here to the government’s proposals that claimants should in future bear the entire cost of starting Tribunals claims; and that if claimants underestimate the potential value of their claims they should be stopped from receiving the full value of the claims later.
Who should pay?
The consultation document suggests that workers should pay the costs of Tribunal claims, for the following reasons:
“When a claim commences it can only be the claimant who initially pays the fee. The employment tribunals incur cost as soon as the claim form is submitted. The respondent is not formally aware of the proceedings until the tribunal sends notification and therefore cannot be asked to pay the initial fee. A claim received without the correct fee, (or proof of eligibility for a remission considered in section 5), will not be properly made and will not be accepted.”
The government goes on to acknowledge that only asking one side to pay fees is a lop-sided proposal – in that only side bears the initial cost – but this is to be remedied by asking the losing party (whoever that is) to pay the costs at the end. If that is the employer, the employer will compensate the worker in due course.
This proposal is unjust for three main reasons:
First, the majority of workers in the UK work for companies that employ more than 50 people. The majority of claimants are unemployed workers. (Generally, those with grievances who remain in work don’t bring Tribunal claims, for the obvious reason that they don’t want to be sacked). The typical Tribunal claim involves a company whose spare income outweighs the spare income of the claimant many times over. In two of the three main types of Tribunal claims (i.e. wages and dismissal claims) workers “win” in half of all cases or more. In other words: the proposal front-loads the financial risk of litigation onto the party least well equipped to bear that risk, and without even the justification that they are most likely to lose.
Second, the rationale for charging claimants rather than respondents is administrative efficiency. But it is simple nonsense to write that respondents can’t be asked to pay the initial fee as they don’t know there is a claim until they see it. Of course they don’t. But there is no good reason to charge the initial fee on the receipt of the claimant’s ET1 form: it could just as easily be charged on receipt of the respondent’s ET3 form.
Third: the government proposes to balance the unfairness of asking only claimants to pay the issuing fee by providing that if claimants win they will get the money back.
The difficulty here is that at present many employers don’t pay when they lose their cases. The reason they don’t pay is that Tribunal enforcement mechanisms have historically been very weak. The last research on the topic (Adams, Moore, Gore and Brown, Research into Enforcement of Employment Tribunal Awards in England and Wales (Ministry of Justice Research Services 9/09, May 2009) suggested that 47% of Respondents did not pay the Tribunal claim within 6 weeks of the decision (i.e. the point at which they become liable for interest) and 31% do not pay within 12 months – i.e. at all.
So under the government’s system, a worker bringing an unfair dismissal claim (for which the median eventual award is c£5000, and the prospects of winning are c50%) is expected to frontload the risk by paying total hearing and issuing fees of £1400 which even if they win they only have 70% chance of ever getting back.
i.e. to bring a claim, a worker should have to pay two thirds of its entire commercial value upfront.
Why should the poorest party in the hearing be forced to carry that sort of risk?
Capping Tribunal awards
The last part of the fees proposal on which I want to comment is that the Coalition proposes that in future when workers submit their claims, they should be required to decide whether their total claim shall be in excess of £30,000; if so, they will be required to pay a higher fee; where they do not pay that fee, this cap shall apply.
The proposal would be a dramatic change from the present system, under which Claimant representatives are given the opportunity to estimate the value of the claim, but by and large do not do so.
The reasons for this are nothing to do with the merits of a claim or the perfidy of Claimant representatives. They are rather because the two major determinants of the value of an unfair dismissal or a discrimination claim are (i) what the worker earned in their last employment, and (ii) how long it takes them to obtain a new job.
Invariably, even the best advised claimant knows (i) but not (ii).
Another factor here is that the claimant also does not know the date of the hearing. The unacknowledged, but general, practice of the Tribunal is to be much more ready to put a value on past rather than future losses.
The reason for this, again, is unstated but obvious. If a worker is dismissed on 1 January 2011 and their case is heard on 1 January 2012, the Tribunal can know for definite whether they have found work and can assess their efforts to date. If the worker then says it will take them another year to find a job, but in fact it takes them 6 months – or indeed 18 months – there is no real provision to disturb what was intended to be a final judgment.
The length of time it takes to get from initial claim to merits hearing can be (exceptionally, in a very simple unfair dismissal claim heard in a part of the country where the system is relatively efficient) as little as 6 months, it can on the other hand takes as much as 2 years (especially if there are preliminary hearings) and where there are appeals the time between hearing and remedy can be in excess of 5 years.
Where workers leave tribunals with awards of £40,000 or £50,000 this is their “real” loss. This is some (but never all) the money that they would have been paid had they remained in work.
To say to the Claimant at the start – here is a financial incentive to cap your claim at a value which may be less than half your real loss – is grotesque.
It is a very long way from justice.
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Friday 2nd March 2012 at 3:50pm
Charging Fees in Employment Tribunals (1)
Tuesday 6 March is the deadline for responses to the Ministry of Justice’s consultation on fees in the Employment Tribunal and at the EAT.
The first point to note is that the consultation will be about the amount of fees rather than the principle of fees. The government has not consulted on the principle of fee charging and has no plans to consult on it. This alone is probably the biggest single change to the Tribunal system since the unfair dismissal jurisdiction was introduced in 1971, and the government has no intention of asking whether fees should be introduced. The government’s assumption is of course that, if it did ask, an overwhelming majority of those responding would be opposed.
For my book, I looked back to the deliberations of the Donovan Commission which introduce the modern Tribunal system. It is noteworthy that while Donovan deliberated many of the key features of the present-day system it never occurred to Donovan or any of his Commissioners that fees should be charged for what they originally termed a “dismissals tribunal”.
The Commissioners sought to establish an “easily accessible, informal, speedy and inexpensive” Tribunal (Report of the Royal Commission on Trade Unions and Employers Associations 1965-1968 (Cmnd 3623), para 572).
Had the Commissioners encountered today’s system, with its many informal obstacles to claimants’ rights (including lawyers’ fees, the stress of litigation, and the diminished prospects of claimants obtaining any work thereafter) they would have been horrified and would have sought the reform of the system in the exact opposite direction to the changes now proposed by government.
The MOJ’s consultation seeks views on 3 key issues:
1) Should there be a separate issuing and hearing fee?
2) Should claimants bear the cost of starting the claim?
3) If claimants underestimate the potential value of their claim should they be stopped from receiving its full value later?
I’ll address the first of these issues here and engage with the others in a further post.
Separate issuing and hearing fees
At the start of the consultation document Jonathan Djanogly MP writes, “employers complain that, at its worst, the operation of the current system can be a one way bet against them, with parties inadequately incentivised to think through whether a formal claim really needs to be lodged, or whether it could be settled in other ways such as conciliation, mediation or informal discussions.”
The first point to notice is the phrase “employers complain…”. One rationale for this specific proposal, and for document as whole, is to alter the Tribunal system in ways which are intended to benefit employers at employee’s expense.
Second, although the proposal is cast as being about incentivising settlement; it will be noted that a large number of the other proposals in the document are likely to disincentivise settlement: for example, it is suggested that if the parties decide to mediate their claim and seek judicial assistance, they should pay £750 for a mediation service which is presently free.
Third, in a crude “game theory” approach to litigation, having separate issuing and hearing fees “might” incentivise settlement, in the sense that both parties will have a pecuniary interest in settling the case rather than proceeding to a full hearing.
But, the proposal needs to be considered in light of the absolute amounts that the coalition is proposing should be charged:
Wages claim: issuing fee £150, hearing fee £250
Dismissal claim: issuing fee £200, hearing fee £1200
Discrimination claim: issuing fee: £250, hearing fee £1250
I don’t know of any research on what awards wages claims typically attract (from the annual ET figures we can see only that a relatively high proportion of them succeed), but I would be amazed if much more than 50% of wages claims actually resulted in an award excess of £1000.
Many wages claims it should also be noted are brought against employers whose primary defence is along the lines of “I know you did the work, and I really should pay you, but I am strapped for cash” (whether the companies are in fact strapped, or not).
As a result, around 30% of employers don’t pay Tribunal awards (see Adams, Moore, Gore and Brown, Research into Enforcement of Employment Tribunal Awards in England and Wales (Ministry of Justice Research Services 9/09, May 2009, which is the most recent research on the subject. It was on the Ministry of Justice website until recently, but unfortunately appears to have been taken down).
So, rather than incentivising settlement, the real purpose of the dual fee (once the fees are set at this amount), is to disincentivise the claim itself. A rational economic calculator, sitting on a debt of c£1000, with c70% success at the Tribunal, and only around 70% chance of actually being paid even if the claim succeedds would think something like the following
“I am owed £1000. But when I consider that I only have a 70% chance of success at the hearing and a 70% chance of being paid if I win … I reckon that if I take my claim to the Tribunal it’s real value is as little as £500.”
“On those odds Fee 1 – the issuing fee – may just about be affordable – in that it “may” convince my employer that I’m serious and that they have to pay me something.”
“But Fee 2 – the hearing fee – is getting to the point where it would be ludicrous to gamble further. Even if I win at the end, and that will take time and effort, there is too much risk that I will end up with less money than I had at the beginning.”
It also has to be remembered that very many wages claims aren’t even for as much as £1000.
Certainly, when I worked at a London Law Centre, the typical wages claimant was something earning more like £200 per week, and the typical scenario giving rise to their claim was a failure to pay notice pay – ie the typical claim had a value of just (say) £200-£400 – at which point paying a hearing fee of £250 on top of an issuing fee of £150 would be still less attractive.
It is hard to resist the conclusion that the government’s purpose in introducing Tribunal fees is to say to those wretched employers who don’t pay their staff wages that they have the full authority of the Coalition in so doing.
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