News: Legal costs see most employers settle tribunal cases out-of-court

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The majority of employers settle tribunal cases out-of-court despite good odds of making a successful defence because it is cheaper to give in early rather than fight and win, according to a legal expert.   Dan Peyton, an employment law partner at McGuireWoods, said that the latest figures for the first quarter of this year from the Ministry of Justice indicated that employers tended to win most cases if they were pursued, with the majority being struck out or successfully defended.   Moreover only 13% of all claims disposed of by employment tribunals were successful, he added. Between January and March this year, some 28,600 disposals were made, an 18% drop on the same quarter last year. The number of single disposed cases fell by 6% and the number of multiple ones by 28%.   But because lawyers dealt with far more settlements than tribunals did, it was “safe to assume that the number of claims settled is much larger than the 186,000 claims that were presented to the employment tribunal in the past year,” Peyton continued.   On this basis, even a conservative estimate suggested that UK employers faced more than 500,000 employment disputes each year, he said.   Between January and March, the MoJ figures indicated that the number of tribunal claims made had fallen by 44% to 42,500 in comparison with the same period last year, however.   The drop was attributed to a higher number of multiple receipts, including resubmitted airlines cases. The number of multiple claims fell by 55% and the number of single claims by 2%.   But Peyton said: “Why are employers paying off so many claims by employees, when the odds of successfully defending claims are good? Because costs are rarely awarded against unsuccessful claimants – instead the basis of the Tribunal costs regime is that, normally each party bears its own legal costs whether they win or lose.”   This meant that it was usually cheaper for employers to pay employees off than defend a tribunal claim, even if they expected to win, he added.  


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