The cost of reform: Will tribunal changes tip the balance against employers?

The headline does not give the full story as there are plans for much wider changes to the Tribunal system here, including higher compensation payments for all employment tribunal claims, not simply those involving discrimination.

Broader changes to Jersey's tribunal system

It is probably about time that Tribunal awards for successful claimants were increased here as Jersey currently has awards that are much lower than in other jurisdictions and they have not been reviewed for several years. However, the reality is that the JEDT rarely awards the maximum under the current arrangements. It is also a fact that most claims fail entirely – but the respondent business will have expended much time, effort and money before that point is reached.

The case for increased tribunal awards

One of the key directives in the Government’s commissioning of the report was to compare Jersey with other jurisdictions, including the UK, Guernsey, and IoM.

The recommendations in the report are informed by such a comparison and are very explicit in regard to the improvements that will benefit claimants with precise sums and formulae defined.

However, there are two parties to every Tribunal case and  recommendations that would offer comfort to employers and businesses, such as being able to claim costs, are light touch and, as yet vague and unquantified.

The cost of failing claims

Where claims fail at a Final Hearing they inevitably result in considerable time, effort and cost for the respondent. This is particularly the case with discrimination and constructive unfair dismissal claims where multiple acts spanning several years may need to be investigated. The JEDT is particularly reluctant to strike out any claim, although it has such powers.

In the other jurisdictions, particularly in England judges appear to have incrementally become more willing to accept that some claims are definable as vexatious, unreasonable or have no prospect of success. Perhaps if Jersey is to look to England on the framing of awards there should also be a redefining of ‘vexatious’ and ‘unreasonable’ to support the striking out of some claims.

Striking out meritless claims: Lessons from England

Another aspect of the brief that prompted the Jersey review is an assumption that  most claims do not reach a full hearing because they settle via JACS or compromise agreements, and that this is due to employers knowing that they are in the wrong. In our experience and that of many others in our network, that assumption is considered to be wholly inaccurate.

The great majority of claims are settled on a “no admission of fault basis” and purely as a commercially prudent solution. Put simply, it is quicker and cheaper to settle than it is to win the case; one that will often have been brought out of malice and with the explicit aim of persuading the employer to settle because it is a less disruptive and cheaper outcome. More than a few clients have described this mentality and methodology as “blackmail” – which in legal terms it is not - but which we do see happen almost every week.

The other term used by clients in such situations is that the Tribunal process allows for and encourages what is considered to be a “free hit” for some claimants. It is no exaggeration to report that some respondents, especially but not limited to, small businesses and charities, have been reduced to tears at being the recipient of false, malicious and vexatious claims that impugn their reputation and cripple their finances.

The rationale for cost in tribunal cases

It is this paradigm that supports the rationale for deploying deposits and especially costs in the Jersey Tribunal. The headline arguments against costs are well rehearsed in the Report – but these are the same arguments that pertained in England: they were seen as a “bad thing”. There is now a discernible sea change in England. Costs are still only awarded in a minority of cases BUT they are more and more common.

In the last 2-3 years hundreds of cases have resulted in claimants being required to pay costs: the mean figure in recent years is only a few thousand pounds, but more and more often figures such as £10K and £20K are surfacing and at the high end of the spectrum there are cases with costs touching £400,000.

The fact that claimants are litigants in person and of limited means has NOT deterred English judges from applying costs.

The risk of increased meritless claims

Without a re-definition/re-interpretation of grounds to strike out claims AND the introduction of a fair, transparent, balanced but effective costs regime, it is reasonable to assume that Jersey will see a very significant increase in claims (including a significant increase in claims without merit) at a catastrophic cost to businesses – especially small businesses and charities.

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