What do Owen Smith’s 20 pledges mean for HR?

A ban on zero-hours contracts and a repeal of the Trade Union Act have been pledged by Labour leadership candidate Owen Smith

Labour leadership candidate Owen Smith has unveiled 20 pledges a labour government under him would introduce.

Smith’s policies include:

  • A pledge to focus on equality of outcome, not equality of opportunity.
  • Plans to scrap the DWP and replace it with a Ministry for Labour and a Department for Social Security.
  • Plans to introduce modern wages councils for hotel, shop and care workers to strengthen terms and conditions.
  • Banning zero-hours contracts.
  • Ending the public sector pay freeze.
  • Extending the right to information and consultation to cover all workplaces with more than 50 employees.
  • Ensuring worker representation on remuneration committees.
  • Repealing the Trade Union Act, which allows employers to break strikes by bringing in agency workers to cover for strikers.

Regarding a blanket ban on zero-hours contracts, Beverley Sunderland, managing director of Crossland Employment Solicitors, pointed out that this could be potentially detrimental to those workers who benefit from such arrangements.

“While zero-hours contracts have received some very poor press in recent months, it is said that this kind of arrangement does work for some, giving them the flexibility to pick and choose when they work,” she told HR magazine. “Before implementing a knee-jerk blanket ban on such contracts, perhaps more research is needed and if indeed there is support for an arrangement of this kind, then consideration should be given for a middle ground which allows flexibility but also provides greater rights.”

Commenting on Smith’s pledge to end the public sector pay freeze, Tom Stenner-Evans, a specialist in public sector work and senior associate at law firm Michelmores, said more analysis was required to determine the viability of this. “While the decision to end the public sector pay freeze would be welcomed by employees at all levels, further analysis of whether that would be financially viable would most likely be required,” he said.

He added that Smith’s pledges represented highly employee- rather than employer-orientated intentions. “Repealing the Trade Union Act 2016, which has been welcomed by many employers, would be a divisive move, but would likely ensure ongoing support from the unions. The blanket ban on zero-hours contracts will bring mixed reactions, particularly as both employers and employees often value the flexibility that such contracts can afford when used appropriately and properly,” he added.

The Labour leadership contest will be settled in September. Smith is standing against incumbent leader Jeremy Corbyn.

Uber tribunal case has employment lawyers “glued”


ELAS consultant Emma O’Leary discusses the cab-hailing firm’s ongoing tribunal case

The Uber tribunal case has employment lawyers “glued,” according to ELAS consultant and employment law specialist Emma O’Leary.

Cab-hailing app Uber is facing a legal challenge from drivers who say the firm is acting unlawfully by not offering holiday and sick pay.

O’Leary described employment status as the “greyest area” of employment law. “Is someone self employed or are they really an employee, or a worker?” she said. “Even where both parties believe and want to have a self employed relationship, an Employment Tribunal and HMRC see it differently. Their decisions can have far reaching implications for the employee’s rights and tax liabilities, as well as opening the flood gates for other similar claims against companies operating this type of arrangement.

“This is why the Uber case has employment lawyers glued. The drivers are claiming that they are workers because the terms and conditions of the arrangement means that Uber has such a degree of control over them that they cannot be said to be self employed, and therefore they are entitled to national minimum wage, holiday pay etc.”

O’Leary highlighted that the drivers are not arguing that they are employees, who would have increased rights above those of a worker. “Uber will seek to argue that they simply put the drivers in touch with customers but the drivers are their own boss,” she said. “They will say that they are simply a technology company who do not provide the services themselves – so the nature of that will be analysed too.

“Such is the difficulty with employment status claims. They require scrutiny of all the facts and circumstances and questions need to be asked, including: Do they have to do the work themselves? Can someone tell them at any time what to do, where to carry out the work or when and how to do it? Can they work a set amount of hours?”

O’Leary said that if the answer is yes to any of these questions then this might be indicative of an employee or worker status. Someone is more likely to be classed as self employed if they provide the main items of equipment they need to do their job, agree to do a job for a fixed price regardless of how long the job may take, or if they regularly work for a number of different people.

“However this case goes, rest assured it will have a huge impact on both parties and set an important employment law precedent,” she added.

New immigration rules turn up the pressure on employers

New legislation increases penalties for employers who take on illegal migrant workers, so how to protect yourself and your business?

Last week new legislation came into force to increase penalties for employers who take on illegal migrant workers. The Immigration Act 2016 makes it easier to hold bosses accountable for taking on illegal migrant workers, giving courts the power to impose a fine of up to £20,000 and a prison sentence of up to five years for businesses and individuals who fall foul of the new law. It also includes an additional power to shut a business down for 48 hours if an employer is found to have persistently broken the law.

So how do you protect yourself and your business? How to prevent legal migrant workers being affected by false claims that cause stress and affect productivity? And how do you avoid allegations that checks are discriminatory?

Legal migrant workers are without question an important part of our economy across a wide range of sectors, so conducting proper checks is important to protect their right to work for you. There are three initial checks you must carry out. If you don’t complete these checks thoroughly then there is a real risk you will be found liable under the new legislation.

Right to work checks are a vital defence and if carried out thoroughly – before employment starts – enable you to eliminate illegal migrant workers from consideration for roles and swiftly dismiss false claims made against legal migrant workers.

It is wise to apply these checks to any potential employee once the initial selection process has been completed, to avoid the risk of a discrimination claim.

Firstly make sure you obtain the individual’s original identification documents. Home Office guides ‘UKVI: An Employers Guide to Acceptable Right To Work Documents’ and ‘UKVI: Right to Work Checklist’, feature lists of acceptable official documents.

Secondly check those documents with the potential employee present, making sure photographs match, double-checking personal details, expiry dates for eligibility to work, UK government endorsements and that no documents have been tampered with.

Finally copy and keep all documents and record the date they were checked by you. These must be stored in a way that cannot be altered for the duration of the individual’s employment and two years after their employment ends.

A prospective employee may claim to have made an application or appeal to the Home Office, show you an application registration card claiming to have been granted asylum, or present a certificate of application issued to or for a family member from a European Economic Area nation or a Swiss national. If they do you should also use the Employer Checking Service. If the individual is permitted to work you will receive a positive verification notice.

It is important for employers not just to establish an individual’s right to work, but to identify renewal dates if their permission is limited and arrange meetings to discuss extending permission several months before expiry. By completing the Right to Work checks, employing an individual whose eligibility has lapsed would qualify as knowingly employing an illegal migrant.

Just as important as compliance is the need to protect workers who are employed legitimately.

The new legislation does risk encouraging discriminatory practices against legal immigrants, particularly from small or medium-size businesses which may see all migrant workers as a risk and may not have the resources to fully check their Right to Work.

It also risks the reporting of legal migrants as illegal. This can be stressful and upsetting for both them and their families as they are detained and have property seized during investigations into their eligibility.

Such an investigation will likely have an effect on your business while you manage employee absence and/or productivity. By conducting a full Right to Work check you can assist with the investigation and help bring it to a quicker resolution.

By taking these measures you can protect legal migrant workers who make a valuable contribution to your business and the wider economy, and protect yourself against severe penalties.

This article is published courtesy of HR magazine and was written by Helen Watson (pictured), head of employment law at Aaron & Partners

The legalities of preferential benefits

While employers who provide benefits to certain groups of employees may have the best of intentions, there are legal implications to consider

There are some scenarios where offering certain segments of the employee population certain benefits that will particularly help them, seems a good idea. Some employers may want to encourage diversity by generous policies that particularly attract women for example, or benefit those of a certain age who are perhaps more likely to encounter health issues.

But while employers who do this may have the very best intentions, they should consider the potential legal implications of these benefits – particularly when they benefit a specific group of employees.

Service-related benefits

Employers might seek to reward commitment and loyalty by providing service-related benefits. However, there is a risk that benefits which depend on a qualifying period of employment are potentially discriminatory on the grounds of age.

Under section 10 of the Equality Act 2010, a benefit based on length of service up to five years is permitted. For example, offering one additional day’s holiday for every year of service up to a maximum of four years. Where a benefit is based on length of service over five years, an employer must justify the benefit by showing that it reasonably appears that the award of the benefit fulfils a business need, such as encouraging loyalty or motivation or rewarding the experience of some of the employer’s workers.

Enhanced redundancy pay

Enhanced redundancy pay calculations are often potentially discriminatory on the grounds of age as they frequently depend on age and/or length of service. However, the Equality Act 2010 contains a specific exemption for enhanced redundancy schemes that are similar to the statutory redundancy pay scheme contained in the Employment Rights Act 1996. For example, an employer can remove or raise the cap on a week’s pay or increase the amount allowed for each year of employment by multiplying it by a figure of more than one.

Even if the scheme is not exempt, employers could objectively justify it if the scheme is a ‘proportionate means of achieving a legitimate aim’. A potentially legitimate aim includes enhancing payments to older workers who may be at a disadvantage in the labour market.

Enhanced maternity pay and enhanced paternity pay

Many employers offer enhanced maternity pay in order to attract and reward high-calibre female employees. However, since the introduction of shared parental leave and shared parental pay, should employers also be offering enhanced shared parental pay and if they don’t, will male employees claim sex discrimination?

In Shuter v Ford Motor Company Ltd ET/3203504/13 the Employment Tribunal rejected a male employee’s claim that his employer’s failure to pay enhanced additional paternity pay amounted to direct and indirect sex discrimination. In considering indirect discrimination, the Employment Tribunal found that the policy of paying women full basic pay when on maternity leave was a proportionate means of achieving the legitimate aim of recruiting and retaining women in a male-dominated workforce, where the employer had detailed statistical evidence of the issue and steps taken to resolve it.

Employers may therefore want to consider whether they can justify paying enhanced maternity pay, but not enhanced paternity/shared parental pay. However, in light of the fact that the take up for shared parental leave is currently so low, it might be best to wait until the system has been in place for a few years before making any decisions.

Health benefits

Many employers offer health benefits, such as private health insurance. But what if an employer decided to offer health checks for employees over or under a certain age, or just for male or female employees?

If an employer had a policy providing for health checks for employees over a certain age, in order to avoid claims of age discrimination, the employer would need to demonstrate that its policy was a proportionate means of achieving a legitimate aim. For example, it could seek to rely on statistical evidence supporting an increased risk of certain medical conditions in individuals over or under a certain age.

Benefits provided just to men or just to women would potentially be more problematic, as it is not possible to justify direct sex discrimination. Therefore, it would be safer for employers to ensure that any health-related benefits are extended to both its male and female employees.

This areticle is published courtesy of HR magazine and was written by Lucy Leonard-Davies (pictured), an associate in the employment team at Blake Morgan

Why embracing duty of care brings business benefits

While Duty of Care is a legal requirement, companies that go above and beyond are reaping the benefits

Duty of care (DoC) is a legal requirement for any company, but new research by insurer Chubb reveals a clear correlation between companies that go beyond the minimum DoC requirement enjoying increased profitability, productivity and the ability to attract and retain top talent.

The report, Reworking Duty of Care, based on interviews with 240 managers of European companies with responsibility for employee DoC (HR, employee benefit and risk management personnel) reveals that more than half (57%) of European companies believe that there is a strong link between the quality of their DoC provision and their corporate profitability and productivity.

Significantly, the research also reveals that companies going beyond mere regulatory requirements experience even more positive corporate outcomes and are almost a third more likely to report greater profitability, reduced employee absence and a safer working environment which minimises accidents.

These findings are particularly timely as companies across Europe face the twin pressures of an ageing workforceand a complex economic picture that might suggest cost cutting would have a stronger bottom line impact than investment in DoC.

Not all industries, or employees, are equal

While our study shows that almost two thirds (63%) of European companies have a good understanding of their DoC legal responsibilities, there is considerable sector variance.

The chemicals, telecoms, construction and real estate industries are among those reporting the most significant positive impact of high standards of DoC – with 75% of those surveyed reporting a positive impact on profitability. Companies operating in these industries are typically exposed to more significant occupational hazards and have generally invested time, money and expertise in specialist support.

At the other end of the spectrum, some IT, technology and manufacturing companies do not yet appear to adopt best practice. Retail and education sectors likewise appear only to be meeting minimum DoC requirements. These sectors also have a heightened risk of DoC issues relating to their supply chain partner companies, and working conditions of their employees in developing countries where standards sometimes fall well below what is acceptable in Europe.

A key area of DoC concern highlighted by the research is the risks employees face when travelling on business. A significant proportion of respondents are failing to provide comprehensive business travel insurance for staff, with almost half (49%) providing specific business travel cover for C-suite only. Some 28% offer this insurance to senior managers and a mere 24% extend this cover to all staff. While not every company will have employees at every level engaged in business travel, the figures do reveal a tendency to treat insurance cover for business travel as a perk for senior employees, rather than as a duty of care for staff at all levels – a trend which is at odds with the principle of treating all employees fairly.

In our view, shortcomings like these create risk and this research suggests that companies that fail in providing a consistent level of good-quality care may experience higher work accident rates, higher absenteeism and staff turnover and are at greater risk of under-performing their peers and experiencing reputational and financial loss.

Appetite to improve

European companies can improve many aspects of their DoC offering by seeking support from insurance partners – but currently only one in five (22%) do so. We believe that establishing a clear business case for DoC paves the way for more fruitful engagement between companies HR departments and their insurers. With the interests of employees and employers so clearly aligned, improving DoC via improved insurance solutions is surely a win-win situation for everyone.

This article is published courtesy of HR magazine and was written by Stéphane Baj (pictured), regional director – EMEA – A&H Corporate & Affinity at Chubb reports.

Almost half apprehensive about hiring disabled workers

Mark Grimley, director of HR at disability charity Scope, explains how to accommodate disabled employees

Almost half of UK businesses (45%) are apprehensive about hiring someone with a disability because of fears they will not be able to do the job and concerns around accidentally making inappropriate comments, according to not-for-profit organisation Purple.

Purple’s research found that one in five (22%) business owners and hiring managers admit they are worried about interviewing someone with a disability in case they do or say the wrong thing.

Fears include using the incorrect terminology (32%) and not knowing whether they should help with things such as opening doors or pulling out chairs (38%). One in five employers (21%) said falling foul of discrimination law was a real concern.

Mark Grimley, director of HR at disability charity Scope, told HR magazine that employers are not alone when it comes to these concerns. “Our research shows the majority (67%) of Brits feel awkward around disabled people,” he said. “The important thing is to focus on the person, not their impairment.

Disabled people are pushing hard to find jobs and get on at work, but they continue to face huge barriers – including employer attitudes. Research by Scope shows that a staggering 74% of disabled adults feel they have lost out on a job opportunity because of their impairment. This is a waste of the talents of disabled people, who are avital and often untapped resource for the UK labour market.”

Grimley added that often just minor adjustments will be needed. “By creating flexible, modern workplaces and making small adjustments, more employers can benefit from the skills and experience of disabled people,” he said.

“As with all employees, disabled people who feel valued, have the opportunity to develop their careers and contribute to the success of companies are engaged and will be more productive. Part of this is employers being confident in understanding how to get the most out of their employees, including disabled people.”

Brexit and business immigration: how can UK firms safeguard EU workers?

The immigration implications for EU workers in the UK remain a key question. So what might happen and how to prepare?

The legal process of withdrawing from Europe following the result of the referendum on 23 June should take at least two years. While nothing will change immediately, the likely effects on EU workers based in the UK remain a key question. So what are the practical implications for UK companies and their EU staff?

The present

Currently it is business as usual. The UK remains an EU member until it formally leaves around two years after giving notice under Article 50 of the Treaty on the European Union. EU workers already in the UK can continue to live and work here and retain the automatic right to work in the UK. EU citizens can continue to relocate to the UK without a visa. The same position applies to British citizens working in other EU countries.

What can you do now?

During this period EU citizens may wish to consider the actions they can take to safeguard their position. Any EU citizens who have or during the transition period will have spent five or more years working in the UK could apply for permanent residence (PR). PR takes the holder outside of immigration rules meaning any changes to the right to free movement would not affect them. EU citizens who are not eligible for PR could instead apply for an EEA registration certificate to evidence their current right to live and work in the UK.

We recommend that employers who are willing to support their EU workers and provide reassurance to them about their immigration status actively investigate PR eligibility with them.

Those who have held PR for at least 12 months can apply to naturalise as a British citizen, which provides a right to a British passport. As this application has an impact on workers and their family including original citizenship, voting, military service and tax position, advice should be taken on any proposed applications.

The future

It is hard to predict the future with certainty. Separate EU trade negotiations may affect the longer-term ability of EU citizens to work in the UK. These could lead to a Norwegian-style model permitting free trade in exchange for financial contributions to the EU and accepting full free movement of workers. Alternatively the UK could try to negotiate free movement with a smaller group of states (e.g. Belgium, France, Germany, Italy, Luxembourg and the Netherlands). A third alternative – bilateral deals with individual countries – would be time consuming and complex.

Once the UK leaves the EU European citizens relocating to the UK will only be able to live and work here by complying with whatever immigration rules the UK introduces. If free movement of workers is not retained and no bilateral deals are in place, Leave campaigners have argued for a points-based system to govern how EU citizens qualify for UK visas.

The UK’s existing points-based system for non-EU visa applicants gives us insight on how this could work. Currently it applies to high-skilled workers performing graduate-level roles, paid UK market rate minimum salaries. Studies show that most EU workers currently in the UK would not meet those conditions. A simple option to provide the flexibility for lower skilled workers might activate the currently frozen Tier 3 of the current points-based system for low-skilled non-EU workers.

Short-term EU travellers to the UK for business or tourism are unlikely to need formal visas.

What can you do?

A requirement for EU nationals to obtain visas will involve more red tape, cost and planning for UK employers. Recruitment teams may not have access to the talent pool they currently do and may need to give greater thought to visa eligibility and lead-in times for urgent hires.

HR teams will need to continue to focus on the compliance aspects of managing an international workforce. UK-based businesses will need to continue to show they fully comply with current rules to protect their brand with customers, their market reputation in this social media age, their contractual relationships with business counterparties, and their standing with the regulators who will determine future applications. The Home Office continues to ramp up its auditing and removal of sponsorship rights for employers not complying with immigration rules with, for example, the roll out of the stricter right to work requirements in the Immigration Act 2016 on 12 July 2016.

We recommend that all employers, but especially those working in perceived higher risk sectors (financial services, care homes, hospitality, retail, engineering and construction) undertake a fresh audit of current employee visa status, consider future resourcing plans and take advice where needed. We also recommend employers consider the merits of expediting medium term EU national transfers to the UK so that they can benefit from the current right to free movement.

Employers may also wish to consider with their British citizen staff whether they are eligible for dual citizenship with another EU country based on EU ancestry or long-term residence in another EU state. This will preserve the right to travel and work in Europe regardless of future changes.

This article is published courtesy of HR magazine and was written by Vikki Wiberg (pictured) senior counsel in the Employment, Pensions & Mobility group at Taylor Wessing

What if an employee turns out to be a hooligan?

What to do if one or more of your workers engaged in football hooliganism recently

The group stages of the 2016 UEFA European Championship were marred by violence, with fans clashing both inside and outside the stadium. Five English people were jailed for their part in the fighting before the England v Russia game. French authorities deported several English fans and around 30 Russian supporters.

Behaviour of this kind can have a significant negative impact on businesses that discover their employees were involved. What if one (or more) of them was in your employ, and are the repercussions the same in other European countries?

The situation varies from country to country. In the UK there is a division between an individual’s work and private life, but it only goes so far. If an individual’s private actions bring the employer into disrepute, affect their suitability to do their job, or damage their relationship with their employer, colleagues or customers, disciplinary action or dismissal might be justified.

If an employee is arrested many employers would consider tough action. However, they cannot simply rely on the arrest, the police investigations or a subsequent charge or conviction. They need to carry out an investigation of their own and hold a disciplinary hearing giving the worker a chance to tell their side of the story.

In the majority of European countries labour legislation makes a clear distinction between an employee’s behaviour at work and in their private life. Therefore someone who is arrested for hooliganism, or who features in media reports or social media participating in hooliganism, cannot be dismissed solely for this reason.

However, in exceptional circumstances in some countries – such as Spain, Italy, Germany and France – serious private misconduct can justify dismissal if the employer can show that it has a negative direct effect on the employment relationship. For example, if a criminal offence committed outside work directly undermines the trustin an employee´s ability to fulfill their contractual duties.

This is also the case in almost all countries when the worker has a key function, holds a position of trust in the company, or is a company representative/public figure (for example a manager, spokesperson or salesperson). In this case the employer would need to prove that the employee actively took part in illegal activity.

If a staff member is injured as a result of hooliganism, in all countries they are entitled to take sick leave in accordance with their employment contract. In Belgium, France and Spain employers have no alternative but to pay the sick leave indemnity. However, under German law an employee hurt in a fight may not be entitled to statutory sick pay if they actively provoked the fight. The Italians take a similar approach.

Hooliganism is not just limited to football matches. It can also occur during protests, strikes or on a drunken night out. The legal position and the actions an employer can take to address hooliganism in these scenarios will be the same as above.

This warticle is published courtesy of HR magazine and was written by Dan Begbie-Clench (pictured) a partner at workplace lawyers Doyle Clayton

Legal lowdown: Unpaid internships and the National Trust

Third sector employers may be able to lawfully engage unpaid interns, but could nevertheless face controversy

Tackling exploitation in employment is high on the government’s agenda, and non-payment of the national minimum wage is a hot moral, political and legal topic. The latest issue to hit the headlines is criticism of the National Trust’s rolling six-month unpaid internship schemes, which drew criticism despite a statutory exemption that specifically entitles charities not to pay ‘voluntary workers’ the national minimum wage.

So it seems a timely reminder of who interns are, and what their rights are, is in order.

‘Interning’ is popularly understood to mean a kind of work experience, generally undertaken for free with the implied quid pro quo that the intern can build up their CV and ‘get a foot in the door’. However, ‘intern’ is not a legal term and interns have no specific legal status.

Interns and the minimum wage

So from a legal perspective, should interns be paid?

The starting point is that a person will be entitled to the national minimum wage if he or she is a worker, ordinarily works in the UK under a contract and is above the compulsory school age. ‘Worker’ means someone who works under a contract of employment, or any other contract under which they undertake to perform the work personally for a company that is not their client or customer.

Whether or not an intern is a ‘worker’ for national minimum wages purposes, depends on the usual tests for employment status – looking at matters such as mutual obligations, the need to perform work personally and control over the work. Interns who are only work shadowing will find it harder to show they are workers who should be paid compared with those interns doing real work and being treated much like employees.


If an intern is a worker, they will be entitled to be paid the national minimum wage unless one of a few limited exemptions applies.

One exemption is specifically for people known as ‘voluntary workers’ working for ‘a charity, voluntary organisation, or associated fundraising or statutory body’. For the exemption to apply, the voluntary worker must receive no monetary payment (other than reimbursement of expenses). Generally, they must also not receive any benefits in kind, other than reasonable subsistence or accommodation. Assuming the National Trust’s internship arrangements meet these stipulations, as a charity it is legally entitled to engage interns without paying them.

Legal sanctions

Failure to pay the national minimum wage to any entitled worker (including interns) can be costly.

The worker themselves can bring a variety of claims in the Employment Tribunal, including for unlawful deduction from wages, breach of contract, and unfair dismissal or detriment related to their eligibility to receive the national minimum wage. To date there are two known cases of unpaid interns, supported by trade unions, successfully bringing tribunal claims, both for non-payment of wages and pay in lieu of holiday (Vetta v London Dreams Motion Pictures Ltd ET/2703377/08 and Hudson v TPG Web Publishing Ltd, 2011, unreported).

Separately, HMRC can issue a notice of underpayment requiring the company to pay minimum wage arrears from the last six years (calculated at the current rates) plus a fine of 200% of the underpayment, up to a maximum of £20,000 per underpaid worker. BIS will also ‘name and shame’ the employer in a press notice, unless the employer successfully makes representations as to why it should not be named.

Obstinate employers who persistently refuse to pay the national minimum wage or to co-operate with HMRC may even face criminal charges.

Beware the publicity…

As the National Trust story shows, the downsides of not paying interns can be as much about bad publicity as about the law. Charity employers may be able to rely on specific exemptions to lawfully engage unpaid interns, but nevertheless may face controversy. This makes it important for employers to weigh up all the implications – legal, social and PR – before advertising lengthy unpaid internship opportunities.

This article is published courtesy of  HR magazine and was written by Richard Miskella is a partner and Rachel Rooksby a senior associate in the employment team at Lewis Silkin

The Eva Carneiro tribunal: lessons on avoiding high-profile disputes

Employers would be well-advised to consider settlement early and often to avoid legal disputes

While the vast majority of employment disputes settle, the Eva Carneiro case (a high-profile spat between a doctor and her ex-employer Chelsea Football Club) is a good example of how not to publicly settle such a case.

While Carneiro and Chelsea FC mostly avoided the full details and very public gaze of a tribunal (Carneiro settled with a generous figure of up to £5 million, according to media reports), the case highlights the risks of fighting employment disputes all the way to court, which can do more harm than good to an employer.

Contesting a dispute with an employee in a tribunal is often described as a lottery. The outcome can be so hard to predict and be swung by any number of factors. For example, even the strongest of cases can quickly disintegrate because of the poor performance of a witness on the day of testimony. Likewise, the tribunal panel of adjudicators consists of only one legally-qualified member – the chairman – and two wing members. So the panel may be easily influenced by non-legal issues or be swayed by their own sympathies and perspectives.

There is also no loser-pays-costs rule for employment disputes so even if an employer is found not to have acted unlawfully they will usually still be stuck with a large legal bill. Given the cap on potential awards for certain claims, legal fees may dwarf any award of damages or a settlement.

It is not just financial expense. The greater cost is frequently to public image. Tribunal hearings are (save for exceptional cases) conducted in public so the reputational winner may not be the same party as the victor. The press and the public do not wait for the legal verdict. The pictures, headlines and allegations make much better copy. Accusations such as discrimination, even if eventually proved untrue, are not always quickly dismissed in the court of public opinion.

Lengthy employment disputes also waste management time. It is crucial not to underestimate the impact on the business of the loss of senior management spending days in tribunal, not to mention the preparation time.

The good news is that, Carneiro aside, settlement offers usually do not get played out in the tribunal or the press. They are made on a without prejudice basis and confidential between the parties and possibly ACAS; the tribunal panel is unaware of the details.

If settlement does occur there is a time and a way of doing it. Frequently it is done before the barrister’s brief fee (often five figures) is incurred, and for a high-profile claimant or defendant certainly before the press gets hold of the tribunal listing. If mandatory conciliation has failed, arguably the best time to try to re-open a settlement dialogue is before the real meat of the legal expenses is incurred; pre-discovery or pre-witness statements being prepared.

Sometimes an employer has to fight. If a business needs to take a stand on a point of principle then settlement offers should never be made on commercial grounds. Alternatively, sometimes employers need to disrupt the culture of an organisation that has fallen into the norm of ‘lazy settlement’ – employees all ‘take a pop’ on the way out and a culture develops of employers frequently paying out relatively small nuisance sums. If staff know employers will always roll over and pay cases have to be fought even if they are sometimes lost.

Employers would be well-advised to consider settlement early and often. The risk profile of employers differs widely and settlement needs to work for both parties.

This article is published courtesy of HR magazine and was written by Jules Quinn (pictured), a partner at law firm King & Spalding