Defending any Employment Tribunal claim, whether or not it has merit, is costly for businesses, both in terms of legal costs, management time and potentially negative PR. Even if a business ultimately succeeds in defending a claim at Tribunal, it still does so at a cost. For this reason, Tribunal claims brought by current or former employees will never be an enjoyable experience for a business. That said, there are some claims which are more annoying/painful than others, particularly where the claim has no merit or basis in reality! However, there are things that an employer can do about this latter type of "vexatious" claim.
A claim may be vexatious for various reasons: it may have no reasonable prospect of success (for example, because the Claimant is incorrect or deliberately misleading in their allegations); it may have been brought by a serial litigant; it may have been brought simply to harass, inconvenience or cause distress to the opposing party; it may be an abuse of process (for example, because the Claimant has brought the same claim before which was settled, withdrawn or dismissed); or it may be conducted by or on behalf of a Claimant in an unreasonable or vexatious way.
So what steps can a business take to nip vexatious claims in the bud, preferably before substantial costs are incurred?
Strike out application
A business can ask a Tribunal to consider knocking out a claim on the grounds that:
The claim is "scandalous", "vexatious" or "has no reasonable prospect of success"; or
The proceedings have been conducted by or on behalf of a Claimant in a scandalous, vexatious or unreasonable manner.
It can be difficult to satisfy the above tests, however, which is revealed by the Employment Tribunal’s statistics for 2011/2012.
In 2011/12, 186,300 claims were brought in the Employment Tribunal, some of which contained a number of different types of complaint, known as "jurisdictional complaints" (such as unfair dismissal, discrimination, unlawful deduction from wages, holiday pay etc). The total number of jurisdictional complaints accepted in 2011/12 was 321,800. 230,000 of these jurisdictional complaints were "disposed of" by the Employment Tribunal (the others were withdrawn, settled etc). However, only 13% of these were struck out.
Costs warning/costs application
Cost warnings can be a good option, but must be exercised with care.
An Employment Tribunal can make a costs order against a Claimant (or their representative) if they have acted vexatiously, disruptively, abusively or unreasonably in bringing the claim in the first place or in the way they have conducted proceedings.
The first step (before making a formal costs application to the Employment Tribunal) is to give the Claimant a costs warning.
It can be tactically helpful to accompany the costs warning with a commercial settlement offer (sometimes referred to as a "without prejudice save as to costs" letter), along the lines that, if the Claimant refuses the settlement offer and then loses their claim and/or succeeds at Employment Tribunal, but is awarded lower compensation than the settlement offer, the business reserves their right to seek their legal costs from the Claimant.
Alternatively, a costs warning may be accompanied by an offer not to pursue the Claimant for costs if the Claimant withdraws the claim.
As Employment Tribunals now have the power to order a party to pay up to £20,000 costs, a costs warning tends to focus the mind of all but the most unreasonable Claimants!
However, this tactic is not suitable for all cases. If a party is unreasonable in making a costs warning, this itself could constitute unreasonable conduct and lead to a costs warning (and potentially a cost award) against that party! Alternatively, if the Claimant then succeeds in their claim, the Claimant could be awarded aggravated damages (awarded where a party has conducted proceedings in a malicious or high-handed way).
As with strike outs, costs are not commonly awarded. In 2011/2012, costs were only awarded in 1,295 out of 186,300 Employment Tribunal claims and a Tribunal can take into account a Claimant’s financial means when assessing what costs (if any) to award.
Applications for a Civil Restraint Order or Restriction of Proceedings Order
These applications are rare and involve making an application to the High Court or Employment Appeals Tribunal.
They are only appropriate in the case of serial vexatious litigants, i.e. where a Claimant has made numerous claims which are without merit (either against the same or different parties).
If you are unfortunate enough to fall prey to such a Claimant, please contact us for further advice!
Introduction of Employment Tribunal fees
Vexatious litigants may also be discouraged from bringing Tribunal claims following the introduction of Employment Tribunal fees potentially from the summer of 2013 (a definite start date for Tribunal fees has yet to be announced at the time of writing).
The Government’s aim behind introducing these fees is to encourage businesses and workers to mediate or settle a dispute rather than go to a full Employment Tribunal hearing. They will also hopefully make people think twice before raising vexatious claims.
Bringing a claim or an appeal to the Employment Tribunal is currently free of charge with the full cost being met by the taxpayer. By introducing fees, people using Employment Tribunals will start to contribute a significant proportion of the £84 million cost of running the system!
Where vexatious claims still arise notwithstanding any new fee system, the tactics set out above may assist in dealing with them.
These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.