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Expense of Litigation

Litigation is an expensive business, both in terms of financial cost to the litigants and the “indirect” and unseen cost of time and energy spent discussing the case with lawyers, collating and preparing documents and, not least, the attendance at the hearing(s) itself. Employers are left to conduct a “cost v benefit” analysis to see whether the litigation is worth the candle. For small to medium size employers this analysis is magnified as the cost of litigation may leave the office/factory being understaffed. For large employers it takes on a different hue: if the employer settles too many cases, ex-employees may be encouraged to commence spurious claims in the knowledge that the employer will pay to settle the claim, irrespective of its merits.

In the UK consultation is taking place considering the introduction of issue fees for Claimants who wish to commence Employment Tribunal proceedings. In the UK there is also the (rarely used) power to award costs against any party, employer or employee, who has brought unreasonable, vexatious or misconceived proceedings or continued them in such circumstances. The maximum amount recoverable by way of tribunal order has recently been increased to £20,000 from £10,000.

It may be that such institutional disincentives to litigation may not yet be necessary or welcome here as, to-date, the tribunal is not inundated with claims and fighting to allocate scarce judicial resources to hear them all, there is also a cultural incentive to remain a costs free court as the tribunal is still rooted in the mind-set born from the foundation of the tribunal service as a whole: that it is an informal court where parties can represent themselves.

However, one must weigh against this the undoubted cost to the economy of requiring employers to answer weak and unmeritorious cases and for the state to allocate resources to hear such claims. In the UK such cases can be dismissed (“struck out”) early by a judge where it is felt that there is no prospect of success, or the claimant can be required to pay some money into the tribunal as a precondition of them continuing their claim where there is little prospect of success. In such cases if the employer ultimately succeeds at Final Hearing, any application they make for costs will be bolstered.

With the promise of discrimination legislation on the horizon here in Jersey the complexity, and therefore the length of litigation before the tribunal will inevitably increase. This has a cost to the economy and Jersey as a whole as tribunals will see longer and longer cases being brought forward.

Whilst it is right that no litigants are disenfranchised from access to justice, what is needed is a shift in the perception of tribunals so that they are seen by others, and themselves, as formal courts. This can be carried out in subtle, cost effective, ways. Active and robust case management is necessary particularly in the more complicated claims, so that resources are not wasted on issues that were not identified earlier. Timetables for litigation should be applied by tribunals when addressing the prosecution of the litigation and parties should be required to set out their case completely from an early stage. This may require a cultural shift in the way the tribunal is perceived by its consumers, as well as how the tribunal perceives itself, but in times of austerity when resources are scarce for all those involved in litigation (be they litigants, judiciary and those charged with administering the system) wasted time and money is not something the Island can stand.

What’s Current!  Redundancy and the pool of one !

In the recent case of Halpin v Sandpiper Books Ltd, the employer (a book distributor) wished to expand its business in China.

Mr Halpin was employed as a sales manager in China but the employer had no one else.
The employer decided to close its office in China and use a local agent instead. They decided there was only one employee at risk of redundancy, Mr Halpin, and therefore they dismissed him after a consultation process. However they failed to look into the question as to whether there was another opportunity to move him within the company.

Mr Halpin issued proceedings stating that putting him into a pool of one was unfair dismissal.

The Appeal Tribunal held there was no unfairness in restricting the pool to employees based in China emphasising that establishing a pool for selection is a decision that only the management of a business can take and therefore very difficult to challenge.

It was decided that it was easy for the employer to choose the pool where only one manager was in China and the entire operation of one person had to be shut down.

The key to selecting the pool fairly is to show that as the employer you have considered what the pool should be, not to merely have a pool there must be records that you have considered who and why.

    TM Legal Gallery June 2012 (267 kb)


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