Table of Contents
In Short
- Employment tribunal costs can be substantial, including legal fees, compensation, and hidden costs such as damage to your business’s reputation.
- Additional expenses may include settlement fees, witness costs, and potentially paying the claimant’s costs if you lose the case.
- Legal advice is crucial to manage and mitigate the financial implications of employment disputes.
Tips for Businesses
Prepare for potential employment tribunal costs by seeking legal advice early. Consider the financial impact of legal fees, compensation, and hidden costs such as damage to your reputation. Settling disputes before they escalate can sometimes be a more cost-effective solution. Always keep thorough documentation to support your case.
When you run a business, you could fall into a commercial dispute. However, if you employ staff, there is also the potential for employment disputes. In a worst-case scenario, an employment dispute, such as an unfair dismissal claim, could lead to an employment tribunal claim, which means your business will pay employment tribunal costs. These have financial implications, and this article will explain some of them. As employment tribunals can financially impact our business, it is crucial to take legal advice if you face an employment dispute.
What are Employment Tribunal Costs?
Defending your business against an alleged breach of employment law can be expensive. The financial impact can depend on how long the case goes on, as tribunals can go on for months or even years. You may also be ordered to pay compensation at an employment tribunal, which adds to your overall costs. In addition, there can be hidden costs for businesses in employment tribunals.
Although unusual, if you lose your case, you may need to pay the claimant’s costs. An employment tribunal may order you to do so if, for example, you have:
- acted abusively;
- been disruptive;
- behaved unreasonably during the proceedings; or
- breached an order or practice direction.
What are the Financial Implications?
Below, we look at some of the financial implications of employment tribunal costs for your business.
Solicitor Costs
Your highest costs in the employment tribunal claim are likely to be your legal fees for your employment dispute solicitor. Legal fees can be over £10,000 and include fees for:
- assisting you in preparing your response to an employee’s claim;
- helping you prepare documents for the tribunal; and
- representing you during the employment tribunal.
If your case requires good advocacy or a specialist opinion, you may also bear the financial implications of a barrister’s fees.
Settlement Costs
You may decide to settle an employment claim to avoid an employment tribunal. If so, there are financial implications. In addition to the settlement fee, you can incur fees negotiating settlement agreements.
Witness Costs
Your business may face a costs order for expenses for witnesses who give oral evidence at the employment tribunal hearing.
Paying Compensation
If you lose an employment tribunal case, the compensation you must pay will have financial implications for your business. The amount you are required to pay your employee depends on the type of employment claim they bring forward.
A tribunal will also need to take into account certain factors. For example, if it is a claim for unfair dismissal, they need to consider your previous employees:
- age;
- length of service in your business; and
- pay.
Hidden Costs
Unfortunately, one of the financial implications for business wonders defending employment tribunal claims are hidden posts. For example, these can be to prepare the case such as:
- obtaining evidence;
- attending hearings; and
- preparing witness statements.
In addition, employment tribunals have a financial impact on businesses. If you lose, it will damage your business’s reputation, which can cause a loss of business income. A tribunal will also take up your time, negatively impacting your business.
As an employer, it is crucial to stay compliant with ever-evolving employment law. This factsheet outlines key changes in 2024 that will affect how you manage your workforce.
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Key Takeaways
Employment tribunal costs are involved if you face an employment tribunal for a claim which can have financial implications for your business. These include defending the claim, potential compensation and hidden costs. Also, the Tribunal could order the losing party to pay the other party’s costs. Possible payments include witness costs and expenses as well as hidden costs such as the financial implications to your business reputation if you lose the employment claim. A further employment tribunal cost includes settlement costs or compensation awards, where the latter could be an uncapped amount.
If you need help understanding employment tribunal costs and their financial implications, our experienced disputes and litigation solicitors can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
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