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What happens if your small business is taken to an employment tribunal?

What happens if your small business is taken to an employment tribunal?


No matter how well you run your business, there could come a moment when an employee takes you to an employment tribunal.

It’s a heart-sinking moment for any small business owner but you are not alone. Employment tribunal claims were up 26pc year on year in 2018/19 with 35,429 cases going to court. There was a 69pc increase in sex discrimination cases alone.

Some estimates suggest the annual cost to UK businesses of employment tribunal decisions could be more than £1bn.

An employee can take you to an employment tribunal over various issues, including pay, dismissal and discrimination. The tribunal is independent and will listen to both sides before deciding.

See also: Navigating the employment tribunals process

If you lose the case, you may have to pay compensation or reinstate the employee. If you win, in most cases, you will not be awarded compensation. But if the claimant acted unreasonably or their case had no hope of success, you can at least ask to have your costs covered.

And that doesn’t factor in the disruption to business continuity that tribunals can cause alongside loss of your time and the inconvenience involved in a tribunal takes up.

How does an employment tribunal work?

Often, the first you will know about a claim is when the papers drop through your letterbox. What you will receive is called a Form ET1 – which is the form the employee filled in to make their claim.

Completing your ET3 response

You must prepare an official response to this form within 28 days and you can do this either in writing or online. The response is formally known as an ET3 and you will need to explain, among other things, whether you are resisting the claim and your grounds for doing so, and the procedures followed before your former employee was dismissed.

When completing the ET3 form, a clear but concise account of what the claim is about should be stated, so do keep it simple.

  • All the key events should be included but you should avoid going into an enormous amount of detail
  • Number each paragraph for easy reference

Because employment law is so complex and the ET1/ET3 forms are crucial to any claim/defence, it is a good idea to bring in a professional to help you prepare your case.

See also: Employment dismissals – How to avoid a tribunal

Case management stage

Once your ET3 form is accepted, the claim then proceeds to the case management stage, which is when documents are exchanged and the date and length of the hearing is published.

Documents you need to bring

Preparing for a tribunal can be extremely time-consuming, so make sure you give yourself enough time to do it properly. You will need to prepare documents and call witnesses, and you must give your ex-employee seven days’ notice of any documents which you will be including as part of your case.

Documents the tribunal will want to see include emails, letters or text messages between you and your former employee, along with any copies of witness statements supporting the claim/defence.

Specifically, the tribunal will want to see:

  • an employment contract
  • payslips
  • pension scheme details
  • contemporaneous notes from meetings

What is document disclosure?

Disclosure is when both sides show each other the documents they have, which they think are relevant to the case.

Check the case management order that the tribunal has made. It will explain how and when disclosure should be done. Try not to miss this date because it can then throw the rest of the timetable off.

The order will usually instruct you to send a list of the documents in your possession. This means you list all the documents you have and attach a copy of any you think the respondent has not already seen.

Trial bundles

At the hearing the tribunal will need to have copies of documents that the parties want to rely on. This is called the “trial bundle”.

Usually the tribunal requires a single “agreed” bundle. This means that the parties agree what documents are going into the bundle, which is not the same as saying the contents of the bundle are undisputed.

Organising the bundle

There is no standard format, but it is common practice to set it out in the following order, with an index at the front:

►Witness statements

  • Claimant’s witness statement
  • Claimant’s witnesses
  • Respondent’s witness statement
  • Respondent’s witnesses

►Pleadings

  • The ET1 and ET3 (and any requests and replies for further information on these)
  • Any relevant tribunal orders (usually the only relevant orders will be those issued as a result of a preliminary hearing, where particular legal issues have been decided)
  • Any relevant documents produced as a result of tribunal orders such as chronologies or lists of issues
  • Discrimination questions and replies

Employment documents — in chronological order

  • Correspondence and emails
  • Minutes of meetings
  • Statements and other evidence taken in grievance hearing
  • Discrimination diary
  • Policies and procedures
  • Contracts

►Documents relating to compensation/remedy

  • Schedule of loss and documents relevant to financial loss (e.g. job applications, payslips)

Finishing the bundle

When the tribunal gives directions for the hearing it will provide guidelines and a timetable for preparing the trial bundle.

meThe number of pages may be restricted, say, to 250 pages to prevent the bundle becoming too cumbersome. If the page limit is reached you will need to get the tribunal’s permission to increase the size or risk the judge refusing to read beyond that point.

The tribunal will normally ask for five copies of the bundle to be given to the tribunal and that the bundle be paginated — page numbered — and bound in a file or tagged together. You will also be told when the bundle must be delivered to the tribunal — some require it in advance, others only on the morning of the hearing.

What happens on the day of an employment tribunal?

If the case does reach a hearing, this will usually be heard by an employment judge sitting alone – although some more complex cases will be heard by a full tribunal panel made up of a judge and two lay members.

When you arrive at the tribunal, be sure to observe the following:

  • Dress smartly
  • Avoid trainers and jeans
  • Switch off your mobile phone
  • Avoid chewing gum

On arrival, check in with the clerk, who will ask both parties if they have a representative and for any documents, witness statements and a certificate from mediation service Acas to provide proof that both parties have spoken to them.

Any notes and evidence need to be brought to the tribunal by the parties themselves if there are no representatives present.

You will then be asked to wait in a room until called. Because, somewhat awkwardly, your former employee will also be in the same room, this is the moment when you could make a settlement offer.

Hearings are usually open to the public and can last anything from an hour to multiple days, during which the claimant, employer and their respective witnesses will give evidence and answer questions, both under cross-examination from the other side’s representative and from the employment tribunal judge.

The employee bringing the action sits on the right facing the tribunal panel and you, the employer, on the left.

The case starts with the employee stating their case and giving evidence and then you will be asked to respond.

Although the process of a tribunal is very straightforward and quite similar to a court hearing, testimony is not given on oath. That means that neither party is asked to tell the truth under a penalty of perjury (as you would do in court).

However, always tell the truth. If the tribunal finds that either of you have given false information, it could have an adverse effect on your defence or the claim.

What happens once the tribunal is over

At the end, the tribunal will announced the judgment and the reasons for it; a copy will be provided to both sides on the day or shortly afterwards.

If the employee wins, then the tribunal will indicate what steps you should take to make compensation and set a deadline for reparation. If you do not stick to this, then you could find yourself on the end of enforcement proceedings.

If the employee loses, then there is a 14-day window for the tribunal to be asked to reconsider. If the employee is still dissatisfied with the result, the employee can always appeal.

And you, the employer, also have the right to appeal if you lose the decision.

Key missteps that small businesses make that could open them up to losing an employment case – and how to avoid them

The best method of avoiding tribunals is to act reasonably and follow clear, transparent procedures which show your actions are justified.

Comply with all the basic requirements of employment law, such as issuing statements of main terms and conditions and payslips. You need to make it clear that any claim will face an uphill struggle, so that it looks less attractive and unprofitable.

Here are simple rules that will keep employers out of the worst kind of trouble:

  • If you do have to let staff go, make sure you have an objectively fair reason for doing so, ideally one that you can defend with documentary evidence
  • Check that disciplinary and grievance procedures for your staff comply with current employment legislation
  • Ensure that staff who deal with employee matters are fully trained in your company’s disciplinary and grievance procedures
  • Keep a record of emails, letters, minutes of meetings, statements and any other material which may be needed to substantiate your company letting a member of staff go at a later date
  • Seek to resolve disciplinary and grievance problems promptly or consider using a professional mediator to help resolve disputes
  • Treat all staff fairly and with respect throughout the employment relationship, but especially on termination. Sometimes these exchanges can be heated, so be professional and courteous at all times

Dos

  • Issue terms and conditions within two months
  • Pay promptly and accurately
  • Make sure you follow proper procedures
  • Ensure that you are meeting your statutory and contractual requirements
  • Be fair, reasonable and consistent
  • Regularly review your recruitment and promotion procedures to make sure that they are fair and transparent
  • Deal with grievances quickly and fully

Don’ts

  • Withhold payments that are due
  • Ignore performance issues or grievances
  • Bypass procedures
  • Make decisions without investigating

Employment tribunal insurance

As we have seen, employment law is an absolute minefield for an employer to navigate on his or her own; not following procedure is the most common reason for an employer finding themselves in an employment tribunal.

Sometimes, even when you think an employee has behaved in a way that any normal personal would consider utterly beyond the pale, such as stealing from your company, you may still find yourself at tribunal if you haven’t followed proper procedure.

For employers, that is the key thing – following proper procedures and processes, ensuring that you have evidence that have done so.

But how can you be sure you are following correct procedure?

An outsourced HR expert such as Peninsula is always up to date with fast-changing employment law, and, because you pay for what you need, it can be cheaper than employing a full-time HR manager.

Employment tribunal insurance – available through Peninsula – will cover the cost of legal representation to help defend you against a claim.

Services Peninsula provides small businesses in an employment tribunal include:

  • Filling in and keeping on top of any tribunal documentation or paperwork
  • Dealing with all correspondence relating to proceedings
  • Interviewing witnesses
  • Negotiating on your behalf if a settlement is reached
  • Attending and representing your company should it come to a tribunal hearing
  • Handling any appeal procedure
  • Keep you up to date during any employment tribunal proceedings

Having employer insurance is a little like having a fire extinguisher in your office; you hope you’ll never need to use it, and most of the time you barely notice it’s even there – but if calamity strikes, you’ll be thankful you had it to hand.

Award-winning HR and health and safety support for small businesses. Arrange a free consultation with one of Peninsula’s local advisors today.

Further reading

Employment tribunal: How to navigate the process



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