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Ministers propose instant pay offs to avoid employment tribunals

Mark HigginsMark Higgins - Employment Law Partner, Employment Law Partner

The government’s proposal is of little help to employers in real terms.

As any employer who has had the unfortunate experience of being taken to an employment tribunal knows, the true cost lies in actually defending the proceedings rather than the cost of any award made.

The median award for unfair dismissal currently stands at just under £5,000.

However, even if the employer successfully defeats the claim, legal costs will often run into tens of thousands of pounds and this does not include the cost of taking time out from the business to instruct lawyers, prepare witness statements and attend a hearing which will often last more than one day.

In these circumstances, introducing a right to prevent ex-employees from mentioning offers of settlement is of cold comfort.

My advice to employers contemplating paying an employee off thus remains the same: ensure all negotiations regarding settlement are conducted on a without prejudice basis and if a figure is agree, ensure that it is subject to a properly drawn up compromise agreement. This is the only way to ensure that the pay off will avoid the nightmare that begins when a Notice of Claim lands on the doorstep.