December 9, 2019

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When Is Refusing A Settlement Offer The Reasonable Conduct Of ET Proceedings? (UK)

Don’t you just love a good understatement? How about this little beauty on the merits of a rejected flexible working complaint: “The difficulty for the claimant is that she never proved that this arrangement could work by producing the required amount of work in the required time. This was both in terms of quality and output. The claimant did not comply with the agreed start and finish times. She did not comply with her output targets” and then, with admirable restraint “This did not help her position“.

Lovely though that is, it is not actually what makes Solomon-v-University of Hertfordshire worth noting here. Following my post on costs last week [here], here is another, also looking at how unreasonably you have to behave in Employment Tribunal litigation to put yourself at risk of an adverse costs order.

Ms Solomon brought 38 separate sex and race discrimination allegations spanning over 3 years, all of which were rejected for broadly the same reason, i.e. that through her serial poor attendance, time-keeping and performance, she had brought her dismissal upon herself. The University then made an application for some of its costs on the principal grounds that Mrs Solomon had withdrawn from a judicial mediation late the previous evening and that she had acted unreasonably in failing to take advice on and accept what the Tribunal described as a “generous and fair offer of settlement”. It awarded £20,000 costs against Mrs Solomon (quite substantial, but still only a fraction of what the University had had to lay out), but she appealed.

In Brooks last week, the Employment Appeal Tribunal took the view that unreasonableness was objective. However, in Solomon, that was diluted to some extent and the personal views and circumstances of the claimant taken into account to a far greater degree. The EAT said that the relevant test was that more usually applied to employers, i.e. whether the conduct in question fell within the “range of reasonable responses”, bearing in mind that the Tribunal should not judge a litigant in person, as here, by the standards of a legal professional.

Pulling out of the mediation at the last moment was blamed on an error in the University’s position statement which suggested to Mrs Solomon that it was seeking to mislead the mediator. Given qualified advice, it could quickly have been made clear to her that this was at best a without prejudice document and the mediator wouldn’t care. However, she did not take that advice and so it could not be said that her withdrawing was outside a fairly liberally-drawn range of reasonable responses. Another argument for her could have been that since one can legitimately walk out of a mediation at any time for any reason, it was actually a saving for the University that she did it the previous night rather than at 9.31am on the day itself.

The more vexed question was whether Mrs Solomon had acted unreasonably in refusing the offer. This is a suggestion made by employers from time to time but traditionally resisted by the ETs because it would introduce by the back door the Calderbank principles from the High Court i.e. allow employers to impose costs threats on employees through the making of settlement offers which the employees are not always equipped to assess. Moreover, there being no definitive answer in many cases, the range of reasonable responses could cover both accepting and rejecting the offer. Therefore, to put the other party at risk of a costs award by reason of its rejection of a settlement offer requires that offer to be so generous that it would drop clean off the end of that range.

One factor potentially relevant to that is the employee’s access to advice on it. Here the University had offered the usual £500 plus VAT for Mrs Solomon’s costs of taking the advice necessary to sign off on the settlement agreement. It referred to that as evidence that she could have got the necessary advice on the offer had she wanted. The EAT was surprisingly sniffy at the sum offered – it could never cover both advice on the terms of the settlement agreement and advice on the merits of the offer, it said, and so was irrelevant to the reasonableness question. The costs award was sent for re-hearing.

I am not sure that £500 plus VAT is actually “wholly unrealistic” as the EAT said, but it is of course true that it would only be payable if the settlement agreement were then agreed. Otherwise the cost of taking the advice would be for the employee anyway.

However, if you do want to make the sort of settlement offer you might later want to use as a costs lever, the practical tip arising from this case is a simple one: when you make the offer, also put on the table a reasonable sum by way of costs specifically for the taking of advice on that offer, i.e. separate from and additional to the traditional contribution to signing off the settlement agreement. In addition, make it clear that you will pay that contribution even if the employee declines the offer you have made.

If you want, you can also add “without prejudice save as to costs” all over your correspondence, but do not expect it to make any real difference. Not only is that fantastically irritating to the other side, as described [here], but Solomon reinforces that the key question is that range of reasonable responses. Your own view that anyone in their right mind would take your hand off for the offer you make will be of no interest to the Employment Tribunal.

© Copyright 2019 Squire Patton Boggs (US) LLP

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David Whincup Employment Attorney Squire Patton Boggs Law Firm
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Following ten years at a Magic Circle firm, David has been Head of our London Employment practice since 1994. His expertise gained from twenty-five years as a specialist Employment Law practitioner covers a wide variety of employment-related issues, including in particular individual and team recruitment issues, policy and contract drafting, disciplinary and grievance procedures, individual and collective redundancies, the defence of employee discrimination and dismissal claims and other litigation, whistleblowing, employee health, data protection and matters surrounding...

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