Avoiding the “on household insurance” claim

Increasingly employees, or ex-employees, are finding they can claim legal expenses on some types of household insurance. For the aggrieved it is a “no-lose” opportunity. That is whether they win or lose they can cause their ex-employer considerable pain. A win in some way.

We see it more and more in Tribunal cases that are drawn out into several days, why? The reason may be that the counsel representing a claimant has an interest in extending the case out as long as possible. Employment Judges are not necessarily motivated to halt protracted processes either – if it could be relevant it has to be examined.

So minutiae of detail become common eg:

Did you set budgets?
No!
Why not?
Because we had higher priorities.
How do you expect my client manage cost-effectively if there is no budget?
He was fully aware of the criticality of the situation.
How was he made aware?
In this e-mail for example
Where does it show he received it?
etc, etc.

We see barristers asking a question 10 different ways in the hope they can find an inconsistency between answer 7 and answer 10 and thereby undermine the credibility of the witness.

The losers in these scenarios are the state (who set up the system), the insurance company (which is not present) and the employer. The winners are the legal profession and the legal profession. For no significant cost, the claimant gets the satisfaction of putting their employer under serious personal and often also considerable financial, pressure.

Ten tips to avoid these claims

  1. Do not employ friends or relatives. This may be attractive at the outset of a business. But when you need to dismiss your sister-in-law for poor performance, business suddenly starts getting very personal.
  2. Treat all employees with politeness and respect, and especially so in any written correspondence. Petulant, uncooperative or even malicious attitudes from an employee might encourage reciprocal behaviour. Beware!
  3. In contentious circumstances, have a disinterested third party review your correspondence before sending it. You may have written something “between the lines” that could be dangerous – easier for your third party to spot it.
  4. Consider mediation. If you foresee a dispute arising over a disciplinary or discriminatory matter then early advice may save much grief later. Mediation can often resolve conflict and has many more long term advantages that do adversarial processes.
  5. Have clear and well written procedures and terms and conditions. We recently observed a Tribunal spend well over an hour trying to resolve a dispute over £500 worth of sick pay. The rules were open to so much interpretation it seemed even the Employment Judge showed despair.
  6. Follow your procedures. They protect you just as much as they protect your employees. It is more difficult for a claimant to get legal support from insurance or any source if it is clear proper procedures have been followed – not to mention the more than 30% reduction in the claim risk itself from this simple step alone.
  7. Involve a professional third party in disciplinary processes, redundancy programmes or employee grievances. They will keep matters “on track” and third parties lack bias. This is particularly important if relatives or friends are involved.
  8. Be prepared to settle rather than fight. Galling though it may be, it often makes commercial sense to settle a claim for a sum of money. The alternative can be to spend far more on your defence and have all the huge opportunity cost of your time that will necessarily be incurred.
  9. Help dismissed employees find new jobs! They are far less likely to want to be at a Tribunal if they have to explain their absence to their new employer. Financially they also have much less to gain and so it often becomes not worth their while.
  10. Remember that spurious Tribunal claims usually arise from a sense of feeling aggrieved rather than necessarily any objective injustice. The more you can help an employee realise that there are being treated fairly the less the risk of them claiming that you have not.

Whether it is vetting correspondence, providing mediation, drafting clear terms and conditions and policies and procedures, facilitating fair processes, negotiating settlements or even defending you against unfounded claims, Employer Solutions is here to help.

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