I have long been vexed by the EAT's decision in Telephone Information Services v Wilkinson [1991] IRLR 148, in which the EAT held that it is not "frivolous or vexatious" for a Claimant to pursue an unfair dismissal claim even though the employer has offered to pay the maximum statutory compensation, as he is entitled to pursue his claim to obtain the declaration of unfair dismissal. In essence, this gives a Claimant carte blanche to force a Respondent to incur massive legal costs even though the Respondent is keen to settle its way out of the case.
Telephone Information Services v Wilkinson was decided under the old procedural rules. It would probably be decided differently now, unless the employee was seeking - and had a reasonable prospect of obtaining - reinstatement or reengagement.
This is because, in the absence of a request for reinstatement/reengagement, it would normally be unreasonable to continue with the proceedings once the maximum compensation is offered (the test of unreasonable conduct of proceedings did not exist when Wilkinson was decided - the costs triggers were simply frivolous or abusive conduct).
Alternatively, Telephone Information Services v Wilkinson could be distinguished on the basis it was decided at a time when the parties were not under a duty to follow the overriding objective (ie cooperating, and acting in a way to save tribunal time).
This decision has been quoted against me several times in the last couple of years. It might have been good law in twenty years ago, but it is time for a change.
Daniel Barnett is co-author of Costs in Employment Tribunals (Jordan Publishing)
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4 comments:
Daniel
Having acted predominantly for employers, I sympathise with the sentiment that employers who have offered the maximum compensation should not then have to incur the costs of defending a claim.
The difficulty surely though (which is what I think underlies Telephone Information Systems) is that the finding of unfair dismissal has its own instrinsic value which cannot be measured in purely monetary terms.
Dismissed employees need generally to find another job. It is one thing to be able to explain why they left their previous employer i.e. they were unfairly dismissed and received maximum compensation. It is another for them to say they were dismissed but their ex-employer continues to assert that the dismissal was fair. The concern of a prospective employer about hiring someone who was sacked in disputed circumstances is no less true today than it was in 1991 - and arguably more so.
The employee generally will not even be able to refer a future employer to the maximum compensation paid because the ex-employer will normally want confidentiality attached.
You could flip round your argument and say that the unreasonableness comes from the ex-employer who wants to have their cake and eat it. Privately they are willing to pay out the maximum to avoid legal costs and publicity - and in reality because they will often concede that their prospects of success at Tribunal are poor. Publicly they want to be able to save face and continue to deny doing anything wrong. The Respondent is not actually forced by the Claimant to incur massive legal costs because the Respondent can avoid this simply by adding the admission of liability. Indeed, you could say the employer was acting unreasonably in forcing the Claimant to incur massive legal costs to secure a finding of unfairness that many would suspect was implicit in the offer of maximum compensation.
Certainly, just because an employee is seeking a finding of unfair dismissal should not immunise them against the risk of costs. It can't be a get out of jail free card. On the other hand, is that really what Telephone Information Services was saying? If it needs to be distinguished, whilst I can see the force in your arguments, is it not really simply a decision based on its particular (and fairly unusual) facts?
My guess is that we often suffer from the temptation to seek order by creating generalised rules from specific decisions. Isn't it, however, more a case of a Tribunal discretion which is largely fact-dependent when it comes to costs. The discretion could be exercised either way and I suspect the Employment Judges would be jealous to guard against any rule that said they 'must' or they 'cannot' award costs in a particular situation. As representatives, it is something which we have to live with I think, however difficult it makes it to give advice to clients about certainty of outcome.
I represent teachers in employment tribunals. They are a group of employees to whom Mark Shrives-Wright's comments particularly apply. The judgments in their favour are about the only things that persuade another employer to offer them another post in teaching. The financial compensation is secondary.
I represent teachers in employment tribunals. They are a group of employees to whom Mark Shrives-Wright's comments particularly apply. The judgments in their favour are about the only things that persuade another employer to offer them another post in teaching. The financial compensation is secondary.
Telephone Information Services v Wilkinson has been applied in Gibbs v Maidstone and Tunbridge Wells NHS Trust [2010] IRLR 786, so it is still good law. The rationale is, as I see it, that the claimant has a general right to a declaration or an admission that his or her dismissal was unfair and that this can form the basis of a claim. An offer of the maximum statutory compensation with no admission of liability is therefore excluding this right. In short, employment claims are often about more than money.
There has, however, been recent contradictory dicta (see Nicolson Highlandwear Ltd v Nicolson).
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