£500 “not enough” to pay for LiP’s legal advice on settlement

termination of employment

Settlement: Merits advice would cost much more than £500

Employers paying for an employee’s to speak to a lawyer about settling a dismissal dispute need to stump up significantly more than £500 for proper legal advice, the Employment Appeal Tribunal (EAT) has ruled.

Such a sum was “wholly unrealistic” if it was to give an employee advice on the merits of their claim.

In Solomon v University of Hertfordshire, the claimant was represented before the employment tribunal and the EAT by her husband, although she also spoke herself following his submissions.

She received £1,900 compensation for unfair dismissal, but lost her discrimination claims; in the run-up to the hearing, she had rejected a settlement offer of £50,000, with an additional offer to pay £500 to take independent advice on it.

The tribunal awarded the university costs of £20,000 – the most it can award without a detailed costs assessment – with one of the reasons for this that the claimant acted unreasonably in failing to take advice on and accept the offer.

The claimant’s husband had argued that £500 plus VAT was not enough for advice on the settlement. The tribunal noted that the claimant had not made this complaint at the time and concluded that the she was not interested in settling for that amount.

On appeal, while His Honour Judge David Richardson in the EAT upheld the substantive decision, he ruled that the tribunal erred in law in its approach to costs.

He found that that in determining whether the claimant’s conduct – for example, in proceeding with the litigation rather than accepting offers – was unreasonable, it should not have substituted its own view but should rather have asked whether her conduct was within or outside the range of reasonable responses in the circumstances.

The EAT added: “We wish to say a word about the offer of £500 to the claimant to obtain legal advice. We think it clear that the advice which the claimant could expect to receive for this sum (or any sum remotely like it) would only relate to the terms and effect of the proposed settlement and its effect on her ability to pursue her rights thereafter (see section 203(3) of the Employment Rights Act 1996).

“Any advice as to the merits of the claimant’s claim and the likely award of compensation would require reading and consideration on a quite different scale.

“So even if the claimant had sought advice, she would still have had to make her own lay assessment as to the merits of her claim and the likely award of compensation.

“The ET said… that the offer of £500 plus VAT was for a solicitor ‘to advise on the merits of a settlement’. If so, the offer was wholly unrealistic.”

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