There should be a presumption that tribunals will order employers to pay employees’ costs if they lose a discrimination case in which sexual harassment has been alleged, MPs said today.
The women and equalities committed also called on the government commission an equalities review of the employment tribunal system.
The recommendations on the tribunal system formed part of the committee’s report on the use of non-disclosure agreements (NDAs) in discrimination cases, which also made recommendations on lawyers’ conduct – as reported separately on Legal Futures.
The report identified a lack of access to legal advice as a “major barrier” to bringing discrimination cases to tribunal.
“We are concerned by the lack of affordable legal advice available for employment discrimination cases,” it added, noting how few claimants were provided with legal aid for representation in recent years.
“We hope that an awareness-raising campaign will help signpost employees to the free advice that is available, and that such advice will be improved.
“However, tailored advice will be needed by many employees and access to legal aid for discrimination cases is very limited. The government should review legal aid thresholds and monitor the effect of the changes it is making to improve access to legal aid.”
The report said legal experts agreed that concerns about costs and low awards were a key barrier to potential claimants bringing a claim and one of the main reasons for settling cases instead of pursuing them.
The MPs were particularly concerned that fears about being pursued for employers’ legal costs may be driving individuals to agree to settlement terms such as confidentiality clauses to cover up unlawful behaviour.
“This may be due to a lack of clarity around the costs regime, or to the use of potentially unenforceable threats by the other party or their lawyers.
“The government must ensure that there is adequate guidance for tribunal judges and litigants about the circumstances in which a refusal to settle a claim may be considered ‘unreasonable’.
“This guidance must be made clear and accessible to litigants in person and should set out that refusal to agree to an NDA should never, in itself, be deemed unreasonable behaviour in this regard.”
In its previous report last year on sexual harassment in the workplace, the committee recommended that tribunals should be able to award punitive damages and there should be a presumption that tribunals would normally require employers to pay employees’ costs if the employer lost a discrimination case in which sexual harassment was alleged.
The government rejected the idea of punitive damages, saying the current range of remedies available to tribunals offered “significant deterrent to employers and compensation to workers” and that the “fundamental purpose of a tribunal award” was compensation.
It also rejected the recommendation on cost awards, stating that it would raise questions of whether the reverse should apply where cases did not succeed.
The new report hit back, saying the evidence showed the tribunal system did not deter and compensate unlawful discrimination.
It said: “Employment lawyers routinely advise potential claimants with strong cases of unlawful discrimination against using the system because the risks outweigh the potential benefits. A rebalancing is required.
“We also challenge the suggestion that the tribunal system is meeting the stated aim of compensating parties for the detriment suffered and restoring them to the state they would otherwise have been in.
“When compensation awards are significantly depleted by, or fail to cover, the legal costs of bringing a case, then that party is not being restored to the financial state they would have been in had that treatment not occurred.
“In addition, no account is being taken of the significant financial and reputational risk of bringing a case in the first place.”
The MPs said the government was wrong to suggest that one-way cost shifting for employment claims would not be defensible.
“It would be a welcome step towards redressing the imbalance of power, where this exists, between employers and employees with a discrimination dispute.
“In addition, compensation awards must be significantly increased to incentivise employers to do more to prevent discrimination and harassment in the workplace.”
This fed into the committee’s wider call for an equalities review of the employment tribunal system.
“The review should consider whether particular groups of people, or those with particular types of claim, are being disproportionately disadvantaged by the way that the tribunal system currently operates and whether modifications to the system are required to rectify this.”
Alongside this should be a review of the extent to which measures within the Public Interest Disclosure Act 1998 and the Employment Rights Act 1996 provide protection to those who wish to raise concerns with regulators and other relevant bodies or people about workplace discrimination or harassment.
“The review should consider: how best to simplify and clarify existing legislation; how whistleblowing law interacts with other relevant legislation such as the Equality Act; and whether the public interest test is workable,” the report said.
The committee reiterated as well previous calls for time limits to be extended to six months in cases where sexual harassment, or pregnancy or maternity discrimination, is alleged, along with a wider review of the time limit in all discrimination cases.
The Legal Futures NDAs, Harassment and Whistleblowing Masterclass is being held on 16 September in London. See here for all the details.