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Routine settlement correspondence - potentially an act of victimisation?

June 2007 - Employment. Legal Developments by Clifford Chance.

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The Sex Discrimination Act 1975 renders it unlawful to victimise a person through less favourable treatment because they have brought sex discrimination or equal pay proceedings. Similar provisions exist in relation to other areas of discrimination.

Once a dispute has arisen between an employer and employee, it is fairly routine for the employer to try to avoid or end the litigation by entering into correspondence with the individual and possibly warning them of the adverse consequences for the employer's business and the effects of pursuing the claim on colleagues. This type of correspondence was the centre of a victimisation claim in the context of equal pay proceedings brought against St Helens Borough Council by its catering staff.

St Helens Borough Council v Derbyshire and others

Over 500 staff had brought equal pay claims in the tribunal, the majority of which were settled. However, 39 employees carried on with their claims. Two months before the hearing, the employer wrote to the claimants, saying that it could not bear an immediate increase in pay rates and encouraging them to reconsider its settlement offer. At the same time, it sent a second letter to all of its catering staff, and the claimants, setting out the likely consequences if the ongoing equal pay claims were successful. In particular, the letter said that if the claims were successful it would cost the council £1.5m that year and a further £1m for every year after that. As a result, the price of school meals would rise to such an extent that it would no longer be viable to produce them, and it would have to limit itself to the provision of free school meals. All of this would mean a drastic cut in the number of staff required.

After receiving these letters, the claimants brought victimisation proceedings on the grounds that the letter had caused them distress and that some of their colleagues had reproached them. They complained that the employer was trying to intimidate them into dropping their claims.

At first instance the victimisation claim was upheld. The tribunal found that the sending of the letters (and in particular the letter that went to all staff) treated the claimants less favourably than employees who had not brought, and continued, equal pay proceedings, and as a result the claimants suffered a detriment. Although the tone of the letters was rational and they contained ‚Äėmuch that was sensible', the reaction was one of distress as the claimants ‚Äėincurred... some odium'.

The House of Lords has now ruled that the tribunal was entitled to uphold the victimisation claims. It accepted that whilst it was open to an employer against whom discrimination proceedings were pending to take reasonable steps to protect its interests by encouraging the claimants to settle, it must not conduct itself in such a way that reasonable employees feel that they are being unduly pressurised to concede their claim. It will be a question of fact for the employment tribunal to decide whether an employer has crossed the line from an honest and reasonable attempt to settle proceedings to unreasonable victimisation.

Practice points

Before embarking on an exercise to persuade a claimant to abandon employment tribunal proceedings (via correspondence or otherwise), an employer would be advised to consider the way in which the proposed actions will be construed in the eyes of the employee or by an employment tribunal.

The following steps may keep an employer on the right side of the settlement/victimisation line:

  • Where a claimant is represented by solicitors or a trade union, ‚Äėsettlement' correspondence should continue to be addressed to them rather than directly to the claimant.
  • Avoid actions that are likely to arouse the hostility of colleagues, clients or the public towards the claimant.
  • Where possible ‚Äėsettlement' letters should not be sent in a period immediately preceding the tribunal proceedings but much earlier.
  • Consider whether mediation or other negotiations could achieve a settlement.
  • Maximise the use of the ACAS conciliation period.

This decision does not prevent employers from making reasonable attempts to encourage claimants to settle - merely sending letters to encourage settlement will not if itself amount to victimisation. However, the key here is to exercise a degree of caution and moderation when doing so.

St Helens Borough Council v Derbyshire and others [2007] UKHL 16