According to the Ministry of Justice, during the year April 2019 to March 2020 (ie the period immediately prior to the first national lockdown), in excess of 100,000 applications were made to the Employment Tribunals.
Commentators had been expecting that these figures could soar in light of the ongoing pandemic, although the recent extension of the coronavirus job retention scheme until March 2021 may impact the next set of published figures to March 2021.
Funding employment litigation with competent legal representation is an expensive proposition for individuals and businesses, notwithstanding the fact that Employment Tribunal fees are no longer payable (there remains a fee regime for bringing forward litigation in the ordinary Courts). Even a straightforward claim from issuing proceedings to final hearing may cost £15,000 plus VAT, with more complex cases costing into six figures.
There are three main routes for individuals and businesses to funding employment litigation claims:
- Paying privately;
- On a conditional fee basis (colloquially referred to as "no win no fee"); and
- Through legal expenses insurance.
What is legal expenses insurance
Legal expenses insurance is normally an addition to either a home insurance policy or a business insurance policy, which will generally cover employment disputes from the point of instituting proceedings.
Level of cover
The level of cover offered via insurance varies but will typically be between £50,000 - £100,000 for those claims which are deemed to fall under the insurance policy and which stand reasonable prospects of success.
Freedom of choice when instructing a Solicitor
Understandably, insurers will suggest that policy holders with potential claims should instruct their panel Solicitors to pursue claims, as there is a large cost saving to the insurer associated with instructing an often junior regionally based Solicitor, with whom the insurer has agreed much reduced rates.
The Law, in the form of the Insurance Companies (Legal Expenses Insurance) Regulations 1990, affords policy holders the right to choose their own lawyer to "serve the interests of the insured in any enquiry or proceedings."
If you or your business finds itself in a situation of needing to bring forward or defend employment related proceedings, please do get in touch with James Townsend, Partner to discuss matters further.
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