WorkLife 2.0: managing the risk of multiparty employment claims

An awful lot of change has happened to the employment landscape in the UK over the past few months since the outbreak of the COVID-19 pandemic. Many businesses have had to make difficult decisions, often at speed, regarding their workforces – whether this is furloughing, the return to work or other cost saving measures like redundancies. These decisions may have generated more legal risk than businesses would ordinarily have been prepared to accept and there is a real risk of increased legal claims in the coming months.

The decisions made by employers recently have affected large groups of employees. Mass claims by groups of employees are therefore increasingly likely. Handling these sorts of claims requires a different approach from individual claims.

Planning your litigation strategy

Many employers will find it useful to put together a high-level litigation strategy document to minimise, defend and potentially settle employment litigation. A litigation strategy might include the following:

• Identification of the key areas of legal risk relevant to the business and the steps to minimise and mitigate those legal risks. Employers may find it useful to design a protocol or process for decision making and implementation;
• An assessment of the potential cost in relation to any potential claims. Mass employment claims are often individually low in value, but taken together can be significant. This requires a different strategy from a small number of high value claims;
• Consideration of any aggravating factors that could affect the seriousness of legal claims, for example high numbers of vulnerable or extremely vulnerable employees, or claims backed by a union;
• Consideration of the reputational/brand impact of any claims (discussed further below);
• Who might advise the employees on a mass claim and how it will be funded (also discussed below); and
• A strategy for whether you will settle claims or fight them.

Defending the brand as well as the claim

Successfully defending a piece of litigation is not the only goal. It is also essential for businesses to defend their brand. Public perception of any dispute will affect a brand – and in the digital era so much is determined by social media. It is essential to have a legal team which works alongside your PR team to ensure clear and consistent external messaging for these reasons. 

Public perception is likely to depend on the sector your business operates within. For example, those in regulated sectors (like financial services), listed companies or those who engage in employment practices that frequently attract attention (eg the gig economy) can be contrasted with the ‘darlings’ of the COVID-19 crisis, like those in the medical or food sectors, who may be able to implement changes with less scrutiny.

A word on tactics

The funding model used by the claimants in a collective employee action will influence the approach and tactics used in defending and, if relevant, settling the claim.

To take one example, in a unionised business it may be that the union is not keen on seeking out a collective employment claim which could cost the business millions of pounds, as this could destroy the relationship between the employer and the union. In this situation, a claimant law firm – and/or a third-party funder – may step in and approach employees directly. The fear of such a firm stepping in in this way may cause a union to change tactic and bring a collective claim where it would otherwise not have done so.