Employment disputes cost sector £19m over four years

Settlements and legal fees are high compared with other sectors, says lawyer

May 29, 2014

Source: Getty

Counting the cost: universities are said to be spending more than other sectors on defending their cases in employment disputes

Seventy of the UK’s universities spent a total of nearly £19 million over four years on settling employment disputes, with a lawyer warning that higher education was spending more than employers in many other sectors in defending claims.

Figures obtained by Times Higher Education under the Freedom of Information Act show that, in addition, 50 universities spent £10.4 million over four years on external lawyers’ fees to fight employment claims.

THE asked 125 UK universities how many employment disputes and tribunals they had been involved in between 2010 and 2013, and how much they had paid to settle or fight those cases. The 75 universities that provided figures on dispute numbers had been involved in a total of 1,331 disputes and 210 tribunals across the four years: an average of 4.3 disputes and 0.7 tribunal cases per institution per year.

The 70 universities that provided figures on the cost of settling claims, either before or after a tribunal hearing, had paid a total of £18.6 million: an average of £66,400 per institution per year. The average payout was £15,600 per case.

Cranfield University paid out the largest total amount over the four years: £1.44 million. It also had the fourth highest number of disputes – 52. The university declined to comment when contacted by THE.

The University of Gloucestershire paid out £1.17 million, including £707,000 in 2012 alone. A spokesman for the university said: “This was a period of restructuring. The majority of the [payments] related to contractual redundancy and pay in lieu of notice entitlements.”

Three institutions were not involved in any disputes, and five paid out no compensation.

The University of Oxford was involved in the largest number of disputes – 67 – but just one employment tribunal. Its total settlement payment of £210,000 was only the 29th highest.

Loughborough University was involved in the most tribunal cases, 15, but paid out only £5,000 in total.

Rob Cuthbert, emeritus professor of higher education management at the University of the West of England and chair of the Improving Dispute Resolution Advisory Service for Further and Higher Education (Idras), cautioned that those institutions reporting the highest numbers might just be “the most assiduous” about classifying “disputes”.

“In particular, I would want to know more about the large institutions reporting little or no spending, which seems improbable,” he said.

THE also asked universities how much employment disputes had cost them in terms of the time of legal and human resources staff. No university was able to provide an internal breakdown, but 50 reported spending on external lawyers totalling £10.4 million. The average spending was £12,200 per case, although four institutions did not spend anything on lawyers’ fees.

The highest average cost per case – £69,200 – was incurred by Royal Holloway, University of London. Manchester Metropolitan University spent the highest total amount on lawyers: £1.84 million, amounting to £41,700 per case.

Helen Scott, executive officer of Universities HR, the professional organisation for universities’ human resources staff, said: “The level of disputes and payouts remains low compared with many other sectors. The higher education sector accounted for only 0.06 per cent of employment tribunal cases in the past four years.”

But Christopher Mordue, a partner at Pinsent Masons and head of its university employment team, said the statistics suggested that the average total cost of employment disputes within higher education was greater than in other sectors.

He noted that the average total cost per dispute – including both settlement and legal fees – was in excess of £25,000. “That looks on the high side…and is certainly much higher than the median awards made by tribunals even in discrimination cases,” he said.

He suggested this may be a result of the complexity of higher education claims – which frequently involve various categories of discrimination – and the fact that many occur while the claimant is still employed. These were often settled by the employee agreeing to resign, requiring “a higher settlement figure than would be needed simply to settle the claim in isolation”.

Mr Mordue also noted that the proportion of dispute cases in higher education that proceed to a tribunal – 16 per cent – is significantly lower than the per cent figure for all tribunal cases in 2011-12: “That could indicate that universities are more risk-averse than other employers…However, it is just as likely that [it] reflects the fact that…the cost of defending the claim is often disproportionate to what is really at stake if you lose, making it more cost-effective to settle.”

But he added that there are “cases where, despite the cost, the right thing to do is to fight the claim – for example, on a point of principle, or to defend the managers involved or to avoid creating a claims culture”.

He advised universities to decide early on a fixed total of how much they were willing to spend defending claims and make a “robust assessment of the likely outcome of the case”, including how much compensation might be awarded.

He also noted that the total cost of disputes fell significantly in 2013, and he expected that trend to continue given recent changes to the tribunal system, such as the introduction of fees for claimants.

Gill Evans, emeritus professor of medieval theology and intellectual history at the University of Cambridge and chief executive of Idras, said lodging a tribunal case had previously been the standard negotiating tactic for disgruntled staff, but the new administration fee and the risk that they might become liable for costs if they lost – which was the most common outcome – no longer made it advisable.

“There is not much correlation between what the employee ‘deserves’ and what happens to them,” she said. “The ones who win and stay [employed] are the few with a lot of resilience and some supportive advice.”

paul.jump@tsleducation.com

10 institutions that paid out most

UniversityDisputesTribunalsSettlements (£)
Note: figures for both tables from 2010-13
Cranfield University5201,443,845
University of Gloucestershire1711,174,013
Birmingham City University5991,1,376
Lancaster University1912,677
University of Bristol428905,558
University of Exeter490888,537
Newcastle University201797,000
University of Teesside225706,522
University of Strathclyde373705,877
Abertay University120575,505

 

10 institutions that spent most on lawyers

UniversityDisputesTribunalsLegal fees (£)
Manchester Metropolitan University4431,835,154
Imperial College London3771,374,131
Royal Holloway, University of London133899,558
Queen Mary University of London224852,083
Sheffield Hallam University177374,597
University of Teesside225363,083
University of South Wales144317,175
Cardiff University254304,355
University of Nottingham296,320
University of Hertfordshire61250,079


Click here for the full data

Editor’s note: An error in the calculation of the University of Derby’s figures meant their legal fees were incorrectly listed as £302,177. The actual figure was £148,177. Derby should not have been listed in the top 10 institutions spending most on lawyers, and the table has been amended accordingly. The University of Hertfordshire now appears in the amended top 10.

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Reader's comments (4)

Quite shocking! Is it possible to see the full dataset? I think we should be able to see how much of our scarce HE resources are going on this in each institution.
Prudent use of student fees - is it not interesting that with a single exception the Universities in the two tables (lawyers vs settlements) are different? Could this difference be an indicator of different management tactics? I wonder whether the various tribunal hearings reported in these pages in the first few months of 2014 (i.e. from Queen Mary University of London and Imperial College) were counted (as the claims fell within the period 2010-2013). Sad but telling that these two institutions appear to invest so heavily in lawyers.
Of course there are some obvious and good questions one can ask. For example, what of the universities that did not make any relevant info available? What is the total figure for the last ten years (not just three)? What will the government do about this obvious waste of money? What did the union ever do about it? Suggestion: Protect from legal action all those who signed a compromise agreement and let them state openly a) the conditions under which they were victimised, and b) what they were paid for compensation. We are truly only looking at the tip of the iceberg... PS: My case cost my ex-employer (a university) close to half a million. It is one of those institutions not listed in the 75...
Congratulations to the University of West London for their award of THE Outstanding HR Team. I can't see their data in this spreadsheet - is it available?

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