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Mandy Laurie

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Legal insight: what employers should know after the Stella English case

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This article was written by Mandy Laurie, partner in the employment team at national law firm Dundas & Wilson.

There has been much interest about the recent employment case involving the previous winner of The Apprentice, Stella English, and her claim for constructive dismissal against Lord Sugar. However, in a case held to be largely unfounded, perhaps the most important lesson an employer may take away is to be aware of the speculative claim.

Ms English resigned from her £100,000-a-year job with Lord Sugar’s computer company, Viglen, after claiming that her work was "a sham" and that she had been treated like an "overpaid lackey".

In order to be successful in her claim for constructive dismissal, Ms English was required to prove that her employer had conducted itself in a manner which was likely to destroy or seriously damage the relationship of confidence and trust between them. This is a difficult test to satisfy. Conduct of the employer that is simply unreasonable will not form sufficient grounds for a claim.

The Tribunal rejected Ms English’s claim. In particular, the Tribunal held that Ms English had failed to offer any evidence as to the conduct which marginalised or undermined her. So scathing was the Tribunal’s attack of the claim that it stated in its judgment that the case "should never have been brought" – an unusually strong stance for a Tribunal to take.

Lord Sugar has since been quoted as saying that the decision should be regarded as "a victory for the law against the claim culture". This is, to a large extent, true. According to the judgment, Ms English handed in her final resignation at the same time as releasing a press statement via Max Clifford. A consistent theme throughout the media reporting of the decision was, therefore, the suggestion that the claim was brought in order to force an out-of-court settlement. If this was Ms English’s intention, perhaps the law can be seen as victorious on this occasion.

Whilst it is not obvious from the face of the judgment, the speed with which Ms English went to the media might have suggested to the Tribunal that Ms English’s resignation was orchestrated for ulterior motives and not genuinely a direct result of the alleged breach. In this respect, it is worth noting that not only does an employee have to establish that their employer is in breach of contract, but also that their resignation was in direct consequence of that breach. Arguably, this is a hurdle which Ms English may have failed to satisfy even if she had successfully established her employer’s conduct had damaged the obligation of trust and confidence.

However, what Lord Sugar’s much-quoted statement fails to portray is the bigger picture. It does not capture the extent to which this tactic – that of raising speculative claims – often works in practice. Many employers often choose to settle regardless of the strength (or lack of) the claimant’s case due to extra-legal considerations. Concerns about publicity or the difficulty of recovering costs in the Tribunal system often prevail. These issues are particularly significant in the current economic environment, where many employers simply lack the resource to take the risk. In defending the case, not only did Lord Sugar have the security of PR specialists to manage the risk of any negative publicity, he also had the comfort of defending an action with presumably little, or no, budgetary constraints. However, the same cannot be said for the average employer when faced with litigation.

Further, despite Lord Sugar’s success, the case demonstrates that an opportunistic claimant with a speculative case may nevertheless be able to instigate a seven day hearing before a panel of three. In this respect, the law, or rather the legal system, cannot be described as the winner.

Of course, it is crucial that employees who have been wronged are given a forum within which to raise a claim. However, arguably of equal importance, is the right of an employer not to have to spend money defending or settling a claim without merit. The Government has announced a series of measures which are aimed at reducing speculative claims which will be introduced this summer. Only time will tell whether such steps will ultimately prove successful. However, in light of cases such as Ms English’s, it must be seen as a step in the right direction.

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