Employers’ insurers
Further move to converting the employment tribunal to a court
Case Watson v Hemingway Design Ltd (In Liquidation) (2021) The Times, March 10
Facts W, a former employee of HD, brought claims of unfair dismissal and disability discrimination against HD. HD had taken out a policy insuring it against awards arising from successful claims brought against it by employees in employment tribunal proceedings. W applied to join the insurer to his claims. He argued that any liability on the part of HD had transferred to the insurer when HD was liquidated, under the Third Parties (Rights against Insurers) Act 2010.
W’s application was refused by the ET. His appeal to the EAT succeeded and the insurer appealed to the Court of Appeal.
Decision 1. The first issue was whether the ET was included as a “court” for the purposes of the 2010 Act. If so, then the ET had jurisdiction to make a declaration as to the insurer’s liability.
2. It was clear that the main aim of the 2010 Act was to avoid the need for a claimant such as W to have to start two sets of proceedings to make a successful claim against an insolvent company.
3. If the employment tribunal was not included in the definition of a court, the one-stop service which the 2010 Act had created for claimants bringing personal injury cases, or contractual claims within the jurisdiction of the civil courts, for example wrongful dismissal, was not available for claimants raising causes of action within the exclusive jurisdiction of employment tribunals, for example unfair dismissal. The idea that parliament had intended such a distinction was fanciful.
4. The fact that the ET lacked enforcement powers was not a reason why it should not be considered a court for the purposes of the 2010 Act.
5. Enforcement of employment tribunal awards of compensation was dealt with by the county court to avoid the inefficiency of creating a separate division of ET staff, including bailiffs. The county court had no discretion to revisit the decision of the ET and applications for enforcement were dealt with administratively without a hearing.
6. It was wrong to argue that parliament could not have intended the ET not to deal with questions of insurance law. The ET regularly had to deal with difficult issues of law across a variety of topics. These were not confined to mainstream employment law and some had to deal with millions of pounds. This contrasted with the limited jurisdiction of county courts. Other cases had very complex facts.
7. An application for a declaration that an insurance company had to meet a judgment in an unfair dismissal claim was not at the top end of cases with which the ET had to deal. The ET was a court for the purposes of the 2010 Act.
8. The insurer had reserved the right to invoke the arbitration clause in the insurance contract. In cases of unfair dismissal and discrimination, to require claimants to bring claims in arbitration, would deprive them of access to the ET for determination of those claims.
9. The arbitration clause had to yield to the exclusive jurisdiction of the ET over claims for unfair dismissal and discrimination.
10. The arbitration clause had to be treated as inoperative to the extent that the insurer could not rely on it as a defence in, or a procedural block to, W’s claom against the insurer in the ET.