As of 24 December 2013 we issued this witness statement of Alex Monaco, set out here. This has been slightly edited for this site but is essentially the same as that issued:
IN THE HIGH COURT OF JUSTICE CO/161632013
QUEEN’S BENCH DIVISION (ADMINISTRATIVE COURT)
B E T W E E N :
THE QUEEN on the application of COMPROMISE AGREEMENTS LTD
— and —
SECRETARY OF STATE FOR BUSINESS, INNOVATION AND SKILLS
FIRST WITNESS STATEMENT OF ALEX MONACO
I, Alex Monaco, non-practising Solicitor Advocate (All Higher Rights), of Compromise Agreements Ltd, WILL STATE AS FOLLOWS:
- I am authorised by the Claimant to make this statement in support of the Claimant’s applications for:
[a] permission to proceed with the judicial review;
[b] permission to amends its grounds of claim; and
[c] a Protective Costs Order.
- Except whether indicated to the contrary, the facts in this statement are within my knowledge, and are true. Where the facts in this statement are not within my direct knowledge, they are based on the source indicated and are true to the best of my knowledge and belief.
PERMISSION TO PROCEED WITH THE JUDICIAL REVIEW
Re standing: background information about the Claimant
- Compromise Agreement’s Ltd (‘CAL’) is a company, limited by shares which was formed on 11 December 2009, company number 7102813.
- It is a specialist law firm in the field of employment law, catering to employees only, and providing services including representation at employment tribunal as well as out-of-court negotiations. It is regulated by the Ministry of Justice.
- I am the sole director and shareholder, although I have lawyers working for me including Lorna Valcin and Meg Pennycook and others.
- As well as the commercial aim of the Claimant, we also provide a wealth of free information to employees via our website, which allows members of the public to keep up to date with developments in employment law.
- We passionately believe in helping individuals to stay informed about their rights and enabling them to take legal action if they are treated unfairly by an employer, especially where there in an inequality of arms. Most of our claims proceed on a contingency fee basis and this helps to ensure that we only take on cases where we believe that the employee has been unfairly treated.
Background information about me
- Given that I am the sole director and shareholder of the Claimant, and that it was my decision to proceed with this judicial review, it is relevant that I set out some brief about my own professional background and motivation too.
- I decided to study law so that I might be able to make a difference by helping change things for the better. Having graduated I began working pro bono for Luton Law Centre in the fields of immigration, housing and employment, and also taking on employment cases for ‘FRU’ – the Free Representation Unit. Both of these organisations are charities which provide legal services to those who cannot afford representation.
- I completed the Bar Vocational Course and was called to Gray’s Inn, then started training in a legal aid solicitors’ firm called O’Keefes. After practising in criminal defence, I moved into the asylum and immigration department of the same firm, where I was able to help refugees to apply for asylum by representing them in the Immigration & Asylum Tribunals.
- Around this time I became a young father and, out of financial necessity, I left the legally aided sector and joined a boutique commercial litigation and employment firm called C J Jones Solicitors. I had also cross qualified as a Solicitor-Advocate (All Higher Courts). In 2009 I set up CAL and since then have focussed on growing that, apart from serving as a trustee for Small Steps Project, a charity which helps children living on rubbish dumps.
Why the Claimant is taking this claim
Effect on vulnerable groups
- We did not take this step of initiating legal proceedings lightly. However, this new law will have a large impact over many years to come, and especially upon those who will be sat at home this winter with the heating off trying to survive on the breadline. When it became clear that no one else was going to undertake this judicial review, I felt that it was my public duty to act.
- The new cap on unfair dismissal compensation of 1 year’s salary will primarily impact those earning less than £74,200 per year, and who are likely to be out of work for more than a year following an unfair dismissal. For instance, older people are more likely to be awarded more than a year’s salary by employment tribunals in my experience. This is because they are more likely to be out of work for more than a year, and therefore would have been eligible to more than a year’s compensation were it not for the new cap. Thus the cap indirectly discriminates against older people.
14. I believed that the new cap would also disproportionately affect women, ethnic minorities and disabled people. The same groups take longer to find employment than other groups, and therefore they would be more likely to be affected by the cap after winning an unfair dismissal claim. Furthermore, one year’s salary for them will be lower than those from other groups (because they earn less).
15. It will not be just those who have won an unfair dismissal claim, but also those contemplating bringing such a claim in the first place, or seeking a settlement prior to issuing proceedings. Many claimant employment lawyers operate on a contingency fee basis whereby they would represent a claimant in exchange for a percentage of the damages obtained. With the new cap, a claimant on a very low wage would hardly be able to convince a lawyer to take on their case, and therefore will not try to negotiate a settlement or issue a claim at all. In my experience more people negotiate settlements than issue claims, and those who negotiate outside of ACAS are not accounted for in the statistics.
16. Employers will be aware of the limitation imposed by the new cap, and unscrupulous employers will be free to unfairly dismiss older people without repercussions. With an aging population, I believe we need more protection for older workers in this country, not less.
17. When I read the government’s Equality Impact Assessment (‘EIA’) in relation to this matter, it appeared to me to be woefully inadequate. I couldn’t believe that an Impact Assessment for such an important new law had been dealt with in such a perfunctory manner.
18. The only protected group which seems to have been grappled with in any details in the EIA is older people, whereby the government all but admits that the cap will probably disproportionately them. But it then appears to state that such a conclusion is not drawn, because the statistics are not reliable.
19. In the EIA there is no mention at all of pregnant women and those on maternity leave. Again, it is obvious to me that pregnant women are more likely to take over a year to find a job than most people. If you are pregnant you will struggle to find a job; and then once you have had your child, you will struggle to make time for a job, or find the money for childcare. Yet it appears to me that the government simply neglected to consider the impact on pregnant women and those on maternity leave at all.
20. The government claims not to have access to enough data or statistics to determine the effect of the cap on older people. But as I set out in my letter to TSOL of 12 November 2013, it does have the data available. Every ET1 records the age and income of the Claimant. And every judgment records the level of the award. So the government could simply compare the level of unfair dismissal awards with income and age.
21. The ET1’s are stored at the relevant Tribunal for one year after the judgment is promulgated, but they are not available to the public – the government could access them, however. In my letter I did ask TSOL to ensure that the ET1’s are preserved and not destroyed after one year, as they will hold the key to a proper and informed Impact Assessment. The judgments are publically available and all judgments ever handed down are stored in Bury St Edmonds at Tribunals Service, 100 Southgate Street, Bury St Edmunds, Suffolk, IP33 2AQ. On 07 November 2013 I called the Tribunal Service at Bury on 08457 959775 and spoke to Linda Ralf there who confirmed to me that judgments were stored there, but that the ET1’s are stored at the relevant tribunal for one year and are not publically available. The ET1’s contain compulsory sections for the claimant to input their date of birth and income, as well as whether they consider themselves to have a disability. Other information pertaining to protected characteristics, such as religion and sexual orientation, is contained within the equal opportunities monitoring form at the back of the ET1, and is optional.
Effect on the taxpayer
22. It is not just the rights of the unfairly dismissed employee which are affected by the new cap. The tax payer will be hit too. If compensation is restricted to one years’ salary, but the employee is out of work, through no fault of their own, for over one year, then who will support them financially? It is likely that the public purse, in the form of benefits, will take the burden of this, rather than the employer actually responsible for the unfair dismissal in the first place.
23. Therefore not only does this law discriminate against vulnerable groups, but it also punishes the innocent taxpayer in favour of the guilty employer. There are no austerity cuts here which might benefit the country overall: quite the opposite.
The stated aims of the new cap
24. One of the stated aims of this new cap to stop employees from bringing claims with unrealistic expectations of the compensation they may receive. But the government could, instead, educate claimants about the average award made and the proportion of unfair dismissal claims which succeed.
25. That could be achieved in a number of relatively simple and affordable ways. For example, the Government has already introduced new claim forms whereby the average award is stated on the front of the form. The same information could be stated in other literature given to Claimants as there case progresses through the tribunal; it can be made readily available on the ETS website and on boards at the tribunals; a specific leaflet called “Compensation levels” can be produced to support the various leaflets given to parties by the tribunals; ministers can address the issue through various media interviews and so on. None of these steps provides for any disparate impact on protected groups.
26. The government’s “Response to Consultation: Ending the Employment Relationship” of January 2013 at paragraph 97 states that 50% of those consulted were in favour of the new cap. But when I added up the number of respondents to the consultation, it seemed that there were around 70 employers, 27 union respondents, 24 individuals, 5 charities and 6 government respondents. So the number of businesses consulted (70) outweighed all the other groups put together (62). Therefore when 50% of those surveyed were in favour of the cap, this represents less than 50% if you weigh the views of employers equally with the views of all other groups.
27. It is of note that the government’s “Response to Consultation: Ending the Employment Relationship” of January 2013 is ambiguous regarding expectations of Claimants. At para 11 it states:
“11. There was no consensus among key stakeholders on the compensatory cap. Businesses believed that a cap would help bring perceptions amongst employers and employees more in line with what they might reasonably expect. Trade unions did not agree there was an issue with perception of awards. The Government found arguments that the high level of the current cap is creating unhelpful perceptions persuasive. Empirical studies have shown a number of claimants hope for awards far in excess of the median award.”
28. Then in its conclusions on this point it states at para 110 state: 110.
“The Government does not find the suggestion that there are no issues with perception of unfair dismissal awards persuasive. The SETA 2008 data cited by trade unions shows that the median amount claimants hoped for was £5,000. But it also shows that there are some very high expectations. For example, out of a sample of over 150 unfair dismissal claimants, 38% expected to receive £10,000 or more, and of those, 37% expected more than £25,000 (14% of the total). Though the sample size is relatively small, these are large proportions of claimants with expectations far in excess of the median award.”
29. From reading this justification, it does not seem to me that there is sufficient evidence that there is a misconception amongst Claimants. If only 38% expected to receive £10,000 or more, those 38% could be correct. There might be 38% who expected to receive less than the median for all we know. And the sample size is admittedly small. By reducing the cap, it is using a sledgehammer to crack a nut, and that sledgehammer will also hurt a lot of vulnerable people.
29. The other stated aim of the cap was to ‘improve certainty of the amount of award that business will pay’. If the real aim is to reduce the liability of businesses which unfairly dismiss employees, then why not just reduce the cap, rather than restrict it to one year’s salary?
Acting promptly & the time-line for commencing proceedings
30. In around spring or summer of 2013 there was talk on the grapevine of a new cap being enacted, but, unlike the other big changes in employment legislation, such as fees for issuing tribunal claims, the introduction of a cap did not appear to be timetabled until relatively later in the day. We do not recall ever receiving an invitation to participate in the government consultation which preceded the new cap coming into force.
31. We began preparing our challenge in advance by using our contacts to try to find counsel to advise us. We did not have any funding for this matter and we were acting pro bono ourselves. We managed to instruct a QC and a junior from a high profile public law set on a pro bono basis. By around late July 2013, we had managed to draft an application for funding to the Equality & Human Rights Commission (‘EHRC’) which we submitted to them on around 20 July 2013.
32. The government order which brings the cap into force was made on 28 July 2013, with a date for coming into force of 29 July 2013.
33. The EHRC replied to us on around 30 July 2013 with a decision not to take the case forward. This reply was relayed to me on 06 August 2013 by counsel, as my CAL lawyer was abroad on her summer holidays. It was not clear to us why the application had been refused and so we sought additional clarification. A brief explanation was received on around 15 August 2013 from the EHRC.
34. At this point I tried to contact our counsel again for their views on resubmitting an improved application. Unfortunately they were both abroad on their summer holidays, to return in early September. Much of the profession was on holiday at this time and we decided to await their return, as they had an intimate knowledge of the case. They had also been acting pro bono and we did not have a budget to instruct other counsel on a paying basis.
35. Upon counsel’s return we learned that they would no longer be prepared to continue acting pro bono and that now we would need to start paying their fees. CAL could not afford this. At this time I had already decided to try to look elsewhere for help. I had contacted UK Uncut, which were an organisation which had recently been in the news because it had raised funds for an adverse costs order when it had challenged HMRC’s decision to let Goldman Sachs off a £20M tax bill. I arranged a meeting with this organisation and they were supportive but when I followed it up with them on around 16 August 2013 they did not take it any further.
36. I then contacted the campaigning organisation 38 Degrees with a view to requesting support from them regarding the costs of instructing counsel and/or covering adverse costs of the action. We had not realised that a PCO was a possibility, and we had understood that we could be liable for a large adverse costs order if unsuccessful and therefore we wanted to arrange some cover for this eventuality before plunging into proceedings.
37. 38 Degrees issued a bulletin to their members canvassing opinion, but then my contact there went abroad on work for a number of weeks. When she returned, in September 2013, I learned that 38 Degrees was focussing all its efforts on campaigning against the ‘gagging law’ which threatened lobbying groups such as themselves. Thus the new cap on unfair dismissal was not on their agenda any more.
38. On 03 September 2013 I attended a seminar on employment law hosted by Daniel Barnett, a well-known employment barrister. Along with my lawyer Lorna Valcin, we asked Daniel to canvass opinion amongst the lawyers in attendance to see whether any other firms would be interested to join a coalition with us to bring these proceedings. It may have been an unexpected question for the audience, as no hands went up when Daniel asked for volunteers.
39. It was only faced with this knowledge that no other party was willing or able to assist us, that we began to investigate the possibility of issuing this claim ourselves, unrepresented – the last resort.
40. On Friday 27 September 2013, my daughter’s grandma had surgery to remove a tumour from her brain. This meant that for the next three weeks I was looking after my daughter every day, doing both school runs, as well as trying to hold down a business, whilst her mother tended to sick grandma. This time period encompassed half term 25 October 2013 whereby I took my daughter to Italy for the week.
41. On around 18 October 2013 I had contacted an employment judge to ask his advice on what I should do. He suggested trying to find a test case to take to the ECJ in Strasbourg. The plus side was that it would be cheaper and a safer option from the costs point of view. The downside was that it could take years to resolve and by this time the new cap could already have affected thousands of vulnerable people.
42. In order to try to understand more about judicial review, I attended the hearing of the Unison judicial review against fees in the employment tribunal on 23 October 2013. This was the first time I had experienced judicial review proceedings and I was able to learn enough by watching that hearing to complete my draft claim form and grounds. I then discussed this draft with another CAL lawyer and we finalised our application which was then issued on 25 October 2013.
APPLICATION TO AMEND THE STATEMENT OF FACTS AND GROUNDS
- I am not a public lawyer and so the Claimant’s statement of facts and grounds, which I drafted, were the best that I could manage. I managed to find lawyers to advise pro bono by around 14 November 2013. I understand that they believe that the grounds should be amended and in the circumstances, and given that the Treasury Solicitor has helpfully indicated that it would await our amended grounds before providing grounds of resistance, the Claimant requests the Court’s permission to amend the statement of facts and grounds.
APPLICATION FOR A PROTECTIVE COSTS ORDER
- In addition to the information set out above, I have set out further information in my second witness statement of even date in support of the Claimant’s application for a Protective Costs Order.
I BELIEVE THAT THE FACTS STATED IN THIS STATEMENT ARE TRUE
Alex Monaco, Director, Compromise Agreements Ltd
Dated 10 December 2013