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Lessons from Brexit on negotiation in the context of Employment Litigation

Lisa Rix and Paul Quain

Two years on, whilst we watch the UK continue to struggle to negotiate its way out of the EU, we wonder what HR professionals can learn from this (thus far unsuccessful) negotiation. Article by Lisa Rix, Associate and Paul Quain, Senior Partner – GQ|Littler. 

We have collated the below learnings: Appreciate the strength of your bargaining position, but recognise that it can change over time. At the outset of Brexit negotiations, some in the UK felt that the UK must have a strong bargaining position due to their belief that the EU benefits from the UK just as much as (and in some cases considerably more than) the other way around. Time has passed and at the moment the UK looks stuck and very divided. It would appear, although this is not universally agreed, that the UK has failed to appreciate that it is in fact in a pretty weak position, getting weaker and weaker as it approaches the Brexit deadline with no clarity on how it will exit – whether with a deal or otherwise. 

Parties also often fail to recognise their positions in employment litigation. At the outset it is important for the key stakeholders to agree on the merits of a case (although there may be very differing views). However, bargaining power generally fluctuates during the life of a case too. For example, during an interim hearing, the employer’s witnesses might perform badly, leading you to re-evaluate your position and make a generous settlement offer to the employee. At that point, the employee has significantly stronger bargaining strength than the employer (which may have not been the case before the tribunal or trial started). However, if that offer is rejected and the employment judge decides in favour of the employer, despite the terrible witnesses, then the employee is now in a position of weakness, having failed to take advantage of its previously strong bargaining position. Recognising when to take advantage of these fluctuations in bargaining position is key to successful employment litigation negotiations. 

Understand what makes your opponent tick

It is vitally important to understand what is driving your opponent in any negotiation. You need to put yourself into their shoes and see what they are looking for from their perspective. Throughout Brexit negotiations, advice was given to the UK Government in relation to how the EU was likely to approach the negotiations and how the collective vs the individual countries would work. A lot of this advice was largely ignored as certain MPs and some ministers preferred their own “gut” instincts about how, for example, German car manufacturers would not let a hard EU position prevail. There are differing views as to whether these gut instincts have turned out to be vindicated, but some argue that these instincts have led to some fundamental strategic errors in negotiations. In employment litigation, you need to consider what is important to your opponent when negotiating: is it money, pride, principle or something else? Understanding the other side is key to both putting yourself in the strongest negotiating position and often to winning the case. 

Unrealistic and unachievable aspirations can result in negotiations breaking down

In the course of Brexit negotiations, we have seen many unrealistic aspirations at play. From initial hopes that the UK would not have to pay any ‘Brexit bill’ to the repeated refusals to accept the Irish backstop (or any equivalent), insistence on these unrealistic demands has driven negotiations to a standstill. In employment litigation negotiations, employers and employees often have completely different ideas of what a case is worth. Sometimes one side demands something of the other which simply cannot be agreed, for example, for their employer to omit something from a regulatory reference (which is of course something a regulated entity is never likely to agree to). 

Parties get entrenched in emotions and ideology and do not behave rationally or commercially. When a key point of principle is driving an approach, it can be very difficult to reach a compromise. “Sovereignty” and “democracy” have become the watchword of many key Brexit players, making a pragmatic approach that allows for practical solutions and compromises more difficult. In employment litigation, where personal relationships between the parties can fuel intense emotions of hurt and anger, often an employer/key stakeholder or an employee will want to continue to fight, despite there being no commercial sense or point of principle in doing so. Making decisions based on pure emotion will not allow a party to achieve its best outcome. Even where the parties to a negotiation agree, sometimes you are prevented from concluding a settlement due to other important players

This has been a significant problem in the discussions between the EU and the UK. Despite Theresa May managing to agree a deal with the EU, she has been unable to convince a majority in Parliament to vote in favour of it (despite multiple votes) and has also arguably been unable to gain the support of much of the electorate. The EU also has had to make decisions collectively throughout the negotiations. This is a problem which should also be borne in mind by parties when litigating: even when internal legal teams or HR can finally agree a deal with an employee, they can struggle to get senior management buy-in. This might be because of the irrational emotional response explored above, because senior management cannot justify the amount of the payment in general or because they do not wish for such a payment to come out of their department’s budget.

Negotiations today might affect negotiations tomorrow 

The EU is surely concerned that if Brexit goes well for the UK, leaving the EU might look like an attractive option for other countries. It is therefore in the EU’s interest not to make Brexit look too easy. Employers also have to consider the wider implications of a negotiation in relation to employment litigation: if you are willing to pay out a large sum of money to make one claim go away, other employees might find out about this and you may then face multiple employees bringing claims they expect will be paid out. Parties need to know their “best alternative to a negotiated agreement” (sometimes called a BATNA) if negotiations are to be productive 

In Brexit, there is no agreement on what our best alternative is to a negotiated agreement: is it revoking Article 50 and staying in Europe? Or is it an exit with “No Deal”? There is no clear alternative that a deal can be measured against and this has weakened (i) the UK’s ability to negotiate a deal with the EU and (ii) Parliament’s ability to analyse that deal. In employment litigation things can be somewhat clearer – the BATNA is generally proceeding to a tribunal hearing and judgment and accepting the legal, financial and reputational risks that come with that. This gives you a point of comparison for any proposed settlement – though of course if either side has unrealistic expectations of obtaining a favourable judgment, this can only go so far in aiding productive negotiations. 

Negotiations can go on for a long time

We are now over two years into Brexit negotiations without a deal being agreed. It is not uncommon for employment disputes and connected settlement discussions to continue for a similar length of time. Lengthy negotiations inevitably distract time and resources away from other important priorities. The more time spent on Brexit, the less time spent on other important government and parliamentary matters; the more time spent by management litigating and negotiating with employees, the less time spent focussing on the business.

Maybe before 31 October 2019 we will be able to add another point to this list: that even in the most difficult of circumstances, deals (requiring compromise on both sides) can be reached to the benefit of both parties… or perhaps that will prove too optimistic!

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