Radical overhaul of employment law and tribunal procedures

As an employment lawyer who acts for both employers and employees I have a very clear insight into the pros and cons of the current employment tribunal system. What is very clear to me is that, almost without exception, employers believe that the entire process is geared against them and in favour of employees and that they really have very little choice but to settle even spurious claims if they don’t want to incur significant costs which are unrecoverable, even if they are ultimately successful in defending the claims.

Similarly, employees feel overwhelmed by the process which has now become so complicated and the law so onerous, they have no choice but to instruct solicitors at great expense, yet there is no Legal Aid available for employment litigation. Let us not forget that the employment tribunal service was originally geared towards most Claimants being able to reasonably represent themselves. That is certainly not the case now.

It is therefore clear to me that the time is now right for a change and many of the changes which are to be implemented by the Government are, to my mind, welcome.

These are summarised below:

1. In future Claimants will be required to pay a fee to issue claims. There is to be a consultation on the level of the fee which is to be set.

2. Almost all tribunal claims will have to be lodged first with ACAS (the conciliation service) on a shortened claim form so that there can be an attempt at resolution before the claim enters the tribunal system. ACAS will initially have 1 month to try and help the parties reach a conciliated resolution (which may be extended by a further 2 weeks). During the conciliation period the clock for the relevant time limit will be stopped. There will still be an opportunity to utilise ACAS’s services once the claim has been issued formally with the tribunal as its duty to conciliate will remain even if early conciliation has not been achieved.

3. There will be a consultation on shortening and simplifying compromise agreements (which will be renamed “settlement agreements”). There is also a commitment to amend legislation so that it is clear that compromise (or settlement) agreements can be used to compromise Equality Act claims.

4. Currently Claimants with weak claims can be ordered to pay a deposit of up to £500 if they wish to proceed with their claims. It is proposed to increase this figure to £1000.

5. Although costs awards are rarely made in the employment tribunals due to a real reluctance to make such awards on the part of the Judges, there is currently a provision for costs awards of up to £10,000 to be made. This will be increased to £20,000 although I doubt this will be much of a deterrent until Judges actually start making such awards more regularly.

6. Perhaps the most worrying change is that the Government has accepted a proposal to introduce financial penalties of between £100 and £5000 for employers found to have breached employment rights. The payments will go to the Exchequer rather than to the Claimant. However, it will be at the Judge’s discretion as to whether to impose such a penalty and it is anticipated that such penalties will only arise where there has been malice or negligence on the part of the employer.

7. Currently, all tribunal claims are heard by a panel of one Judge and two lay wing-members. That is so that there is a balanced view on reasonableness of conduct. However, in future ordinary unfair dismissal claims will, in most case, be heard by a Judge sitting alone. This will save considerable time and cost but may lead to more appeals as confidence in the decision reached may well be undermined by the failure to have a balance of views. Time and cost will also be reduced by witness statements being taken as read rather than witnesses having to read their statements out.

8. From April 2012 Employees will need to have completed 2 full years’ service in order to qualify for protection from unfair dismissal. The Government is also seeking views on a proposal to introduce ‘compensated no-fault dismissal’ for micro firms of fewer than 10 employees. If enacted, this will enable small employers to dismiss employees without fear of a claim of unfair dismissal provided they provide compensation of an amount fixed by law. It is difficult to see how that would protect them from claims of unlawful discrimination, however, unless settlement agreements are entered into at the same time.

9. It is a widely held practice that employers have so called “without prejudice” conversations with employees they want to dismiss alongside their formal disciplinary/capability or redundancy procedures. However, the “without prejudice” rule is such that conversations can only be held to be “without prejudice” and hence inadmissible in evidence if they are held in order to resolve an existing dispute between the parties. There is a proposal to arguably widen the ambit of this rule to enable employers to have frank discussions with their employees about their futures and their performance without risking those employees resigning and bringing constructive dismissal claims or using the evidence of those discussions during any subsequent unfair dismissal claims.  It will be interesting to see how this works in practice.

10. There is ongoing consultation on whether the current 90 day consultation period for collective redundancies should be reduced to 30 days. Many people support this as employees do not like the uncertainty of such a lengthy process and many would prefer to have a resolution sooner than a consultation which, for many, is effectively meaningless. Furthermore, businesses in financial difficulties want certainty and therefore the reduction of the consultation period would enable them to achieve that certainty sooner.

11. There will be a formal consultation on the current TUPE Regulations 2006.  The current view is that they go beyond what is required by the European Acquired Rights Directive on which they are based.

12. In a speech discussing these changes, Vince Cable also said the Government would: amend whistle-blowing protections to prevent employees using them to complain about breaches of their own contract terms; make CRB checks simpler, review agency worker regulation; simplify NMW regulations, extend flexible working to all and improve parental leave.

It would be interesting to hear from readers with their thoughts on any of the above. I do think that the current law was ripe for review and many of the changes and proposed changes will hopefully make employment law less bureaucratic and more user-friendly. It should also allow employers and employees to be more open and honest with one another without employers being constantly fearful of being sued and employees constantly being fearful of retribution.

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About Belinda Lester
I am the managing director and founder of Lionshead Law a specialist employment law and HR consultancy company.

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