UK: Proposed Changes to Employment Law Tribunal System

Last Updated: 2 February 2011
Article by DMH Stallard

The much anticipated consultation on reforming access to the employment tribunal system, 'Resolving workplace disputes', has now been published. The consultation period is open until 20 April 2011. The key proposals are to increase the qualifying period for unfair dismissal claims from one year to two years and to introduce fees for lodging Tribunal claims.

The Government states that its proposed changes to employment law are intended to 'ensure maximum flexibility while protecting fairness and providing the competitive environment required for enterprise and growth'. It seeks to encourage disputes to be resolved early before they reach the tribunal system. If a dispute does result in a tribunal claim, the Government wants to see cases moving more quickly to conclusion to keep costs down for both the parties and the taxpayer.

Increasing Qualifying Period

The most controversial of the proposals is the increased qualifying period for unfair dismissal claims from one to two years. The Government believes such a move will enable businesses to 'feel more confident about hiring people' and create 'more time for the relationship to get established and work well', but not become 'a charter for businesses to sack people unfairly'. The Government estimates that the increase will result in between 3,700-4,700 fewer unfair dismissal claims per year. This would not affect employees' so-called 'Day One' rights.

Other proposals

  • Requiring 'service users' (i.e. the parties) to contribute towards the cost of running employment tribunals, and the Employment Appeal Tribunal, by paying fees;
  • Requiring all claims to be submitted, within the relevant time limits, to ACAS' pre-claim conciliation (PCC) service before they can be lodged with a tribunal. This is to allow ACAS a period of up to one calendar month to attempt to conciliate the dispute;
  • Including information in the ET1 to ensure that claimants are able to judge the value of pursuing a claim and the likelihood of a successful outcome. This is with a view to encouraging early conciliation. Similar information is also to be made available to employers to enable them to make an informed decision about defending the claim;
  • ncluding a Statement or Schedule of Loss with the ET1, to help inform the employer whether to resist the claim, or to seek conciliation or settlement;
  • Introducing a rule whereby either party can make a formal settlement offer, backed by a scheme of penalties and rewards, as part of formal tribunal hearings. This is to encourage reasonable settlement offers to be made and accepted. The offer would be kept confidential from the Tribunal panel, and only revealed once the Tribunal had reached its decision and assessed compensation;
  • Introducing automatic financial penalties for employers found to have breached employment rights, on top of the ordinary compensation already payable. The penalty would generally be half the amount of the total award made to the claimant, be capped at £5,000, and be payable to the Exchequer, with a reduction of 50% if paid within 21 days;
  • Introducing measures to prevent weak claims from progressing through the system. This would involve an employment tribunal having the power to strike out a claim (or response) at any hearing, not just pre-hearing reviews, and without hearing the parties or giving them the opportunity to make representations. A procedural safeguard would be implemented to enable such a strike-out to be set aside. Employers would also be able to submit an ET3, but rather than complete it fully, suggest that insufficient information has been provided to justify the claim continuing. The employer would then ask the tribunal to either order the claimant to provide more information or to strike out the claim, which would avoid the employer having to submit a full ET3 response and therefore save time and money;
  • Doubling the maximum amount of deposit orders from £500 to £1,000, and making it possible for these to be made other than at Pre-Hearing Reviews;
  • Increasing the £10,000 cap on costs awards to £20,000, to encourage parties who pursue weak claims/responses to think carefully before initiating tribunal proceedings;
  • Taking witness statements as read, in order to shorten the length and cost to the parties of tribunal proceedings. Rather than reading the content of their witness statements out loud, witnesses would be cross-examined about their statement. Procedural safeguards would be introduced to give the tribunal discretion to vary this default rule;
  • Extending the jurisdictions where employment judges can sit alone to include unfair dismissal claims where questions of fact can be analysed within a framework of law that is relatively uncomplicated or settled. The Government are consulting on whether there may be other categories of case to which this could be extended.

Employer's Charter

The Government has also published the much-heralded 'Employers' Charter', which sets out in very brief terms what employers can and cannot do. The eleven actions set out in the Charter, which employers are permitted to do provided they are acting fairly and reasonably, include:

  • asking an employee to take a pay cut;
  • rejecting an employee's request to work flexibly if there is a legitimate business reason;
  • dismissing an employee for poor performance; and
  • asking an employee about their future career plans, including retirement.

The Charter does also state that, while it is designed to assist employers recognise what they can do in general, "individual circumstances may vary and employers should act in accordance with their legal obligations".

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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