Employment
Tribunals:
Charges &
Changes
Paul Statham
Introduction
I will try to cover the following:April 2012
• continuous employment raised to 2 years
• Employment Judges sit alone in unfair
dismissal.
June 2012
Mr Justice Underhill’s Fundamental review of
Employment Tribunal Rules.
July 2012
• Response to Consultation on Tribunal Fees
published
• £250 to issue & £950 for hearing
• Enterprise and Regulatory Reform Bill First
Reading
September 2012
Consultation on
• Changing Cap on Compensatory Award
•Settlement Agreements
Changes From April 2012
Unfair Dismissal and Statement of
Reasons for Dismissal (Variation of
Qualifying Period) Order 2012
(Employment Rights Act 1996)
The unfair dismissal qualification period rose
from one to two years for all new employees
employed on or after 6th April 2012.
Estimated this will lead to a reduction of
around 2,000 claims per annum, which brings
net direct benefits to employers of around
£4.7m per annum.
Changes From April 2012
The Employment Tribunals Act 1996
(Tribunal Composition) Order 2012
This amends the composition of employment
tribunal hearings for unfair dismissal cases to
be heard before 'a judge sitting alone'. Parties
will be able to request a tripartite panel and
this will be accepted or rejected at the judge’s
discretion.
Changes From April 2012
Amendments to Employment Tribunals
(Constitution and Rules of Procedure)
Regulations 2004
These amendments make the following
changes:
When a judge considers that a claim has a
limited chance of success at tribunal, to
increase the maximum limit at which deposit
orders can be made from £500 to £1,000.
To increase the maximum limit at which judges
can award costs to either party from £10,000
to £20,000.
To change the rules on witness statements in
the employment tribunal so that they shall be
’taken as read’, meaning that a witness
statement will not be read out in its entirety unless the judge directs otherwise.
To administratively remove automatic witness
expenses.
Fundamental Review of
Employment Tribunal Rules
An initial paper sift carried out by a judge
Tribunal powers to strike out claims
A lead case mechanism for dealing with multiple
claims
A simplified procedure for withdrawing claims
A new procedure for preliminary hearings that
combine separate pre hearing reviews and case
management discussions
A clear rule on the provision of written reasons
A rule on limiting oral evidence and submissions
leading to more efficient timetabling of cases
Fundamental Review of
Employment Tribunal Rules
Presidential Guidance
Alternative Dispute Resolution
New Cost Rules
More flexible deposit orders
New ET1 and ET3
Encouraging prompt payment of awards
Dealing with new regime on fees and
compulsory referral to ACAS for pre-action
conciliation
Tribunal Fees
Bringing Claims
The headline proposal is that universal fees to bring
employment tribunal claims will be introduced “in
the latter half of 2013” and the Option 1 fee structure
whereby fees are banded and there is a fee on issue
and when a case is set for hearing is preferred to the
Option 2 which proposed a single (higher) fee
payable on issue and an increased fee if the claimant
claimed over £30,000.
There will be two "levels" of claims. For level one
claims which are generally for sums due on
termination such as unpaid wages, pay in lieu of
notice and redundancy pay, the issue fee will be £160
and the hearing fee will be £230. For level two
claims (all other claims), the issue fee will be £250
and the hearing fee will be £950.
Tribunal Fees
Multiple Claims
The new proposals for multiple claims are:
2 and 10 individuals pay a fee of 2 x the fee for single
claims
11 and 200 individuals pay a fee of 4 x the fee for
single claims; and
201 or more individuals pay a fee of 6 x the fee for
single claims.
Tribunal Fees
Fees for Applications
Fees for counterclaims cost £160,
Fees for a review of default judgments cost £100,
Fees for reviews cost £100 or £350 depending on the
level
Fees for applications to dismiss following settlement
or withdrawal cost £60.
Fees for Judicial Mediation cost £600 to be paid by
respondents
Tribunal Fees
Employment Appeal Tribunal
The fee for lodging an appeal to the EAT is to be
£400
If it is allowed to proceed to hearing a further fee of
£1200 is payable
There were just over 2000 appeals received by the
EAT in 2010/11 but only 600 or so proceeded to a
preliminary or full hearing
The Government can potentially raise £560,000
from appeals that will not even proceed to a
preliminary hearing
Tribunal Fees
Fee Remission
The Government proposes using the current civil
courts remission system to protect claimants who
cannot afford to pay the fees.
This provides for 3 gateways:
Receipt of one of a listed income-related benefit
Gross income of £13,000 if single or £18,000 for a
couple
Disposable income computed on the legal aid means
criteria
The latter can result in partial remission. Below £50
a month confers a complete exemption then every
extra £10 of income makes the claimant liable for a
fee of £5.
Tribunal Fees
Time Limits
The Government has accepted that claims will
be treated as lodged in time if accompanied by
a fee or an application for remission even if the
application is not processed until later or it is
decided the claimant does not qualify.
The Government are proposing a review of the
remission system for all civil cases with a
consultation in the “late autumn”.
How fees will interact with the proposal in the
Enterprise and Regulatory Reform Bill for
compulsory pre-action conciliation by ACAS is
still to be worked out
Time limits will become more complex.
Tribunal Fees
What is Wrong
Fees are payable in all cases without exception.
No refund of fee even if case settles straight away.
Discretion to tribunal to make “losing” party refund
fees of “winning party”.
But some 39% of tribunal awards are not paid at all
and a further 8% are only paid in part according to
Government research in 2009.
Will be another factor in negotiations and may be an
obstacle to settlement.
“Fees don’t discourage unmeritorious claimants,
they discourage the impecunious ones” –Sean Jones
QC.
Enterprise and Regulatory
Reform Bill
Part 2 Employment
Clause 7 -9 Pre-action conciliation by ACAS
Clause 10 Decisions by Legal Officers
Clause 11 Composition of EAT
Clause 12 Protected Conversations
Clause 13 changing cap on compensatory
award
Clause 14 Financial penalties
Clause 15 Protected disclosure amendments
Enterprise and Regulatory
Reform Bill
Pre-Action Conciliation
Before a claim can be lodged at the tribunal the
potential claimant must provide ACAS with
prescribed information about the claim.
ACAS will then seek to conciliate the “relevant
proceedings” by approaching the parties within
the “prescribed period”.
If ACAS considers conciliation is not possible
or the “prescribed period” has expired they will
issue a certificate to the potential claimant.
The claimant will only be able to issue tribunal
proceedings when they have the certificate.
The normal time limit may be extended
Enterprise and Regulatory
Reform Bill
Decisions by Legal Officers &
Composition of EAT
The Bill provides a power to the Secretary of State to
pass regulations to appoint Legal Officers to make
decisions in certain proceedings as long as both
parties consent in writing.
The intention is to introduce a rapid resolution
jurisdiction to deal with simpler claims by Legal
officers with the written consent of both parties
The Bill also amends the Employment Tribunals Act
1996 by providing that an appeal from an
employment tribunal constituted by an Employment
Judge sitting alone, a judge shall sit alone in the
Employment Appeal Tribunal unless the judge
directs that proceedings should be heard with
members.
Enterprise and Regulatory
Reform Bill
Cap on Compensatory Award
The Bill provides a power to make regulations to
amend the cap on the compensatory award
(currently £72,300) either up or down.
The cap may not be reduced below "median annual
earnings" or increased above three times median
annual earnings; and the lowest number of weeks’
pay that may be specified is 52.
On the 14th September the Government launched a
consultation “Ending the Employment
Relationship”.
This proposes using the power to reduce the cap to
median earnings (currently £25,582) or 12 months
pay whichever is lower.
Enterprise and Regulatory
Reform Bill
Cap on Compensatory Award
The latest Tribunal statistics put the median
compensatory award for 2011/12 at £4560.
90% of awards were for less than £20,000 and all
but 2% were for less than £50,000. Since these
figures include the basic award which is not included
in the cap, the average compensatory award must be
significantly less.
Reducing the cap on the compensatory award could
have a substantial effect on the employment rights of
better paid employees, particularly those in the
professions, middle management and the public
sector where they still have final salary pension
schemes.
Could this proposal be aimed at saving money in the
public sector where 2/3 of the cuts are still to be
made
Enterprise and Regulatory
Reform Bill
Protected Conversation & Settlement
Agreements
The Bill provides for the terms "compromise
agreement" and "compromise contract" to be
replaced with "settlement agreement" where they
appear in specified legislation relating to
employment matters.
The Government are now consulting on introducing
template letters and model agreements. They appear
to wish to retain independent legal advice for
employees on the terms & effect of agreements but
make it easier to offer such agreements without
requiring legal advice to draft the agreement.
The fact an employer has made an offer of a
settlement agreement will be inadmissible in
subsequent tribunal proceedings subject to certain
exceptions. There will be an ACAS code of practice
to guide parties as to improper conduct.
Enterprise and Regulatory
Reform Bill
The Public Interest Disclosure Act
The bill proposes to reverse the decision in Parkins v
Sodexho Ltd [2002] IRLR 109 Mr Parkins claimed
that a breach of a contract of employment is a breach
of "any legal obligation". The Employment Appeal
Tribunal held that there is no reason to distinguish a
legal obligation which arises from a contract of
employment from any other form of legal obligation.
This decision has raised the possibility that any
complaint about any aspect of an individual’s
employment contract could lay the foundation for a
protected disclosure.
This means that public interest disclosures must in
future satisfy a public interest test and excludes
those which can be characterised as being of a
personal rather than public interest. For example, if
a worker does not receive the correct amount of
holiday pay (which may be a breach of the terms of
his contract of employment), this is a matter of
personal rather than wider interest.
Enterprise and Regulatory
Reform Bill
Financial Penalties
The Bill proposes a power to make regulations so a
financial penalty can be imposed on the employer
irrespective of the nature of the remedy awarded to
the claimant. Any financial penalty imposed must be
at least £100 and cannot exceed £5,000. If the
remedy awarded by the employment tribunal to the
claimant is a financial award (e.g. compensation)
then any financial penalty imposed must be set at
50% of the amount of the claimant’s financial award
subject to the minimum and maximum amounts..
If the employer complies with the order to pay a
financial penalty no later than 21 days after the date
that written notice of the decision is sent by the
employment tribunal to the employer, the amount of
the financial penalty is reduced by 50%.
There must be “an aggravating factor” in order for
the tribunal to impose a penalty but these are not
defined in the Bill.
No-Fault Dismissals for
Micro-businesses
The Beecroft Report
The venture capitalist Adrian Beecroft was invited by
the Prime Minister to write a report on Employment
Law. This was presented to the Cabinet in October
2011 but was only published, having first been leaked
on 21st May 2012.
It is an extraordinary document full of legal and
factual inaccuracies and assertions unsupported by
any empirical evidence.
One of it’s proposals was to introduce a regime of
no-fault dismissals. This was rejected by the
Minister (Vince Cable) but a call for evidence was
published in respect of businesses with 10 employees
or less. The Government have now published their
response to the call for evidence. It appears to reject
introducing a no-fault dismissal regime.
Conclusions
•Still lots of opportunities to change
Government policy by responding to
consultations and through lobbying on Bill in
the Lords.
•The forthcoming consultation on amending
the Civil Courts Remission system is very
important.
•How remissions and pre-action ACAS
conciliation mesh with tribunal fees and the
new tribunal rules could be problematic.
•There will be a lot of fundamental changes to
keep on top of and no doubt IER will be
revisiting the subject at future conferences