The government is aiming to reduce the number of claims that are brought through a number of measures including a requirement for claimants to pay fees to bring a lodge a claim and a cap on the overall level of compensation of the lower of 1 years’ pay or £74,200. The detail of many of the reforms is highly complex, however the headlines are:
New employment tribunal rules
A complete overhaul of the procedural rules that apply to claims in the employment tribunal. The new rules are intended to streamline processes and a very significant change is the introduction of a “sift” of claims to eliminate those without a reasonable prospect of success.
Introduction of fees in the employment tribunals
A highly controversial measure is the introduction of a requirement for claimants to pay a fee to lodge an employment tribunal claim, with a further fee due prior to the full hearing. Dependent on the type of claim the fee to start proceedings has been set at either £160 for “Type A” claims or £250 for “Type B” claims. Hearing fees will be £230 or £950 respectively for Type A and B claims.
Various other fees may be due for applications during or at the end of proceedings and Respondents may also be liable to pay fees – where the parties agree to a judicial mediation the Respondent will be required to pay the £600 fee. The employment tribunal has the power to order the Respondent to reimburse the Claimant the cost of fees paid in the event of a decision wholly or partially in favour of the Claimant but this will not apply if the parties settle before a hearing. The cost of tribunal fees is therefore likely to inflate overall costs of settlement.
For those who are unable to afford the tribunal fees there is a system that enables them to apply for remission of fees. The level of income which will qualify an individual for remission of fees is set low and the evidentiary requirements to prove eligibility for remission of fees are onerous. Eligibility for remission of fees is determined after the claim is lodged and the Respondent will not be notified of any claim until the tribunal has either established that the Claimant is eligible for remission or a fee has been paid. The bureaucratic and complicated nature of the remission system means this may take some time to resolve, so Respondents may have to wait many months after the limitation period for bringing claims has expired before they can be confident that the risk of a claim has passed.
The fee system is subject to judicial review proceedings in both Scotland and England, with full hearings to be listed in October 2013. In the Scottish proceedings the Lord Chancellor gave an undertaking to repay all fees paid between 29 July and the date of judgment if the ruling goes against the government.
New forms ET1 and ET3 for making and responding to tribunal claims
These will be published online on 29th July. From 29th July claims may only be submitted online or by post.
Cap on unfair dismissal compensatory award
The current maximum compensatory award of £74,200 will now be subject to a cap of one years’ gross pay. This cap will apply to all employment dismissals that take effect on or after 29th July 2013.
Compromise agreements renamed “settlement agreements”
The core requirements for a valid compromise agreement remain unchanged however for any agreement signed on or after 29th July the term “compromise agreement” should be replaced with “settlement agreement”.
Some pieces of employment legislation that include provision for compromise agreements have been left out of the amending legislation. This appears to be pure oversight but it is recommended that expert advice is sought to ensure that any template agreements cover this anomaly.
Evidence of discussions to terminate employment on agreed terms inadmissible in subsequent proceedings
Employers have long been having “without prejudice” discussions with employees where there is a clear disagreement such as an ongoing disciplinary process. This reform is designed to make it easier for employers to broach the subject of termination on agreed terms without preamble – although the detail of the provision is tricky and likely to lead to disputes with regard to the use of such conversations in evidence in later tribunal proceedings.