Major Changes to Employment Tribunals now in effect

Following a government review of the Employment Tribunals system, and a lengthy consultation process, a whole range of new rules came into effect on 29 July 2013. A brief introduction to the changes follows:

1. Introduction of fees
Depending on the financial circumstances of a claimant it may now be necessary for them to make payment of a fee to the Tribunal both on issue and before a final hearing. The full fees schedule can be found on the Ministry of Justice website here. Fees are split into two levels depending on the complexity of the issues. In some circumstances respondents will need to pay fees, for example when making an application to have judgement set aside or on appeal. This is bringing the Tribunal more in line with the current practice in the County Court and is designed to reduce the financial burden on the tax payer with Employment Tribunal and Employment Appeal Tribunal running costs exceeding £84 million in 2010/11.

UNISON have made an application to the Court for a review of the legality of the introduction of Tribunal Fees, an application for an injunction preventing the introduction of the fees was rejected on 29 July however the review will take place in October 2013. For the time being the new rules (and fees) are in force.

2. New ACAS Code on Settlement Agreements
Previously known as compromise agreements, there is now a specific code of practice in place regarding pre-termination settlement negotiations meaning even when there is no dispute there is scope to enter into settlement negotiations on a ‘Without Prejudice’ basis. In particular any discussions are inadmissible in Tribunal proceedings (save for a few exceptions). This opens up the possibility for employers and employees to enter into a valid settlement agreement regarding the termination of an employee’s contract in advance of any dispute arising and before any formal process has commenced. In practice Compromise Agreements have been used in a wide range of situations already, however the new Code clarifies their use and the rules regarding disclosure of any negotiations as part of Tribunal proceedings which may follow. The new Code can be found here.

3. New Employment Tribunal Rules of Procedure
The long awaited changes suggested in Lord Justice Underhill’s review of the Employment Tribunal rules have finally arrived. A few of the highlights are:

a. New Claim and Response forms. These are largely unchanged. However the Claimant is now required to specify the amount of compensation they are seeking which may increase early settlement negotiations. The forms are widely accepted to be more user friendly.

b. New ‘sift’ stage. Much like the process in the Employment Appeal Tribunal all new claims will be subject to a review by a Judge following receipt of the Claim Form and Response. If a Judge considers that a claim has no prospects of success then it will be struck out without the further involvement of the parties. Previously a Respondent would need to make an application in this regard. A Claimant can request a reconsideration of the decision at an oral hearing however and it may simply serve to slow the early stages down. It remains to be seen how willing Employment Judges are to strike out a case at such an early stage without hearing evidence as to the points of fact pleaded in claim forms. It will be important for both Claimants and Respondents to ensure their pleadings contain sufficient detail to allow a Judge to make a decision.

c. CMC and PHR’s to be considered at the same hearing. The limit on decisions that can be made at a Case Management Hearing has been relaxed. A Judge can now make decisions with respect to any applications for Deposit Orders, Strike out or Preliminary Issues at the Case Management Conference. Parties will be given at least 14 days notice of any matters to be considered at a Case Management Conference to allow them time to prepare. This change is designed to push matters forward and limit the need for multiple Case Management Hearings.

d. Reconsideration of Judgments – replacing the review procedure previously in force, acting in two stages, first; a consideration of the application on paper and second; if the application is permitted to continue there will then be a hearing to re-consider the initial decision.

e. Costs – costs awards can now be made where ‘a claim or response had no reasonable prospects of success’, a wider definition than the previous use of ‘misconceived’. In addition there is no longer a cap on the amount of costs that can be awarded in the Tribunal. Previously any claim for costs over £20,000 had to be considered in the County Court, this requirement is no longer applicable.

There are of course a number of other changes and the full version of the new rules is available here.

4. Cap on Compensatory Award changed
The maximum amount that can be awarded in respect of the compensatory award for unfair dismissal when the termination took place after 29 July 2013 is the lower of £74,200 or one year’s gross pay, thus keeping any compensation in line with the employee’s actual earnings.

If you are concerned about the recent changes or need assistance with a dismissal or Tribunal claim instigated before or after 29 July 2013, please contact Stephen Stewart on 01238 526200 or email Stephen.Stewart@elselaw.co.uk and Stephen will be happy to assist.

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