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Friday 30 September 2016
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Employee tribunals: Evolution or revolution?

Employment tribunals: Evolution or revolution?

With changes to the way employers have to handle staff dismissals, it is important to be mindful of the current legal perspective in this area

In January 2011, the government announced the launch of a consultation on reforming the employment tribunal procedure. Two of the proposed reforms have now taken effect, namely the increase in the qualifying period to pursue a complaint of unfair dismissal from one to two years on 6 April 2012, and more recently the introduction of fees in the employment tribunal on 29 July 2013. The government hasn’t stopped there. Next year, they will go a step further and introduce compulsory pre-claim conciliation and will give tribunals the power to penalise employers who lose a claim. 

Unfair dismissal claims

In the majority of cases, an employee cannot pursue a complaint of unfair dismissal unless they have sufficient ‘qualifying service’. There are exceptions to this rule, for example in cases where the employee alleges they have been dismissed for raising a health and safety concern. In these circumstances, protection applies from day one of employment. These are known as ‘automatic’ unfair dismissal claims. 

Prior to 6 April 2012, the qualifying service required to pursue a claim of unfair dismissal was one year. For all employees commencing employment after this date, the period of qualifying service was increased from one to two years.

In reality, most practices use three or six month probationary periods as a way of closely monitoring an employee’s performance and suitability for a post during the early days of employment. This helps to identify problems quickly and can have a positive impact on an employee who will recognise that they are under close scrutiny. The other benefit of using a probationary period is that the practice can opt for a shorter period of notice during this period, which means that if it doesn’t work out, the employee will move on quickly without too much disruption to the practice.

However, while probationary periods are undoubtedly a useful tool, the fact that an employee’s ability to challenge a dismissal prior to attaining this service is limited does potentially give an employer greater flexibility to dismiss an employee with up to two years’ service with minimal risk of a claim of unfair dismissal. 

Of course, the important caveat to this is that in addition to claims of automatic unfair dismissal, an employee also has the right not to be subjected to discrimination by the practice from recruitment stage onwards. Discrimination must be on the grounds of a protected characteristic, for example age, sex or religion/belief.

A practice does therefore need to be mindful of this and carry out an assessment of the likely risks of any comeback before it takes a decision to dismiss, before the employee has sufficient qualifying service to pursue a claim of unfair dismissal.  

Practices should also remember that the government has introduced the concept of ‘pre-termination negotiations’ (as reported in the last issue of Management in Practice), which improves a practices ability to have an ‘off the record’ chat with an employee with a view to terminating their employment on agreed terms.

Tribunal fees

Tribunal fees were introduced on 29 July 2013. An individual wishing to pursue a claim in the tribunal will now need to pay a fee when they issue their claim and another fee when they receive notice of the hearing, unless they qualify for full or partial fee remission. 

The amount of the fee payable will depend upon the type of claim. Straightforward claims, such as unauthorised deductions from wages or claims for statutory redundancy payments, will currently incur a fee of £160. More complex claims, such as unfair dismissal, discrimination or whistleblowing, will incur a larger fee of £250.  

In addition to an issue fee, individual claimants must also pay a hearing fee once they receive notification of the hearing. Again this varies depending on the complexity of the claim. Currently, straightforward claims attract a hearing fee of £230 whereas a more complex claim will attract a fee of £930.

Will the introduction of fees put people off issuing tribunal claims? Provisional statistics released by the Ministry of Justice in October 2013 suggests that there was a surge in claims being issued in June 2013 prior to the fees being introduced at the end of July and then significantly lower than average numbers of claims being issued in August and September 2013. The drop off in claims in August and September could of course be accounted for by the earlier surge in June - individuals were getting their claims in early to avoid paying a fee. A clearer picture will emerge early next year.

While the introduction of fees might dissuade an individual with a low value claim from issuing a claim, those individuals who feel they have been unfairly dismissed or discriminated against are unlikely to be deterred.

That said, the fairly hefty hearing fee that will need to be paid by those individuals pursuing a complex claim may well impact upon the strategy that parties adopt during the litigation process. 

Practice managers will be familiar with the services of Acas who assist the parties in trying to broker a settlement during the life of a claim. Practices may well find that there is a greater appetite on the part of an individual to settle a claim before they incur the fee. Conversely, an individual who pays this fee may be reluctant to enter into settlement negotiations after they have paid unless this fee can be recovered as part of any agreed settlement. 

Equally, a practice that is defending a claim may not want to spend too much time and money preparing the case for a hearing until they are sure that the employee is prepared to put their money where their mouth is and pay the hearing fee. This is likely to lead to case preparation being delayed to closer to the hearing.

Compulsory pre-claim Acas conciliation procedure

Next year will see the introduction of a new compulsory pre-claim Acas conciliation procedure. This is due to take effect in April 2014. This mandatory procedure will require an employee to submit details of their dispute or concern to Acas before bringing a claim. Having done so, will offer both parties the option of pre-claim early conciliation as a means of resolving their dispute without recourse to the employment tribunal. It remains to be seen how this process will work in practice, but the proposed change suggests a greater opportunity for employers and employees to resolve disputes at an earlier stage of the proceedings and perhaps avoid extensive legal and management costs further down the line.  

Penalties on employers who lose in the employment tribunal

Additionally, from April 2014, employment tribunals will have the power to impose a financial penalty on employers who lose at tribunal of 50% of any financial award, up to a maximum cap of £5,000. This penalty will be paid to the Secretary of State . 

Applying this levy will not be mandatory, but at the tribunal’s discretion. Practices involved in employment tribunal litigation from April next year onwards should be aware that, if they lose the claim, they could be forced to pay a further £5,000 by way of a penalty. 

The penalty will not be imposed if the practice has made a ‘genuine mistake’ but could be imposed where there are ‘one or more aggravating factors’. It will be interesting to see how this develops in practice.

Summary

While it may be pushing it to say that the reforms referred to above are revolutionary, they certainly represent a considerable change in the way employment tribunals operate and in the main these changes are likely to be welcomed by practices.