Employment tribunals – fees payable by claimants
Change: Under its measures to boost the labour market and reduce the burden on employers, the Government has introduced fees for claimants to bring a claim in the employment tribunals. The level of fees charged depends on the complexity of the claim, there are two fees: (1) an ‘issue fee’ payable when the Claimant lodges their claim; and (2) a ‘hearing fee’, payable before the full hearing. An unsuccessful claimant can apply to have their fees reimbursed and paid by the respondent.
Effect: Fees were introduced from 29 July 2013.
Potential consequences: The hope is that at the very least this will discourage spurious claims brought by claimants hoping that their employer/ex-employer will settle in order to avoid the time and costs in defending the claim.
However, given individuals can apply for reduction of the fee because of their financial circumstances (bearing in mind a lot of claimants are out of work whey lodge their claim) it may not lead to the large reduction of claims that some are predicting.
The full impact of the fees will not be apparent for a while but it will be interesting to see how Claimant law firms and Insurers approach the fees with their clients and whether they offer to pay them in cases where they believe the Claimant has reasonable prospects of success.
Note: There are also be set fees for other applications, such as breach of contract counterclaims, review of a judgment, dismissing a claim on withdrawal that will fall on employers.
2. Employment tribunals – financial penalties for losing respondents
Change: The Government’s original proposal was that employment tribunals would automatically order a financial penalty against losing employers.
The Government’s response to the consultation on this proposal was that it would give the employment tribunals the power to award a financial penalty against an employer who loses a claim. A penalty may be ordered where the employer’s breach has “one or more aggravation features”. The minimum penalty is £100; the maximum is £5,000. The amount may be a % of the financial award to the winning claimant (the proposal is that it must be 50% of the amount of the award subject to the minimum and maximum caps. The penalty is not paid to the winning claimant but paid to the Government who will benefit from the fine.
Effect: April 2014.
Potential consequences: Given the Government’s intention to try to reduce to burden on employers this change in the law is disappointing as it will make it more costly for employers to be faced with claims in the employment tribunals. Also, employers may feel under even greater pressure to settle claims because added to the ‘litigation risk’ there is now the possibility of being ‘fined’.
It is not clear what will amount to an aggravating feature leading to further uncertainty for employers.
3. Collective redundancy consultation rules
Change: The Government has now implemented the following changes to the collective redundancy rules:
- The 90-day minimum consultation period before the first redundancy can take effect is reduced to 45 days where 100 or more employees are affected (the consultation period for 20 or fewer than 100 employees remains 30 days).
- Employees on fixed-term contracts “which have reached their agreed termination point” will be excluded from collective redundancy consultation obligations.
A new Acas non-statutory code of practice has been introduced to improve the quality of consultation and provide guidance on difficult issues, such as the meaning of “establishment”.
Effect: These changes came into force from 6 April 2013.
Potential consequences: As well as being more employer friendly, the hope is that these new rules achieve two objectives: (1) reduce long periods of what can be meaningless consultation where points are often exhausted within the first few weeks of the process; and (2) enable employers to save more jobs by being able to cut costs quicker.
4. Plans to tackle long term sickness absence
Change: In 2011 a report made a number of recommendations to help tackle workplace sickness absence. The Government has decided to proceed with the main recommendations of this report and intends to use an independent assessment and advisory service so that employers receive bespoke, independent advice where sickness absence lasts more than 4 weeks. This will include:
- Advising the employer on overcoming barriers to return to work.
Abolishing the Percentage Threshold Scheme. This scheme currently compensates small employers for high rates of sickness absence but, as a result, fails to provide an incentive to manage absence.
Effect: Intended to come into force in 2014.
Potential consequences: The intention of the new advisory service is to assist employers in getting their employees to return to work as quickly as is reasonably possible. The Government is proposing a substantial investment in this scheme, with the intention that it results in fewer sick days and more productivity for businesses.
Change: The Government issued a consultation paper on a number of proposed changes to TUPE which closed on 11 April 2013. Key proposals included:
- Repeal of the regulations relating to ‘service provision changes’.
- Requiring the transferor to disclose information to the transferee to aid the information and consultation process rather than there being an obligation to provide specific employee liability information.
- Amending the provisions restricting changes to terms which will protect against dismissal and give the right to resign in response to a substantial change in working conditions.
- Including changes to the workforce location as part of the ‘entailing changes in the workforce’ provision. This would mean that changes to the location of the workforce under TUPE (because the new employer requires the employee to do the same job from its existing location as it rationalises the business) will not automatically be unfair. Enabling consultation with the transferring employees on collective redundancies prior to the transfer.
The government’s response to the consultation has now been published.
The headline changes are:
- The ‘service provision change’ definition has not been removed. Clarity has been provided stating that for there to be a service provision change, the service provision must be ‘fundamentally or essentially the same’ as before the transfer.
- The transferor’s obligation to provide employee liability information has not been removed. The time for providing such information has been increased to 28 days.
- ETO (economic, technical or organisational) reasons entailing changes in the workforce will include the workforce’s location.
- Microbusinesses can inform and consult directly with employees.
- Renegotiation of terms agreed from collective agreements one year after transfer will be allowed provided the changes are no less favourable to employees.
- The government has also committed to improving TUPE Guidance.
Effect: The exact timescale for implementing what changes have been agreed, has not yet been confirmed. However, BIS has indicated that the plan is to lay the Regulations before Parliament in December 2013 with the intention they will come into force in January 2014. We will keep you updated.
Potential consequences: The change of policy in retaining the service provision change aspects of TUPE will be broadly welcomed as their removal risked increasing uncertainty. The attempt to increase certainty by “clarifying” that only fundamentally the same services will be covered by TUPE is laudable, it is likely that this term will, itself, be the subject of debate and potential litigation.
6. Employment tribunals compensation limits
Change: The employment tribunals’ compensation limits have increased again.
The maximum unfair dismissal compensatory award rose from £72,300 to £74,200 and the maximum amount of a week’s pay rose from £430 to £450.
However, the Government published its response to the Ending the employment relationship consultation, which confirmed that the unfair dismissal compensatory award will be capped at the lower of the claimant’s one year’s pay and the existing limit. The calculation of a year’s pay for these purposes will be based on the statutory definition of “a week’s pay” contained in the Employment Rights Act 1996. This means that pension contributions, benefits-in-kind and discretionary bonuses will be excluded from the calculation.
Effect: The new compensation limits were introduced on 1 February 2013.
The cap came into effect on 29 July 2013. The limit of only 52 weeks pay will not apply in cases where the effective date of termination falls on or after 29 July.
Potential consequences: Limiting the compensation award should provide more certainty to employers and employees about the potential award in unfair dismissal claims. This may also prevent inflated expectations by employees which hamper settlement negotiations.
7. Changes to the Equality Act 2010
Change: The Enterprise and Regulatory Reform Bill 2013 (ERRB) contains a number of proposed changes to the Equality Act 2010, including:
- Repeal of the statutory questionnaire procedure.
- Repeal of the third party harassment provisions which make employers potentially liable for third party harassment
The Government confirmed that it proposed to go ahead with the repeal of these provisions on the basis that they impose additional liabilities on employers – third party harassment.
Effect: Third party harassment 1 October 2013. Abolition of questionnaires 6 April 2014.
Potential consequences: The statutory questionnaires were intended to prompt a quick resolution, either through early settlement or showing that no discrimination took place, and so prevent unnecessary proceedings. However, the reality was that they imposed a duplication of the work for the employer who often had to complete response form at the same time or before having to respond to a questionnaire.
Employees will still have legal routes available for claims arising out of alleged third party harassment i.e. they can claim under the general harassment provisions of the Equality Act, a claim for constructive dismissal, a claim for negligence and a claim under the Protection from Harassment Act 1997.
8. Regulation of long-term unpaid and paid internships
Change: A Private Members’ Bill was introduced by Hazel Blears on 5 December 2012 to prohibit the advertising of long-term unpaid internships and regulate the conditions of employment for paid internships.
Effect: The Bill’s second reading took place on 1 March 2013. There is no date for implementation yet.
Potential consequences: It is intended to prevent the exploitation of ‘interns’ if it is implemented.
9. Whistleblowing – a new public interest requirement
Change: The definition of ‘qualifying disclosure’ has been amended so that workers cannot bring a whistleblowing claim which relates to matters such as a personal contractual breach that are not in the public interest.
Previously workers who, in good faith, blew the whistle about breaches of their own employment contract (under the “breach of any legal obligation” category) were potentially protected by whistleblowing legislation.
The change will amend the definition of “qualifying disclosure” in the Employment Rights Act 1996 to disclosures that are “in the public interest”. This public interest test will apply to all the categories of protected disclosure. The change means that only disclosures that are “in the public interest” will be protected.
Effect: The new public interest test came into force on 25 June.
Potential consequences: The Government hopes to close a loophole which allows an employee to make a whistleblowing claim for a breach of their own contract.
Change: The Growth and Infrastructure Bill received Royal Ascent on 25 April 2013. The new legislation allows employees to trade employment rights, including unfair dismissal rights and the right to statutory redundancy pay, for a minimum of £2,000 worth of shares in their employer.
Effect: These changes came into force on 1 September 2013.
Potential consequences: The share scheme has been somewhat controversial as it means that employees have to give up their basic employment rights in exchange for a limited number of shares. The changes were principally intended for fast-growing small and medium sized companies that wanted a flexible workforce.
11. Consultation on early conciliation
Change: Acas currently has the power to help parties to conciliate certain claims and parties can request their independent service should they so wish. This is set to change with the Government’s plan to require parties to attempt pre-claim conciliation through Acas before a claim may be pursued.
The proposed four step procedure consists of the following:
- The prospective Claimant must send ‘prescribed information’ in the ‘prescribed manner’ to Acas.
- Acas must then send a copy of the information to a conciliation officer.
- The officer must try to promote a settlement within a ‘prescribed period’. This period is likely to be one calendar month which could be extended by a further two weeks with the parties’ agreement.
- If a settlement is not reached, either because this is not possible or the prescribed period expires, the Acas officer will issue a certificate enabling the Claimant to issue their claim in the employment tribunals.
The above period will “stop the clock” and therefore will extend the time period for bringing certain claims.
Effect: The changes are expected to come into force in April 2014.
Potential consequences: Given the Government’s introduction of fees for issuing a claim we think that many employers will not wish to settle early in the hope that the issue fee will deter a claimant who is not serious about pursuing a claim.
Change: The Government has replaced compromise agreements with settlement agreements and any offers or discussions about settlement agreements cannot be used as evidence in an unfair dismissal claim.
Acas has issued a new Code of Practice (together with a non-statutory guide) which works alongside the new provisions to help explain how they will work in practice. Among other things the Code:
- States that initial offers of a settlement agreement should be set out in writing.
- Makes clear that the parties should allow a reasonable amount of time for the offer of a settlement agreement to be considered (7 working days has been set as a minimum).
- States that employers should allow employees to be accompanied by a work colleague or trade union representative at a meeting to discuss settlement agreements .
- Sets out some examples of what might constitute “improper behaviour” and undue pressure that would usually result in the removal of legal protection surrounding the settlement offer.
Effect: 29 July 2013.
Potential consequences: The intention is to promote full and frank settlement discussions and minimise the need for a complex legal document.
13. Right to request flexible working
Change: The right to request flexible working will be extended to all employees with 26 weeks service rather than just parents or carers. Employers will no longer have to follow the statutory procedure when considering a request but must instead consider all requests reasonably.
Effect: Planned to take effect in Spring 2014.
Potential consequences: The new regime is intended to be a lot simpler and less prescriptive.
This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. TM LAW is not responsible for any activity undertaken based on this information.
