The government published its consultation on employment tribunal reform on 27 January. One of its main aims is to reverse a rise in tribunal claims, which were up by 56 per cent to 236,100 last year.
The proposals include introducing a fee for lodging tribunal claims (the amount to be determined by a consultation in the spring) and extending the qualifying period for employees bringing unfair dismissal claims from one to two years. Many employers view the one year’s qualifying service for unfair dismissal as a barrier to job creation. The government hopes to give businesses more confidence when taking on new employees and to encourage growth.
The introduction of a fee will force claimants to think twice before issuing a claim. However, employees increasingly have legal fees insurance with household or motor policies, which may cover this. Perhaps a more effective solution would be to concentrate on awarding costs routinely against the losing party. The effectiveness of increasing the qualifying period for claiming unfair dismissal to two years is also highly debateable. It may simply encourage more spurious discrimination claims from aggrieved employees, and for these claims there are no qualifying periods.
The paper also suggests that all claims should be lodged with Acas before they enter the tribunal system to allow the service one month in which to offer pre-claim conciliation in an attempt to resolve the dispute. However, Acas already has to offer to assist in resolving cases once they have begun. It is not clear how this measure will be any more effective at removing spurious claims before proceedings are issued.
On the other hand, most will welcome the proposals aimed at reducing the time spent on tribunal claims. Anything that can be done to alleviate the pressure on the employment tribunal system would appeal to common sense.
The suggestions include increasing the use of alternative dispute resolution, and shortening the length of a tribunal hearing if a claim proceeds. The consultation also aims to reduce the costs and time spent on hearings by:
• letting witness statements stand as evidence, rather than having to be read out, unless an employment judge specifies otherwise;
• stopping the payment of expenses to claimants, respondents and witnesses attending tribunal hearings;
• extending the jurisdiction for employment judges “sitting alone” to include straightforward unfair dismissal cases; and
• introducing a legal officer to deal with certain case management functions.
Other proposals include:
• widening the set of circumstances in which tribunals can strike out weak or vexatious claims;
• increasing the maximum level of deposit orders from £500 to £1,000 as a condition of continuing with a claim considered to have “little reasonable prospect of success”;
• a new rule for the provision of additional information about the nature of the claim, including a statement of loss; and
• formalising the process for settlement offers so that tribunals can adjust the amount of compensation if an offer is not accepted.
The consultation also suggests increasing the cap on cost awards from £10,000 to £20,000, and amending the methods used to determine statutory employment awards each year.
For employers, one of the main concerns will be a proposal to give tribunals the right to apply automatic financial penalties on organisations found to have breached employee rights in addition to compensation paid to successful claimants. This penalty would generally be half the total award to the claimant, between £100 and £5,000, and would be payable to the exchequer.
This aside, business groups appear to consider that the proposals of reform overall are the first step in cutting employment red tape and allowing for growth. The consultation closes on 20 April 2011.