Concerns about the inefficiency of the Employment Tribunal system and the prevalence of unmeritorious claims are nothing new. Many employers have at some point felt compelled to settle claims brought by employees, not because they believe the claims are well-founded (though, of course, this also happens), but simply to avoid a lengthy and costly tribunal process. The recession has not helped, with tribunals becoming clogged by an ever-increasing number of claims. The government is now attempting to address some of these problems in a new consultation document on tribunal reform: ‘Resolving workplace disputes: A consultation.’ If the proposals do become reality then the way in which claims are brought and resolved through the tribunal system is likely to be transformed. This article will take a brief look at the key proposals.
What is new?
The government proposals include:
- Increasing the qualifying period for bringing an ordinary unfair dismissal claim from one year’s service to two years’ service. The government hopes that this will reduce the number of claims as fewer employees will qualify for unfair dismissal, and that it will encourage employers to recruit new staff. This is likely to be one of the more controversial points of the proposals.
- Measures to encourage early conciliation and mediation. This is intended to be by way of a pre-claim procedure under which claims have to be submitted to the Advisory, Conciliation and Arbitration Service before they can be lodged with the tribunal, and there will be an increased use of workplace mediation (though it is not clear what form the latter will take).
- Increasing the powers of tribunals to tackle weak and vexatious claims through wider powers to strike out claims (including before a defence is filed), more flexible deposit orders and increased costs limits.
- Measures to encourage settlements by:
- requiring claimants to provide more detailed information about the nature of their claim, including providing a statement of loss at the outset; and
- introducing a procedure for making formal settlement offers, backed by a scheme of penalties and rewards to encourage the making and acceptance of reasonable settlement offers – similar to the Part 36 offers in the civil courts.
- Measures to shorten tribunal hearings, including reducing the time for witness evidence by requiring witness statements to be ‘taken as read’ (rather than the tribunal listening to the witness reading the statement out loud) and encouraging a reduction in the number of witnesses by removing the reimbursement of expenses.
- Making more efficient use of the tribunal’s resources by permitting employment judges to sit alone without panel members in unfair dismissal cases and by delegating some case management powers to legal officers, thus freeing up employment judges to concentrate on tasks that require their expertise.
- The introduction of fee charging for bringing a claim or counterclaim, and for proceeding to full hearing. Much has been made of this in news reports with suggestions that there will be a flat fee of £500 for bringing a claim. The consultation does not mention a specific fee and, in fact, the detail of any fee mechanism has been left for consultation at a later date.
- The introduction of financial penalties for employers found to be in breach. This is one proposal that is unlikely to be popular with employers. It is intended to encourage employers to have greater regard to their obligations towards their employees and ultimately reduce the number of tribunal claims. It is proposed that the level of the fine will be half the amount of the damages awarded to a successful claimant, with a minimum penalty of £100 and a maximum of £5,000 (and with a discount for prompt payment). The penalty will be payable not to the wronged employee but to the Exchequer.
Conclusion
The consultation will close on 20 April 2011, following which the government will consider the responses and then publish its own response and how to proceed.
It is hard to argue with the purpose behind the proposals – to encourage workplace disputes to be resolved at an early stage, and to reduce time and costs when disputes do go to the tribunal. If these objectives can be achieved then both employers and employees will benefit.
By Asa Waring, legal director, Mishcon de Reya.
E-mail: asa.waring@mishcon.com.
