Business Law & Compliance

7 summer changes to employment law and tribunal rules

5 min read

30 September 2013

2013 has been an important year for business owners, HR specialists and employment law practitioners. This is because we all have witnessed staged implementation of various changes to employment law and tribunal rules.

Introduced by the Enterprise and Regulatory Reform Act 2013 and the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2013, these changes hope to reduce the mounting costs of the Employment Tribunal system. In the financial year 2011-12, Employment Tribunals accepted a total of 186,300 claims. The annual cost of running employment claims is said to be £74m. 

Here are the changes that have already taken place:

1. Removal of qualifying period for political belief dismissals

If an employee is dismissed because of their political beliefs or affiliations, they do not need to demonstrate that they were employed for a qualifying period (two years, or a year if they were employed before April 2012) in order to bring an unfair dismissal claim. 

2. Changes to whistle blowers’ protection

Workers making a protected disclosure are now only protected if the disclosure is ‘in the public interest’. Consequently, if they blow the whistle about breaches of their own contract of employment, they will not be entitled to protection from detriment or dismissal. However, they do not have to make the disclosure in good faith any more, although, if they do not, a tribunal may reduce their compensation by up to 25 per cent.

3. Introduction of the tribunal fee paying system

On 29th July 2013 we observed the introduction of a two-tier fee paying structure, payable by claimants. It divides claims into ‘minor claims’ (Type A claims) such as unlawful deduction from wages or statutory redundancy payment and ‘complex claims’ (Type B) including unfair dismissal, discrimination and whistle blowing. Type A claims now require a lodging fee of £160 and a hearing fee of £230; Type B claims require a lodging fee of £250 and a hearing fee of £950. 

The introduction of a unified fee remission system across all courts and tribunals for claimants in receipt of certain state benefits or on low gross income is expected in October 2013. However, employers are not immune. The new system requires a fee for a counter claim of £160, and £400 to lodge an appeal with the EAT (plus a further EAT hearing fee of £1,200).

4. New employment tribunal rules

In order to make the tribunal system more time and cost efficient, Pre-hearing Reviews and Case Management Discussions have been combined together into a single hearing, now referred to as a Preliminary Hearing. The new rules have given the judges powers to strike out weak cases and, in certain circumstances, to order that a deposit be paid by the claimant in respect of individual allegations within claim particulars. Also, the judges will now, more actively, encourage parties to use alternative dispute resolution. 

5. New Cap on the unfair dismissal award

The Compensatory Award for unfair dismissal is now subject to a cap of £74,200 or 12 months’ salary, whichever is the lower. 

6. Settlement agreements

This is a new name for good old compromise agreements. The change is not only in the name. Before, employers were wary of offering Compromise agreement to their employees, in case they complained that their dismissal was predetermined and therefore unfair. Now, in the spirit of pre-termination negotiations, employers are able to offer a settlement agreement at any time, regardless whether there is an existing dispute. Because these negotiations are on a without prejudice basis, if no agreement is reached neither party can refer to it in any ensuing proceedings. 

The move is a result of a drive towards encouraging parties to reach settlement without recourse to the tribunal. It is also in line with the spirit of reconciliation and extended role of ACAS. Worth noting though is that this rule only applies to unfair dismissal situations and not where a claim for automatic unfair dismissal or discrimination may arise; furthermore employers must comply with the new ACAS Statutory Code of Practice.

7. Employee shareholder contracts introduced 

1st September 2013 introduced Employee shareholder contracts – a scheme which allows employees to give up their employment rights such us a right to claim unfair dismissal or a redundancy payment in return for at least £2,000-worth of shares in the employer’s company. In order to take advantage of the scheme and understand it, an employee must obtain independent legal advice before signing up. This is to give protection from undue influence on the part of the employer.

Kate Boguslawska is a solicitor at Saunders Law Ltd.