Employment Tribunal Reforms Race Ahead

Employers and employees should take note of the dramatic Employment Tribunal reforms currently in progress. The Government has sought to make a number of Employment Tribunal reforms in response to wide ranging concerns about the burgeoning Employment Tribunal system.

In 2012 the Ministry of Justice carried out a consultation on the introduction of claimant fees. Meanwhile, former president of the Employment Appeal Tribunal (EAT) Mr Justice Underhill completed an independent review of the Employment Tribunal Rules. A number of reforms were implemented from 6 April 2012; more will follow in 2013.

The broad aims of reform are to lower the number of claims, minimise the cost to taxpayers and reduce the threat to businesses of spurious claims.

Existing Employment Tribunal Reforms

• Changes from 6 April 2012 include:
• Allowing employment judges to sit alone, without two lay members (the usual arrangement previously), when hearing unfair dismissal claims.
• Increasing limits on Deposit Orders from £500 to £1,000 for claims with limited chances of success.
• Increasing limits on Cost Orders from £10,000 to £20,000.
• Removing the right to reclaim witness costs from the Tribunal. Out of pocket expenses will be paid by the parties, as directed by the Tribunal.
• Taking witness statements as read to help alleviate time pressures.

Impending Employment Tribunal Reforms

The most prominent Employment Tribunal reforms relate to claimant fees, designed to discourage weaker claims. Two levels will be introduced in summer 2013:

1. Level 1 Claims. Issue fee £160. Hearing fee £230.
2. Level 2 Claims. Issue fee £250. Hearing fee £950.

Level 2 claims will include more complex cases such as discrimination or unfair dismissal and higher fees will be charged for multiple claims. Similar fees will apply to the EAT.

A number of changes to Employment Tribunal and EAT proceedings were also proposed under the Enterprise and Regulatory Reform Bill 2012-13, such as:

• A mandatory period of conciliation via ACAS before a claim will be heard by a tribunal.
• Financial penalties for employers that breach the law.
• Power for certain proceedings to be delegated by tribunal judges to legal officers.
• Power for the Secretary of State to increase or decrease awards for unfair dismissal.
• A provision for employers to have protected conversations (not to be taken into account in tribunals) with employees.

Notable changes proposed by Mr Justice Underhill’s independent review include:

• An early ‘sift’ of weak cases.
• Preliminary hearings to aid quick resolution in some cases.
• Powers to impose time limits.
• ‘Presidential guidance’ to aid parties’ understanding of the tribunal process.
• Allowing tribunals to make costs orders over £20,000.
• Simplification of the withdrawals process.

The proposals broadly seek to streamline claims management.

The discouragement of spurious claims with conciliation requirements and claimant fees should be welcomed by employers. The final reforms and their overall effectiveness remain to be seen in practice.