The Government believes that one of the possible barriers to growth in the labour market is the stock of existing employment regulations and the flow of new ones. With this in mind, it has issued a new consultation paper which sets out proposed reforms to the employment tribunal system, with the aim of reducing the number of claims and encouraging employers to take on more employees. If these changes are implemented, it will radically change the way tribunal claims are dealt with.
The key proposals are:
Extending the qualifying period for employees to be able to bring a claim of unfair dismissal from one to two years. Official statistics show that the number of tribunal claims rose by 56% last year to a record 236,000. The Government believes this proposal would ultimately reduce the burden on the tribunal system and could result in 3,700 to 4,700 fewer claims. However, the proposal would not affect the automatic unfair dismissal rights (such as discrimination), which apply from day one of employment.
Encouraging early dispute resolution through mediation or by requiring all claims to be lodged with ACAS in the first instance, in order to allow pre-claim conciliation. It is envisaged that this would encourage parties to settle and thereby avoid tribunal hearings. Statistical evidence shows that of those claims which are referred to pre-claim conciliation, less than 30% go on to become tribunal claims.
Ensuring that cases move more swiftly to conclusion with the aim of containing costs for all concerned. Proposals include giving employment tribunals more flexible case management powers and extending the jurisdictions where judges can sit alone to hear a case, to include claims of unfair dismissal. Tribunal hearings could be shortened by requiring witness statements to be taken as read, rather than read out by the witness. The proposals also suggest withdrawing the payment of expenses by the tribunals, which could encourage parties to think carefully about the number of witnesses they call and potentially reduce the length of hearings.
Tackling weak and vexatious claims by:
Requiring claimants to pay a fee for lodging tribunal claims The Government’s view is that spurious claims would be discouraged by requiring claimants to pay a fee for lodging the tribunal claims. The fee would be returnable only if the claim is won. This will be the subject of a separate consultation exercise, to be issued later in the spring.
Giving employment judges increased powers to strike out a claim or issue deposit orders at any stage of the proceedings Currently the tribunal only has power, at a pre-hearing review, to require a party with little prospect of success to pay a deposit of up to £500 before being allowed to continue taking part in the proceedings on any particular matter. It is proposed that Employment Judges could order a deposit to be made at any stage in the proceedings, of up to £1,000. The maximum amount of costs that could be awarded will be increased from £10,000 to £20,000.
Allowing settlement offers to be lodged with the employment tribunal if they are rejected by the party This would mean, for example, that if the tribunal subsequently makes a less favourable award to the claimant, the claimant would be liable for the other party’s costs.
Financial penalties for employers. The Government is also considering giving tribunals the power to penalise employers that have been found to have breached an individual’s rights, with a ‘fine’ of up to £5,000 payable to the Exchequer rather than the claimant, in addition to the payment of compensation to the individual.
The proposals have received support from the British Chambers of Commerce (“BCC”) and the Director-General of the CBI. The BCC considers the current tribunal system to be ‘overwhelmingly weighted in favour of the employee’ and claims that businesses are forced to settle spurious claims rather than fight them, simply because it is more cost effective for them to do so.
By contrast, the TUC believes that such major changes to the system could stop employees who have been wronged at work from seeking justice, and give the green light to rogue employers to break the law. Its view is that introducing tribunal fees would deter many employees with genuine cases, and that a reduction in the unfair dismissal qualifying period would ‘prevent thousands of wronged employees from challenging their employers’, leading to employers being able to sack workers ‘on a whim’.
The TUC also disputes the statistics which show the numbers of tribunal claims are increasing. It points to the fact that the vast majority of the 236,000 cases brought last year were multiple claims covering large groups of workers (particularly in the public sector), often in disputes over working time or equal pay and that the number of claims made by individual employees is still low. Recently released statistics from the Tribunals Service support this claim, showing an 8% reduction in the number of employment tribunal claims issued in the second quarter of 2010, compared to the same period in 2009.