Employment Tribunal Changes

Significant changes were brought into effect on 29 July in relation to Employment Tribunal claims and employment law, which include the following:

1. A new set of Employment Tribunal rules
2. The introduction of fees charged for bringing an Employment Tribunal claim
3. Cap on compensatory award in Employment Tribunal
4. The ability to have confidential termination negotiations with employees.

The general opinion is that these changes are broadly in favour of the employer and will potentially reduce the number of new claims in the Tribunal.

1. The new Employment Tribunal rules

A new set of rules has been introduced. The purpose of these new rules is to simplify and streamline the Employment Tribunal process.

Some of the key changes of interest to you are as follows:

• All claims pass through an initial sift stage whereby a Judge will look at each claim and response to assess whether they have a reasonable prospect of success and are within the jurisdiction of the Tribunal. The Judge can then order that all or part of a claim or response is dismissed. The parties will be given time to comment on such a proposal to dismiss before this takes effect.

• The power of a Tribunal to require a party to pay a deposit as a condition of continuing with their claim or defence has been widened so it applies not just to the whole claim or defence but can also be ordered in relation to any allegation or argument which forms part of a claim or response. The Tribunal can order a deposit order of up to £1,000 per allegation or argument. The aim is to discourage weak parts of a claim or defence being included as part of an otherwise meritorious claim/defence.  Hopefully this will discourage Claimants from including spurious claims that have no basis in fact.

• Now where the Tribunal makes a costs award it can carry out a detailed assessment of costs without any cap. Previously higher awards had to be referred to the County Court for detailed assessment. Costs awards should still only be made in exceptional circumstances, where a party has acted vexatiously, abusively, disruptively or otherwise unreasonably.

2. Fees for bringing Employment Tribunal Claims

The most significant change is the introduction of fees which will apply to any claims brought from 29^th July 2013.

There will now be 2 fees payable by a Claimant when making a claim.  Firstly an issue fee is payable when lodging the claim and secondly a hearing fee is payable on a date specified by the Tribunal when the case has been listed for hearing.

For most claims such as unfair dismissal and discrimination claims the issue fee will be £250 and the hearing fee will be £950.

Smaller claims such as for a redundancy payment, breach of contract or unlawful deductions from wages will attract an issue fee of £160 and a hearing fee of £230.

This is expected to cut the number of claims being brought before Employment Tribunal significantly, although a fee remission is available for people on limited means. Failure to submit the fee or an application for a fee remission will prevent a claim being accepted and failure to pay the hearing fee risks the claim being struck out.

This is not all good news for employers. Where claims are decided in the employee’s favour, the Employer is likely to be ordered to pay the Claimant’s the fees they had previously paid to the Tribunal.

In some circumstances Employers will also have to pay a fee, for example when making a breach of contract claim against an employee or when applying for a judgment to be reconsidered.

3. Compensatory Award limits

From 29 July 2013 there is a cap on the amount of compensation a Tribunal can award. Generally Claimants in an unfair dismissal case will receive a Basic Award (calculated in the same way as statutory redundancy) and a Compensatory Award (which represents loss of earnings). The maximum a Claimant can now recover for the Compensatory Award is either £74,200 or 52 weeks gross pay (including overtime, bonuses etc.), whichever is the lower.  The aim of this change is to manage the expectations of Claimants so that they don’t think they are automatically going to receive £74,200.  

4. Confidential negotiations before termination of employment

Previously if employer’s wished to discuss with an employee the possibility of that employee leaving (possibly with an enhanced payment) rather than face, for example, disciplinary proceedings it was a risky conversation to have. That employee could use that conversation as evidence in a Tribunal that the employer wanted to dismiss her or perhaps could rely on that conversation as a reason to resign and claim constructive dismissal.

The aim of the new legislation is to ensure that evidence of pre-termination negotiations is inadmissible in Tribunal proceedings. However, before employers get too excited about this there are a few points to be wary of:

• the inadmissibility does not apply where there is a claim involving an automatically unfair dismissal. So whilst inadmissibility applies in ordinary unfair dismissal cases it would not apply if, for example, the unfair dismissal claim was for a reason related to maternity leave or TUPE. This may lead to Claimant’s alleging an automatically unfair dismissal case even if it clearly is not just to get around the legislation;

• inadmissability also does not apply in relation to anything said or done that the Tribunal considers was improper; and

• inadmissibility only applies to the extent that the Tribunal considers just.

The final two points mean that there is likely to be a situation where the Tribunal has to hear evidence on the conversation to see if there was anything improper/if it is just for it to be inadmissible. That same Tribunal then has to hear the case and possibly “forget” about the conversation in question. It will be interesting to see how this legislation works in practice.

For more information on this article or any other area of employment law please contact Marsha Robinson on 01245 216114.


This does not provide a full statement of the law and readers are advise to take legal advice before taking any action based on the information contained herein.