40 law
All change - employment law reform
The coalition Government’s proposals to help stimulate much sought after economic growth by relaxing employment regulations are now beginning to crystallise with formal changes to employment regulation and the employment tribunal procedures, writes James Simpson, partner and head of employment law team, Henmans Freeth LLP
The qualifying period to bring a general unfair dismissal claim has already been changed so that an employee must have two years of continuous employment. The Government has now confirmed when some of the other main changes will happen.
Issue and hearing fees
A significant complaint by employers was that the old tribunal system allowed poor claims to proceed with little consequences for the claimant, incurring unnecessary time and cost for the employer. It was perceived that this shifted the initial balance of a claim in favour of the claimant – a poor claim therefore had a nuisance value which employers were often prepared to pay to conclude cases quickly.
The changes address this. For the first time, charges will apply to tribunal claims issued after July 29, 2013. Most claimants will have to pay an issue fee when a claim is submitted and a second “hearing fee” prior to the final hearing. The amounts will depend on whether the claim is Type A or Type B and the number of claimants involved. So group claims will cost more. A typical unfair dismissal claim (Type B) for one claimant is likely to attract an issue fee of £250 and a hearing fee of £950.
As there are concerns about access to justice, the existing fee remission scheme for High or County Court cases has been extended to ET proceedings. So claimants will not be required to pay these fees if they pass both an income and disposable capital test. Those in receipt of typical income support benefits are likely to satisfy the income test.
If a remission does not apply, having to pay an issue fee should cause most claimants to rethink the merits of a claim. The payment of a hearing fee just before the final hearing should also provide an incentive to settle cases earlier, rather than on the eve of the hearing. Unfortunately using the ET’s judicial mediation scheme to achieve settlement will no longer be free of charge – the respondent will be charged £600 when the mediation date is set.
www.businessmag.co.uk The 'sift'
New rules of procedure will apply to all new cases issued after July 29 – the new rules will also apply to most cases issued before this date.
One of the significant changes is the introduction of an automatic review (the 'sift') when a claim is defended. An employment tribunal judge will carry out this initial sift to determine if all or part of the claim or defence should be struck out, causing either the issues to be narrowed or at worst, the end of a claim. Strike out can be exercised if the judge considers that a claim or defence does not have “reasonable prospects of success” or if the ET does not have jurisdiction to hear the claim.
However, if there is strike out, the losing party can ask for the decision to be reconsidered and a hearing may be set to consider representations. Even so, this automatic sift is likely to curb a number of poor claims. It will mean that parties will also need to draft claims and defences properly and in more detail to avoid strike out.
Costs orders
The new procedure rules also amend the cost rules making it easier for costs to be awarded against a losing party. The threshold has been reduced so that costs can now be awarded if a claim or defence does not have “reasonable prospects of success”. This links in with strike out so if a case is struck out at the sift, there is the increased probability that the successful party can be awarded costs.
It remains to be seen how vigorously the ET will apply the new strike out provisions – traditionally, the ET has been reluctant to allow claims to fail early on simply because of lack of detail or poor drafting. However, the emphasis is now very clearly on getting claims dealt with early, before time and costs increase.
Other planned changes
Other changes are planned to push parties to resolve claims at the outset.
THE BUSINESS MAGAZINE – THAMES VALLEY – JULY/AUGUST 2013
It is presently proposed that from April 2014, there will be mandatory ACAS conciliation before proceedings can be issued. So ACAS will have to issue a certificate before a claimant can issue a claim. It is also proposed that a losing employer will be ordered to pay a penalty of up to £5,000 if there are “aggravating factors” – this would be paid to the treasury, not the claimant.
Inevitably, there are aspects of the changes where there is scope for debate and dispute. However, it is anticipated that the cumulative effect of the changes will act as a deterrent to poor claims and lead to the earlier settlement of viable claims.
For further information on the reforms and how it will affect you, contact me on details below.
Details: James Simpson 01865-781193
james.simpson@
henmansfreeth.co.uk
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