Employment e-Brief – Tribunal system under scrutiny

On 27 January 2011 the Government published a Consultation document including proposals for significant reforms to the tribunal system. The proposals seek to strike a balance between assisting economic growth, by protecting employers from unnecessary claims and costs, whilst still protecting employees’ rights.

Key Proposals for Change

• Increasing the qualifying period for employees to be able to bring a claim for unfair dismissal from one to two years – This is designed to allow businesses more confidence when recruiting people. However, this is only likely to reduce the number of claims by 3,700 – 4,700 per year;
• Requirement that all claims be lodged with ACAS within the normal time limit (3 or 6 months) which would ‘stop the clock’ for the applicable time limit. ACAS would then have a period of time (suggested to be one month) to attempt to resolve disputes;
• Tackling weak and vexatious claims by providing the employment tribunals with a range of more flexible case management powers;
• Costs limit to rise – whilst there will be no move to the ‘loser pays’ principle adopted by civil courts, it has been proposed that the level of costs that can be awarded if a party has acted unreasonably is increased from £10,000 to £20,000. A further proposal is that an unreasonable refusal to accept an offer could be taken into account by the tribunal when making an award of compensation;
• Introducing fees for employment tribunal cases and appeals – some sources have suggested that this could be either one weeks pay or £500. Not only will this ensure that users contribute towards the cost of running the tribunal system it is likely to also prevent some employees pursuing vexatious claims;
• Financial penalties for employers – whilst a lot of the above proposals could be seen as ‘employer friendly’ the consultation period also proposes that tribunals would automatically levy a financial penalty on an employer who loses a claim (other than in exceptional circumstances). This would be an additional 50% of the award made, up to a maximum of £5,000. This proposal would make it even more important for employers to ensure that they are compliant with their legal obligations.

The proposed reforms are open to public consultation until 20 April 2011. Should you wish to contribute to the Consultation, you can access the document by clicking on this link.

If you have any questions on this article, or any other employment related matter please contact a member of the employment team.