9 Mar 2011

The proposed changes to the Employment Tribunal system are proving controversial. David Murphy gives you the low-down on some of the key changes being considered and hrlaw’s opinion on them.

1.    Extending the qualifying period for unfair dismissal

Government says

  • Extending the qualifying period for unfair dismissal from 1 year to 2 years will reduce the number of disputes that to go to Employment Tribunals.

TUC says

  • This will deter many genuinely wrong individuals from seeking justice.

hrlaw says

  • It could lead to an increase in spurious discrimination claims from employees who have less than 2 years’ service and want a way around this requirement. Discrimination claims are usually more difficult and costly for employers than unfair dismissal claims and so the changes could be a hollow victory for employers.
  • The qualifying period was two years several years ago and it was argued then that it was indirectly discriminatory against women who tend to have shorter periods of service than men. This argument might be tried again if this proposal goes ahead.

2.    Financial penalties for employers

Government says

  • A financial penalty, payable to the Exchequer, will be automatic for all breaches of individuals’ rights. It will be based on the total amount of an award made by the Tribunal, capped at £5,000 and reduced by 50% if paid within 21 days.

hrlaw says

  • This is unexpected. It sounds like a parking fine, only the amount is much more. A poorly disguised attempt to generate additional revenue for Government? Employers who breach individuals’ rights are already “punished” by having to compensate them for their losses. Is this approach really going to achieve the objective of making employers feel more confident about hiring people?

3.    Fees and costs

Government says

  • Users of the Employment Tribunals should be asked to contribute towards their running costs by paying fees. We intend to consult on the detail in the Spring.
  • The current cap on costs awards should be increased from £10,000 to £20,000.

IoD says

  • Introduce a £500 employee fee/deposit to deter weak cases.

hrlaw says

  • The civil and family courts require users to pay fees, so why should Employment Tribunals not do the same?  
  • £500 will not be enough to deter many claimants from pursuing spurious claims as they will know that commercially it will often make sense for the employer to pay at least this amount for them to go away. A range of fees/deposits, based on the individuals’ earnings, may make most sense.  The amount needs to be enough to make individuals think twice about brining unmeritorious claims but not so much as to put the Employment Tribunals out of the reach of the lowest paid who may be particularly vulnerable.
  • Increasing the cap on costs awards is by itself not enough. Tribunals need to be more willing to exercise their existing powers to make costs awards and so deter unmeritorious claims.

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