This year has seen a number of changes to employment law already and there is still more to come.  We are expecting the new costs regime that will apply to Tribunal claims and the new Employment Tribunal Rules of Procedure to come into force in the summer (towards the end of July).  So, what are the changes and what will they mean?  Here is a very brief overview…

1.  Costs regime

How it will work:

  • Claimants will be required to pay a fee when issuing their claim and a further fee just before the hearing.
  • The amount of the fee payable will depend on the type of claim.  The fee for straightforward (“Level 1”) claims (e.g. claims for breach of contract, unauthorised deductions from wages and holiday pay), will be £160 to issue the claim and £230 for the hearing.  All other claims (“Level 2” claims) – which cover unfair dismissal, discrimination and whistleblowing claims – will be subject to a fee of £250 for issue and £950 for the hearing.  
  • The issue fee will be paid at the point the claim is submitted to the Tribunal and the hearing fee will become payable between four to six weeks before the hearing. 
  • There are also fees to pay when making certain applications in the course of proceedings (e.g. a £160 charge for an employer to bring a counterclaim for breach of contract).
  • Tribunal Judges will have the discretion to order the unsuccessful party to reimburse the fees paid by the successful party.     

Advantages for employers:

  • The requirement to pay a fee on issuing a claim should make claimants think twice before bringing a claim, particularly if they are low paid or concerned about the merits of their case.  However, the level of fees is such that it is unlikely to have a significant impact on high-earners seeking to bring high value claims; it is more likely to impact on the lowest value claims and lead to a reduction in those being issued.
  • Parties – particularly claimants – will be encouraged to focus on settlement at an early stage in the proceedings, certainly before the hearing fee falls due.  This could have the effect of less claims going to a full hearing.

2.    New procedure rules
Headline points:

  • Although the final version of the new procedure rules has not been published, the Government has decided to adopt Lord Justice Underhill’s draft rules in the main.  The rules do not contain any transitional provisions, which suggest that they will apply to all cases from the implementation date and not just the cases that are issued after that date.
  • Once a claim and response have been submitted, the case will first be reviewed by an Employment Judge who will consider, among other things, whether either party’s case (or part of it) has any reasonable prospect of success.  The Judge may dismiss a claim or a response at this stage, in which case, written reasons for the decision will be provided and parties may apply for a hearing to consider whether the claim/response should be allowed to proceed.
  • Where a deadline applies, the action in question must be taken before 5pm on that day (weekends and bank holidays do not count), whereas parties currently have up until midnight.
  • There will be increased flexibility in the case management of matters.  In particular, specified time limits may be shortened or extended regardless of whether the original time limit has expired.  This means that a party who has missed (or is about to miss) a deadline can write to the Tribunal and request an extension.  
  • Claimants will be encouraged to specify the compensation they are claiming when completing the claim form, together with the calculation of that compensation (there is a space for this on the new draft claim form, but completing that section is optional). This ought to help employers to understand, at an early stage, the value of the claim against them.
  • The two types of existing preliminary hearings (“Case Management Discussions” and “Pre-Hearing Reviews”) will be combined into one form of “Preliminary Hearing”, which will consider any case management issues (currently dealt with in a CMD) alongside matters relating to the detail of the claim itself (currently considered in PHRs).  
  • Judges are explicitly mandated to encourage and facilitate the use of alternative forms of dispute resolution (e.g. judicial or mediation).  This goes hand in hand with the new system of issuing claims which will require claimants to first submit certain details of their claim to ACAS and for ACAS to attempt to conciliate before proceedings commence (provided both parties agree to this).  

Pros and cons for employers:

  • Although the filtering of cases by Judges at an early stage may have the intended effect of weeding out unmerited claims, it is also likely to result in cases becoming more “front-loaded” in terms of costs.  That is, the initial pleadings will be critical documents and parties will need to spend more time and incur more legal costs at the beginning of the matter to ensure that their claim or response is drafted as fully and as well as possible to avoid being struck out at this stage.  The fact that a case may be struck out without the Judge having had an opportunity to consider all of the evidence and make findings of fact has also lead to concerns that this may lead to injustice.
  • The flexible approach to time limits clearly raises a concern with regard to consistency in that some Tribunals may take a more lenient approach to such matters than others.  It is hoped that such concerns will be addressed by the issue of Guidance from the President of the Employment Tribunal.
  • Encouragement of claimants to specify the amount of compensation they are claiming (together with justification and calculation) at the point they submit a claim may encourage settlement at an earlier stage.

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