Reform of the Employment Tribunal System

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The government plans to consult on proposals to reform the Employment Tribunal system and qualifying periods for unfair dismissal. The proposals include:

  • sending all unfair dismissal claims to ACAS to attempt conciliation before they reach a tribunal;
  • all unfair dismissal cases to be heard by a single judge rather than a panel of three;
  • the introduction of a fee to file any tribunal claim (the TUC claims this could be as high as £500);
  • extending the qualifying period to bring a claim for unfair dismissal from one year to two.

The consultation closes on 20 April 2011.

The Government claims that the proposed changes to employment law will ‘ensure maximum flexibility while protecting fairness and providing the competitive environment required for enterprise and growth’. The two most controversial of these are the increased qualifying period for unfair dismissal claims and the introduction of a fee to file a claim. The Government thinks that such a move will enable businesses to ‘feel more confident about hiring people’ and create ‘more time for the relationship to get established and work well’, not become ‘a charter for businesses to sack people unfairly’. It estimates that the increase will result in between 3,700-4,700 fewer unfair dismissal claims per year. Quite what effect the introduction of a fee will have is unknown. Although the qualifying period has previously been as long as two years, there has never been any question of fees being payable to bring a claim. This could open the door to claims that costs should routinely be awarded to successful claimants, as is the case in the civil courts.
The other proposals include:

  • requiring all claims to be submitted to Acas before a claim is issued, to allow Acas a period of up to a month to offer pre-claim conciliation.
  • introducing automatic financial penalties for employers found to have breached employment rights, on top of the ordinary compensation already payable. The penalty would generally be half the amount of the total award made to the claimant, and would be payable to the Government
  • allowing employment judges to sit alone in a wider variety of cases.
  • reviewing the formula for calculating employment tribunal awards and statutory redundancy payment limits.

The Government has also published the ‘Employers’ Charter’, which sets out in clear terms what employers can and can’t do when managing staff.
In 2010, the number of tribunal claims rose by 56% to 236,000. Vince Cable said today that the reforms would give businesses that want to expand the confidence to hire more staff because it would reduce the risk of tribunal claims. The proposals may help to prevent some of the more ridiculous and time wasting claims but it remains to be seen whether they would have any significant effect on employers’ recruitment habits
What the Government does not seem to have noticed is the possible link between a record number of claims and record levels unemployment. Logic would suggest that the problem will resolve itself once the job market stabilises.