At first sight, many of the forthcoming changes to the way employment tribunals operate, together with associated changes to the law on unfair dismissal, appear to be employer-friendly. But there is a growing alternative viewpoint that it is not. Who is right? Asks Andrew Willis, Head of Litigation at Croner.
The Department for Business Innovation and Skills recently announced a new implementation timetable. It confirms that the following will come into force this summer: tribunal fees for claimants; a new twelve-month earnings cap on the compensatory award in unfair dismissal cases; changes to the law on whistleblowing; protected settlement conversations; and new procedural rules for employment tribunals. The combined effect of these changes, introducing financial hurdles for claimants alongside incentives to settle early and enhanced powers for tribunals to dispose of weak claims, would appear to address many of the concerns employers and HR professionals have expressed about the tribunal system in recent years. The same timetable also suggests that we will have to wait longer for the more “pro-claimant” changes which are planned. In fact, Acas pre-claim conciliation and employment tribunal penalties for employers, won’t come into effect until the spring of 2014 at the earliest. However, many employers still fear that these changes will operate in favour of the employee, or at least to the detriment of the employer. This was particularly evident in theHRDIRECTOR roundtable, sponsored by Croner, which featured in the 100th issue.
There is certainly justification for taking this view, and there is no reason to think that fewer disputes will arise in and from the workplace, and the clear intention of the Government is that more of these disputes will be settled, at the new “pre-claim” stage, or at an earlier stage of the tribunal process (if the dispute reaches tribunal). Within the workplace, if employers begin to take advantage of the limited comfort offered by protected settlement conversations in large numbers, employees will perhaps come to expect a “pay-off” on termination. If the case reaches a tribunal, proper settlements sums will inevitably incorporate an element to cover tribunal fees. In both situations employers will bear the financial brunt.
Of course, it isn’t all bad news! When dealing with a difficult termination, if he realistic prospect of a discrimination claim is absent, employers will be able to take advantage of a protected settlement conversation to offer a pay-off of up to one year’s salary, knowing that the employee will not be able to do better by pursuing a claim of unfair dismissal in the tribunal. In addition, the requirement for claimants to pay tribunal fees (if they are not exempt under the remission scheme) will be a significant disincentive to pursuing a claim. Although the “halfway house” of pre-claim conciliation will eventually be introduced, there will be no obligation on employers to negotiate, and many will choose to sit out the process, to see whether the claimant is prepared to pay the fees and proceed with the claim. In the future, it is likely that claims reaching tribunal will be more complex and difficult. While there will be a window of opportunity for settlement when the hearing fee falls due, once this is paid, stances are likely to harden and settlement will be harder to achieve. However, the combined effect of the forthcoming changes will surely see the vast majority of claims settle.
Routine cases with a likely outcome and known compensation levels are already the most likely to be resolved in this way, and the pressure to pursue this option will be even greater in the future. The likelihood is that many more cases will settle before tribunal proceedings are even commenced. As a result of this shift, the costs of resolving employment disputes will, to some degree, be borne less by Government and more by the parties concerned, particularly employers. HR professionals will need clear strategies in place to control these costs and ensure that a new culture isn’t created in which the “pay-off” becomes the norm.
