Changes in employment law – not business as usual!
Employment Law is undergoing a revolution. In July 2013, we saw the introduction of employment tribunal fees to submit a claim to the employment tribunal, a cap of 12 months’ pay on unfair dismissal compensation; and new rules governing Employment Tribunal procedure. But are employers prepared to meet these changes?
Employment Tribunal Fees
Under the new fee system, an employee must pay a fee to submit their claim and to proceed with a Tribunal hearing. Employees will therefore think twice about bringing unmeritorious claims. Early settlements from employers will decline too as they adopt a “wait and see” approach and use the payment of the upfront fee by an employee as an indicator of whether they are serious about their claim.
Although it may seem that the introduction of fees favour the Employer, with a likely rise in the cost of settling claims it is not all good news. Employees will inevitably seek the cost of the Tribunal fee to be added to any settlement payment and there is a real prospect that Claimants would rather have their ‘day in court’ rather than entertain settlement proposals.
Unfair Dismissal Compensation
The compensatory award for unfair dismissal claims were capped at £74,200. This gave an unrealistic perception about the level of awards employees could receive. We have now seen a 12 month pay cap on unfair dismissal compensatory awards introduced. The maximum cap of £74,200 remains, but there is also a lower cap of one year’s salary for those who earn less than £74,200. Although the intention is clearly to deter claims by employees against businesses, employees may consider adding allegations of discrimination or whistleblowing to bolster their chances of a higher award.
Employment Tribunal Rules
Elaborate Tribunal Rules were a minefield for anyone unfamiliar with the Tribunal process. Consequently, the rules have been reduced and simplified to make them more accessible. It seems universally accepted that any uniformity will give certainty for both employers and employees and must therefore be embraced as a welcome change by both.
Resolving disputes in the workplace is less costly to both parties and delivers more positive outcomes in terms of continued employment and business productivity. Conciliation can also achieve outcomes which are not an option in the Tribunal, such as an apology.
It is intended that ACAS conciliation will become a mandatory process before a claim is submitted to the Tribunal. The intention is clearly to encourage the parties to consider and participate in settlement or mediation.
The Employment Law changes we are witnessing are to encourage early resolution of workplace disputes and to simplify an overburdened Employment Tribunal process. As these changes bite, employers need to modify their approach and strategies to resolve disputes. Whilst the new rules in 2013 take a tough line on employees, the future looks brighter for employees with the imminent introduction of compulsory ACAS mediation. Penalties of up to £5,000 for employers who lose at Employment Tribunal will discourage small businesses from defending claims.
We are likely to see an increase in the tactical games of employers and employees. But who will prove to be the strongest tacticians? Employers should strongly consider seeking help now from Employment Law Specialists to prepare them and protect their business against the changing cycle of employment law.
Kerry Wigg is a partner at FM&C specialising in Employment Law. She may be contacted on +44 (0)7454 866 133 or +44 (0)1440 761 200.