UNFAIR DISMISSAL AWARDS TO BE REDUCED
September 2012: Business Secretary Vince Cable has proposed a cut in how much workers can claim for unfair dismissal at employment tribunals. For the full story see: http://www.bbc.co.uk/news/business-19594879
£ Tribunal Awards: In February 2012 the maximum compensatory award for unfair dismissal was increased from £68,400 to £72,300. The compensatory award is intended to compensate employees for loss of earnings. The maximum basic award is increased from £12,000 to £12,900.
The maximum “weekly pay” for calculating certain statutory entitlements, including statutory redundancy pay for redundancies taking effect on or after 1 February 2012, is increased from £400 to £430.
The limit on guarantee payments when an employee is not provided with work is increased from £22.20 to £23.50.
The minimum basic award for unfair dismissal on grounds of health and safety, trade union involvement, serving as an employee representative or occupational pension scheme trustee, or other reasons that are automatically unfair is increased to £5,300, and the minimum compensation for a worker excluded or expelled from a trade union goes up from £7,600 to £8,100.
From 6 April 2012 a number of changes in employment tribunal procedure kicked in to reduce the complexity and perceived inefficiency of the system. For further details refer to the Employment Tribunals Act 1996 via the Parliament website. (Note: Tribunal FEE paying structure to be introduced in 2014, details below).
Judges: For example, from 6 April 2012 employment judges will hear unfair dismissal cases alone in the employment tribunal, unless the judge directs otherwise. Some concern has been expressed about Judges sitting alone for unfair dismissal cases in the ET. See EAT decision in McCafferty v Royal Mail.
Deposit orders: The maximum amount for a deposit order is increased from £500 to £1,000. The employment judge or tribunal can order any party to pay a deposit as a condition of being allowed to proceed if it considers its case has no reasonable prospect of success.
Costs cap: The maximum amount for a costs order, requiring the employer or employee to contribute to the other’s costs, is increased from £10,000 to £20,000. The tribunal or employment judge has a duty to consider awarding costs where the case had no reasonable prospect of success or where one of the parties or its representative has acted vexatiously, abusively, disruptively or unreasonably, but can award them even if this is not the case. Practical Lawyer magazine suggests that tribunals are likely to move away from a general “no costs” presumption towards the county court system of “loser pays”, which could make the consequences of losing more serious for both employers and employees.
If a claimant persists with a claim after being ordered to pay a deposit at a pre-hearing review and then loses, the deposit may be awarded as costs to the other party.
Witness statements: Witnesses’ written statements will be “taken as read” and witnesses will no longer need to read them aloud, unless the tribunal or employment judge orders otherwise.
Witness costs: The tribunal or employment judge has power to order the parties to a dispute to pay witnesses’ expenses, and to require the party who loses the case to reimburse the successful party for any such witness costs they have already paid.
See: The Employment Tribunals (Constitution and Rules of Procedure)(Amendment) Regulations 2012.
Maximum awards: The method of calculating the basic award in unfair dismissal claims, and the maximum compensatory award, are both being changed.
Discrimination compensation: The government has concerns about the high level of compensation awarded by employment tribunals in some discrimination cases, and whether this leads some workers to take weak, speculative or vexatious cases in the hope of a large award and/or leads employers to settle such cases before they reach the tribunal. In the BIS employment law review annual update in March 2012, the government said that because discrimination law derives from EU law, it would not be possible to put a cap on awards. However, information on median awards will be included in tribunal claim forms, so workers and employers realise that large awards are not the norm.
Judges Discretion: ref financial penalties for employers. Under clause 14 of theEnterprise and Regulatory Reform Bill, which was introduced in Parliament on 23 May 2012, employment judges will have discretion to serve a penalty on employers who breach employment rights where there are “aggravating features”. So as well as paying compensation to the employee, an employer could be required to pay a penalty (a fine) to the Exchequer of up to 50% of the tribunal award, subject to a lower limit of £100 and an upper limit of £5,000. The penalty will be reduced by 50% if it is paid within 21 days.
HOW TO DEAL WITH A TRIBUNAL CLAIM
Dealing with a Tribunal claim can be a stressful and costly experience. Here, we provide some practical advice to assist the employer in receipt of an ET1 – a tribunal claim.
SCENARIO: A member of staff has been dismissed from your company following a disciplinary hearing. You probably hoped that was the end of the matter and that you could get back to business. Suddenly, unexpectedly, you receive notification from the Employment Tribunals Service that your former employee has made a claim for unfair dismissal. This is a daunting prospect for all employers – large and small. The employee may, once, have been a much valued and trusted employee. A feeling of betrayal and a fear of an unknown legal system can cause sleepless nights for management and will be an unnecessary and costly business distraction.
You are not alone. Between 2008/9 and 2010/11, Employment Tribunals saw a 44% increase in claims, to 218,100. During 2010/11, 122,800 cases were dealt with – 33% more than in 2008/9. Among the most common claims were alleged breaches of the Working Time Directive, allegations of unfair dismissal and breach of contract.
RESPONDING TO A CLAIM : THE ET1 & ET3
Often, the first you will know about a claim is when the papers land in your ‘in-tray’. What you will receive is called a Form ET1 – that is the form the employee filled in to make their claim. You must prepare an official response to this form within 28 days and you can do this either in writing or online. The response is formally known as an ET3 and you will need to explain, among other things, whether you are resisting the claim and your grounds for doing so, and the procedures followed before the claimant was dismissed. Prior to responding, seek legal advice !
TIMELINES: If you find you are unable to respond in time, it is possible to apply for an extension but the application must be presented to the Employment Tribunal Office within the 28 day time limit, explaining why you cannot comply with the time limit. It is up to the Employment Judge to decide whether this explanation is reasonable and whether to grant the extension.
Failure to provide all the requested information within the deadline and on the correct form can have serious repercussions. The Employment Judge may decide to issue a default judgment without you being able to play any part in the proceedings. A default notice may determine liability only or it may also quantify the remedy the claimant is entitled to. An employer’s only option at this point is apply for a review of the decision. A review hearing may then be heard and if the employer is successful, the matter can then proceed to a full hearing.
If the ET3 form is accepted, the claim then proceeds to the case management stage in which documents are exchanged and the date and length of the full hearing is listed. However, the current practice is to list the case and set out the information required when notifying the employer of a claim, to avoid the need for a case management hearing.
CASE MANAGEMENT: If a case management hearing is held, the claimant and respondent will usually agree when to exchange documents and witness statements. The Tribunal can also order either side to provide further information if necessary. As an employer, failure to comply with such an order can result in the Tribunal awarding costs against you, striking out whole or part of the response and where appropriate debarring you from responding to the claim altogether.
Employment Tribunals routinely send the employer’s response to the Advisory Conciliation and Arbitration Service (Acas) which means an Acas conciliator may well contact you to see whether the case can be settled, i.e. the employer makes a monetary payment to the claimant in exchange for their withdrawing the claim, without the need for a hearing.
Acas often refer mediation cases to HR & Diversity Management for mediation so, consider contacting us directly if you feel comfortable with this.
HEARINGS: If the case does reach a hearing, this will usually be heard by an Employment Judge sitting alone although some more complex cases will be heard by a full Tribunal panel made up of a Judge and two lay members. (Laws are changing on this point as we speak). Hearings are usually open to the public and can last anything from an hour to multiple days, during which the claimant, employer and their respective witnesses will give evidence under oath and answer questions, both under cross-examination from the other side’s representative and from the Employment Judge. At the end, the judgment and the reasons for it will be announced and a copy will be provided to both sides on the day or shortly afterwards.
If the claimant is successful, the Employment Tribunal can order you to pay them compensation. This can be unlimited in certain cases such as successful claims for discrimination but for a claim of unfair dismissal will generally consist of a basic award, based on the claimant’s age, length of service and pay, and compensation including loss of earnings up to a set maximum which is reviewed each year. In addition, if you are ordered to re-employ the claimant and you ‘fail unreasonably to do so’, a further award can be made against you. In general, both sides pay their own costs but the Tribunal can order one side to pay costs to the other if, for example, one side is thought to have behaved unreasonably.
Both sides can apply for the Tribunal judgment to be reviewed within 14 days of the date on which the judgment was sent. This can be done for specific reasons, such as that new evidence has become available since the hearing which could not reasonably have been known at the time. It is also possible to appeal the judgment of the Tribunal on the grounds that that the Tribunal has made an error in applying the law or ‘that the judgment was one which no reasonable Tribunal could have reached’. This must be done within 42 days of the date on which the written judgment was sent.
2013 – EMPLOYMENT TRIBUNAL FEES
Bringing a claim or an appeal to the employment tribunal is currently free of charge with the full cost being met by the taxpayer. By introducing fees, people using employment tribunals will start to contribute a significant proportion of the £84m cost of running the system. The aim is to reduce the taxpayer subsidy of these tribunals by transferring some of the cost to those who use the service, while protecting access to justice for all.
From 2013 this will change. Proposed fees will be tailored to encourage businesses and workers to mediate or settle a dispute rather than go to a full hearing from summer 2013. Following the Ministry of Justice’s consultation with businesses and the public, some of the fees will be slightly lower than initially proposed in order to strike a fair balance between the needs of business and tribunal users. A FEE paying system is part of the Government’s programme to promote early resolution of disputes in order to help both individuals and companies to get on with their lives and businesses. The objective is to encourage people to look for alternatives – like mediation or compromise (settlement) agreements – so that tribunals remain a last resort for the most complex cases.
Taxpayers will continue to meet the full cost of the Advisory, Conciliation and Arbitration Service (ACAS) which provides a free service to help workers and businesses settle disputes without the need to go to a tribunal.
Justice Minister Jonathan Djanogly said: “It’s not fair on the taxpayer to foot the entire £84m bill for people to escalate workplace disputes to a tribunal. We want people, where they can, to pay a fair contribution for the system they are using, which will encourage them to look for alternatives. It is in everyone’s interest to avoid drawn out disputes which emotionally damage workers and financially damage businesses. That’s why we are encouraging quicker, simpler and cheaper alternatives like mediation.”
From summer 2013, mediation by a judge will cost £600. This offers a considerable saving on the £1,200 it would cost to take a ‘level 2′ claim all the way to full hearing. The lower fee to take the administratively simpler ‘level 1′ claims to a full hearing will be £390 – which drops to just £160 if settled before the hearing fee is payable.
Many people on low incomes may not be required to pay the full fees, under the same remission system which already exists for court users who pay fees to use the civil courts’ services. Following this extension of this exemption system, the Government will review its use across both courts and tribunals and publish a consultation later this year as part of a wider review required by the introduction of Universal Credit in late 2013.
Fees to use the employment tribunal will be payable in advance, and most types of fee will only apply to the person bringing the claim. Note: However the tribunal will have the power ‘to order the unsuccessful party to reimburse the fee to the successful party’. In practice, cases are often settled rather than there being a clear ‘winner’ or ‘loser’ and the issue of reimbursement would form part of the settlement.
The introduction of fees is part of the Government’s Employment Law Review which aims to maximise flexibility for both employers and employees while protecting fairness and providing a competitive business environment.
The Review includes a package of reforms to streamline and modernise the employment tribunals system, including routing all claims to ACAS to offer early conciliation before going to a tribunal, and encouraging more use of mediation through a best practice project in the retail sector and also regional mediation pilots currently being developed in Manchester and Cambridge.
For further information, call the Ministry of Justice press office on 020 3334 3536
PROFESSIONAL HELP – NOW
Given that it can take months for a case to reach a hearing and the cost can be significant in terms of time, effort and disruption, it is important for employers to get the right advice as soon as possible.
HR & Diversity Management Limited provide a range of services for employers, including;
A UK-wide Helpline – a subsidiary of The National Bullying Helpline
Assistance with conflict resolution (broadly speaking)
Diversity & Leadership development at all levels
An independent investigation service (both grievances and disciplinaries)
Training for Line Managers on workplace investigations
Help with drafting letters and forms
Professional HR consultancy on all aspects of Employee Relations (change management, TUPE etc).
Referral to Employment Law Solicitors whom we know have considerable knowledge in this arena and who work very competitively
PRACTICAL STEPS: There are some practical steps that employers can take to help avoid a successful claim by a former employee. These include:
• Checking that disciplinary and grievance procedures for your staff comply with current employment legislation. Tribunals will take many factors into consideration when determining an unfair dismissal claim, including adherence to your disciplinary procedures and the extent of your administrative resources.
• Ensuring that staff who deal with employee matters are fully trained in your company’s disciplinary and grievance procedures. It is also essential that they understand employment law as it applies to your company.
• Keeping a ‘file note; a record – emails, letters, minutes of meetings, statements and any other material which may be needed to substantiate your company’s decisions at a later date.
• Seeking to resolve disciplinary and grievance problems promptly in the workplace or consider using a mediator or independent investigator to help resolve disputes.
• If you receive a claim (Form ET1), seek legal advice straight away.
Call us on 01793 3388888 immediately.