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Recently the Ministry of Justice has published information concerning the number of Employment Tribunal claims received since the introduction of fees for issuing claims.
The report is not a full analysis (which the tribunal publish officially) but, rather, an ad-hoc statistical release on tribunal claims received between July and September 2013, following the introduction of fees on 29 July 2013. However, there are some interesting findings which include:
These statistics certainly bear out in our experience of the number of claims that we are dealing with on behalf of clients. However, employers cannot run out to celebrate just yet as we have heard from a number of sources that there is a backlog of cases waiting to be dealt with at the central processing centre in Leicester and so it is possible that these cases may well be waiting to make their way over to unwitting respondents – we are only likely to get a true picture of the impact of the fee regime once we receive the next set of figures next year.
Did you know that the Government is introducing a fee scheme whereby the Employment Tribunal will start to charge Claimants for bringing a claim at the Employment Tribunal?
The Government has now decided that this will start from the end of July 2013.
Once the new proposals are implemented, it means that Claimants will have to pay up to the following amounts in order to attempt to bring a claim and see it through to a hearing at the Employment Tribunal:
|The appeal of a decision of the Employment Tribunal||£1,600|
As you can see these are quite hefty sums of money, which is good news for employers as it means that (hopefully) the new scheme will act as a deterrent to employees bringing bogus Tribunal claims. It is hoped that it will also strongly encourage Claimants to reconsider any rash or disgruntled decision they may take to appeal an unsuccessful outcome made at the Employment Tribunal.
However, you need to be aware that the Government wants to protect Claimants who cannot afford to pay any or part of the new Employment Tribunal fees. To do this it proposes to extend existing law applicable to the civil court process to Employment Tribunals and the Employment Appeal Tribunal. This is called a remission service.
Basically, there will be a new system for assessing whether an individual is eligible for a free fee remission. This is now split into two distinct tests as follows:
The first limb of the test involves looking at an individual’s disposable household capital, including any savings and investments they may have.
The proposal is that an individual will qualify for a remission if they have less than the disposable capital limit as follows:
|Amount of fee||Disposable capital limit|
|Up to £1,000||£3,000|
|£1,001 – £4,000||£8,000|
|More than £4,000||£16,000|
If an individual passes the disposable capital test then the next test is to consider whether based on their income they should receive a full fee discount, make a partial contribution to their fee or pay the full fee. The remissions system could mean that an employee does not have to pay anything at all and can bring their claim for no fee at all.
There will be no fee payable if an individual is in receipt of any qualifying benefits which are as follows:
There will be no fee payable if an individual’s gross annual income is a below a certain amount depending on how many children that person has and whether or not that person is single. See the below table for more information on income rates used for the remissions system:
|Number of children of party||Single||Couple|
|5 or more children||As per 4 children plus the sum of £2,930 for each additional child i.e £30,580 for a single parent with 6 children|
The disposable capital test helps employers. Without this element of the test, more people who have recently become unemployed, and are bringing their claim at the Tribunal, would qualify for remission based on income alone.
A final reflection… A good example is to think of an employee who has been dismissed and claims unfair dismissal. It may cost up to £1,200 to pursue an unfair dismissal claim and a dismissed employee with only £3,000 in savings and no household income would have to gamble over a third of their savings on tribunal fees at a time when they need the money the most in order to live. Statistics show that the average unfair dismissal award during the year 2012 was £4,500. Consequently, many dismissed employees may simply decide that access to justice is an expensive luxury they cannot afford.
Now that the new year of 2013 is upon us it is time to stop mourning the festive break and look forward to what 2013 will have in store.
Over the next couple of weeks we will be providing an update in relation to the changes in legislation that we can expect, and hope, to see in 2013.
Firstly, however, we want to update you on the new tribunal compensation rates which come into effect on 1 February 2013.
Already the Employment Rights (Increase of Limits) Order 2012 has been placed before Parliament. This sets out the annual increases for tribunal compensation awards.
It is important for any employer to be aware of these tribunal compensation rates and limits as they affect the amounts of compensation that a Tribunal can award for a successful claim.
If you are facing a Tribunal claim from a disgruntled employee, the team are happy and willing to help you through the whole Tribunal process.
If a former employee wants to make a complaint to an employment tribunal for unfair dismissal they have a time limit of three months from the date of the termination of their employment in which to do so. Most employers will, therefore, breathe a sigh of relief if this time limit expires without a claim being received by the Tribunal.
However, the recent case of John Lewis Partnership v Charman is a timely reminder that the Employment Tribunal is able to extend the three-month time limit where it considers that it was not “reasonably practicable” for the complaint to have been presented to the Tribunal in time.
In this particular case, the employee’s three months would have expired on 12 June 2010. However, he was not aware of the time limits involved and did not have the outcome of the employers’ internal appeal, upholding the decision to dismiss, communicated to him until mid-July 2010. His complaint was presented to the Tribunal on 21 July 2010.
The Employment Appeal Tribunal (EAT) found that it had not been reasonably practicable for the employee to have presented a complaint to the Tribunal before the conclusion of the appeal and that as he had presented his complaint within a reasonable period after that he should be allowed to pursue his claim.
This decision is a rare exception to the rules about time limits which seems to go against the strict approach to time limits that have been taken in the past. It is possible that the EAT’s approach may have been influenced by the fact that, having dismissed the employee on 13 March 2010, it then took a further 4 months for the appeal to be concluded. In light of this, employers should ensure that any internal disciplinary and appeal procedures are concluded without unreasonable delay, to reduce the risk of criticism from the Tribunal and the possibility that the three-month time limit may be extended.
The recent increase in maximum employment tribunal awards now means that an employee can be awarded up to £68,400 for their losses caused by unfair dismissal.
In addition, the Government is proposing to impose penalties of between £100 and £5,000 on employers that lose unfair dismissal claims.
The Government’s reason for changing the Workplace Dispute system is to reduce the volume of claims and to streamline the tribunal process; which is obviously welcome news.
Many companies I have spoken to have suggested this new proposal might encourage them to settle out of court to avoid paying the extra fine. This could lead to companies feeling pressured into making an offer, simply to avoid the extra financial burden.
It is important to point out that the consultation period for the proposed penalty ends 20th April 2011 and I suspect that, should this become law, it will not come into effect until April 2012. Nonetheless, the increase in employment tribunal awards and proposed penalty come at a tough time for business as statistics from the Tribunal Service show that claims are at record levels, with 236,000 employment tribunal claims being received in the year up to March 2010.
Regardless of the outcome of the consultation, the Government is sending a clear message to all businesses – comply with your employment law obligations, or face a hefty fine. Obviously, an increased emphasis on prevention rather than cure is advisable so you should take a close look at your company’s rules and procedures regarding Employment law. They should clearly outline your organization’s discipline and grievance policies and should be regularly updated.
However, could it backfire and actually end up costing you more in Tribunal claims?
You’ll no doubt be aware that an employee can bring a claim for unfair dismissal against you after a year of continuous employment, but the Government’s proposal is to extend this to two years in order to give you additional time to assess staff before they gain protection from unfair dismissal.
But in our view, this proposal might encourage people to ‘shift the focus’ of a claim to discrimination and other claims, which could be financially damaging as unlike unfair dismissal claims, compensation payouts in some of these claims can be uncapped. Whilst you may welcome a relaxation in the requirement to follow a ‘fair procedure’ before dismissing employees in the first two years of employment, without such a procedure to demonstrate a genuine (non-discriminatory) reason for dismissal, you may struggle to defend yourself against such claims.
In fact in some respects this proposed legislation is actually going backwards as, some years ago, the qualification period of an unfair dismissal claim was two years and the ‘two year requirement’ was subject to a legal challenge on the basis that it discriminated against women (as they were less likely to remain with one company for long periods due to childcare commitments and other domestic responsibilities). If the Government’s proposals go ahead then it is likely the two-year requirement will be challenged once more on the ground of sex discrimination and also age discrimination.
To act as a deterrent to dismissed workers bringing ‘vexatious claims’, the government has talked about charging people a fee in order to lodge Tribunal claims. From conversations with our clients this would be very welcome but, unfortunately, the idea has been shelved for the moment with a mere proposal that it is discussed again in the spring.
Further news which might disappoint you is that, at the other end of proceedings, the Government is proposing to levy a fine (payable to the treasury) on employers who are found guilty of breaching employment laws.
We believe the Government are genuinely trying to make it easier to dismiss employees who are not up to the job and by doing so, encourage businesses to recruit, knowing that they are not taking such a big risk on new employees. And anything to help you take a more flexible approach employment can only encourage economic growth.
However, we feel there is a real danger of this proposal backfiring and, rather than reducing unfair dismissal cases, it will increase the number of cases built on allegations of discrimination which are more complex and can be more expensive to defend.
Even without the proposed changes, you can still dismiss disruptive and underperforming employees (regardless of the length of service), but our advice (with or without the proposed changes) is to ensure you have a proper and robust process in place that is always followed.
The statistics show the number of employment tribunal claims that have been submitted and disposed of in the past 12 months. Also, for the first time, the performance of the Tribunals Service has been measured against certain key indicators.
The number of claims that have been submitted to the employment tribunal has increased by 56% compared to 2008/2009. A total of 236,100 claims were received, with 164,800 (an increase of 90% from the previous year) of these relating to multiple claimants.
The number of claims relating to unfair dismissal, breach of contract and redundancy increased by 17% on last year. The number of cases that the employment tribunal has disposed of in the past year has also risen by 22% from last year. However, as disposals have failed to keep pace with the increased receipts, there are still more than 400,000 claims within the tribunal system that remain outstanding.
It is likely that the significant rise in claims is yet another result of the recession with businesses deciding to make staff cutbacks in an attempt to survive the downturn. However, as attractive as a reduction in labour costs may be, with more and more employees showing a willingness to exercise their employment law rights, employers must ensure that they have proper redundancy procedures in place to reduce the risk of successful claims being made against them.
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