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Employment Tribunal Update 2011

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20 May 2011 – Extension of Employment Tribunal time limits

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.

19 February 2011 – Will Tribunal fines increase out of court settlements?

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.

1 February 2011 – David Cameron’s plans to reform the Tribunal system by making it easier to dismiss staff in the first two years of their employment sound sensible.

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.

For guidance on how to dismiss employees whose performance or behaviour is not meeting required standards please contact our Employment & HR team.

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