On 29 July 2013 four important changes were introduced: -
1. Fees in the Employment Tribunal;
2. Cap on unfair dismissal compensation
3. Negotiations leading to Settlement Agreements (Compromise Agreements) will be
confidential; and
4. Changes in procedure in the Employment Tribunal.
This briefing note looks at the first three items.
Introduction of fees
The Tribunal system costs £74m per year to run and it is the Government's intention that users of the Tribunals (rather than the tax payer) should pay for this. An obvious second consequence of the fees will be to deter some Claimants, whether or not their claims are frivolous or unfounded.
In broad terms, straightforward claims will be classified as Type A cases, attracting a level 1 fee (for example Wages Act claims, refusals to allow time off). More complicated claims (such as discrimination, detrimental treatment or dismissal claims) will be classified as Type B claims and which will attract a level 2 fee.
Fees will be payable by the Claimant on issue and prior to hearing.
Other fees are payable at other times during the Tribunal process but these are the main fees.
A successful party can look for reimbursement of their fees from the loser.
Cap on unfair dismissal compensation
From 29 July there will be a statutory cap on the amount of compensation which can be claimed for unfair dismissal. This will be the lower of the individual's pay for one year or £74,200.00. It follows that anyone earning more than £74,200.00 will have their compensation for unfair dismissal capped at that level. The purpose of compensation is to compensate for time out of work and so it will be especially important for Claimants to find new work of the same value within a year.
Negotiations leading to Settlement Agreements which terminate employment
Settlement Agreements are the new name for Compromise Agreements, but the changes are more far-reaching.
Whilst Compromise Agreements have been with us for a long time, the new rules will mean that discussions leading up to the Settlement Agreement cannot be disclosed in any Employment Tribunal. It is likely that employers will feel more able to broach those discussions, as a way of avoiding disciplinary or performance related issues, if the discussions cannot be referred to in any subsequent proceedings. That would be the case if the negotiations did not succeed and the employee went to the Employment Tribunal; in those circumstances the discussions cannot be disclosed.
ACAS advises that meetings during which a termination package is discussed should be attended by a trade union representative or work colleague of the employee, in the same way that a disciplinary meeting would be. ACAS also recommend that the employee be given at least ten days to think about the proposed terms of departure.
If terms can be reached then they will be noted down and signed in a Settlement Agreement in the usual way. These rules around confidentiality will only apply to straightforward claims for unfair dismissal. The rules will not apply to claims around whistleblowing, union membership, asserting a statutory right or issues surrounding the Equality Act 2010.
If you would like further information relating to the changes, or if you require specific advice, contact Mark Serby on 0114 2666660; alternatively you can email [email protected].
