1. Employment Tribunals: Charges & Changes Paul Statham

2. Introduction I will try to cover the following:- April 2012 continuous employment raised to 2 years Employment Judges sit alone in unfair dismissal. June 2012 Mr Justice Underhill’s Fundamental review of Employment Tribunal Rules. July 2012 Response to Consultation on Tribunal Fees published £250 to issue & £950 for hearing Enterprise and Regulatory Reform Bill First Reading September 2012 Consultation on Changing Cap on Compensatory Award Settlement Agreements

3. Changes From April 2012 Unfair Dismissal and Statement of Reasons for Dismissal (Variation of Qualifying Period) Order 2012 (Employment Rights Act 1996) The unfair dismissal qualification period rose from one to two years for all new employees employed on or after 6th April 2012. Estimated this will lead to a reduction of around 2,000 claims per annum, which brings net direct benefits to employers of around £4.7m per annum.

4. Changes From April 2012 The Employment Tribunals Act 1996 (Tribunal Composition) Order 2012 This amends the composition of employment tribunal hearings for unfair dismissal cases to be heard before 'a judge sitting alone'. Parties will be able to request a tripartite panel and this will be accepted or rejected at the judge’s discretion.

5. Changes From April 2012 Amendments to Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 These amendments make the following changes: When a judge considers that a claim has a limited chance of success at tribunal, to increase the maximum limit at which deposit orders can be made from £500 to £1,000. To increase the maximum limit at which judges can award costs to either party from £10,000 to £20,000. To change the rules on witness statements in the employment tribunal so that they shall be ’taken as read’, meaning that a witness statement will not be read out in its entirety - unless the judge directs otherwise. To administratively remove automatic witness expenses.

6. Fundamental Review of Employment Tribunal Rules An initial paper sift carried out by a judge Tribunal powers to strike out claims A lead case mechanism for dealing with multiple claims A simplified procedure for withdrawing claims A new procedure for preliminary hearings that combine separate pre hearing reviews and case management discussions A clear rule on the provision of written reasons A rule on limiting oral evidence and submissions leading to more efficient timetabling of cases

7. Fundamental Review of Employment Tribunal Rules Presidential Guidance Alternative Dispute Resolution New Cost Rules More flexible deposit orders New ET1 and ET3 Encouraging prompt payment of awards Dealing with new regime on fees and compulsory referral to ACAS for pre-action conciliation

8. Tribunal Fees Bringing Claims The headline proposal is that universal fees to bring employment tribunal claims will be introduced “in the latter half of 2013” and the Option 1 fee structure whereby fees are banded and there is a fee on issue and when a case is set for hearing is preferred to the Option 2 which proposed a single (higher) fee payable on issue and an increased fee if the claimant claimed over £30,000. There will be two "levels" of claims. For level one claims which are generally for sums due on termination such as unpaid wages, pay in lieu of notice and redundancy pay, the issue fee will be £160 and the hearing fee will be £230. For level two claims (all other claims), the issue fee will be £250 and the hearing fee will be £950.

9. Tribunal Fees Multiple Claims The new proposals for multiple claims are: 2 and 10 individuals pay a fee of 2 x the fee for single claims 11 and 200 individuals pay a fee of 4 x the fee for single claims; and 201 or more individuals pay a fee of 6 x the fee for single claims.

10. Tribunal Fees Fees for Applications Fees for counterclaims cost £160, Fees for a review of default judgments cost £100, Fees for reviews cost £100 or £350 depending on the level Fees for applications to dismiss following settlement or withdrawal cost £60. Fees for Judicial Mediation cost £600 to be paid by respondents

11. Tribunal Fees Employment Appeal Tribunal The fee for lodging an appeal to the EAT is to be £400 If it is allowed to proceed to hearing a further fee of £1200 is payable There were just over 2000 appeals received by the EAT in 2010/11 but only 600 or so proceeded to a preliminary or full hearing The Government can potentially raise £560,000 from appeals that will not even proceed to a preliminary hearing

12. Tribunal Fees Fee Remission The Government proposes using the current civil courts remission system to protect claimants who cannot afford to pay the fees. This provides for 3 gateways: Receipt of one of a listed income-related benefit Gross income of £13,000 if single or £18,000 for a couple Disposable income computed on the legal aid means criteria The latter can result in partial remission. Below £50 a month confers a complete exemption then every extra £10 of income makes the claimant liable for a fee of £5.

13. Tribunal Fees Time Limits The Government has accepted that claims will be treated as lodged in time if accompanied by a fee or an application for remission even if the application is not processed until later or it is decided the claimant does not qualify. The Government are proposing a review of the remission system for all civil cases with a consultation in the “late autumn”. How fees will interact with the proposal in the Enterprise and Regulatory Reform Bill for compulsory pre-action conciliation by ACAS is still to be worked out Time limits will become more complex.

14. Tribunal Fees What is Wrong Fees are payable in all cases without exception. No refund of fee even if case settles straight away. Discretion to tribunal to make “losing” party refund fees of “winning party”. But some 39% of tribunal awards are not paid at all and a further 8% are only paid in part according to Government research in 2009. Will be another factor in negotiations and may be an obstacle to settlement. “Fees don’t discourage unmeritorious claimants, they discourage the impecunious ones” –Sean Jones QC.

15. Enterprise and Regulatory Reform Bill Part 2 Employment Clause 7 -9 Pre-action conciliation by ACAS Clause 10 Decisions by Legal Officers Clause 11 Composition of EAT Clause 12 Protected Conversations Clause 13 changing cap on compensatory award Clause 14 Financial penalties Clause 15 Protected disclosure amendments

16. Enterprise and Regulatory Reform Bill Pre-Action Conciliation Before a claim can be lodged at the tribunal the potential claimant must provide ACAS with prescribed information about the claim. ACAS will then seek to conciliate the “relevant proceedings” by approaching the parties within the “prescribed period”. If ACAS considers conciliation is not possible or the “prescribed period” has expired they will issue a certificate to the potential claimant. The claimant will only be able to issue tribunal proceedings when they have the certificate. The normal time limit may be extended

17. Enterprise and Regulatory Reform Bill The Bill provides a power to the Secretary of State to pass regulations to appoint Legal Officers to make decisions in certain proceedings as long as both parties consent in writing. The intention is to introduce a rapid resolution jurisdiction to deal with simpler claims by Legal officers with the written consent of both parties The Bill also amends the Employment Tribunals Act 1996 by providing that an appeal from an employment tribunal constituted by an Employment Judge sitting alone, a judge shall sit alone in the Employment Appeal Tribunal unless the judge directs that proceedings should be heard with members. Decisions by Legal Officers & Composition of EAT

18. Enterprise and Regulatory Reform Bill Cap on Compensatory Award The Bill provides a power to make regulations to amend the cap on the compensatory award (currently £72,300) either up or down. The cap may not be reduced below "median annual earnings" or increased above three times median annual earnings; and the lowest number of weeks’ pay that may be specified is 52. On the 14 th September the Government launched a consultation “Ending the Employment Relationship”. This proposes using the power to reduce the cap to median earnings (currently £25,582) or 12 months pay whichever is lower.

19. Enterprise and Regulatory Reform Bill Cap on Compensatory Award The latest Tribunal statistics put the median compensatory award for 2011/12 at £4560. 90% of awards were for less than £20,000 and all but 2% were for less than £50,000. Since these figures include the basic award which is not included in the cap, the average compensatory award must be significantly less. Reducing the cap on the compensatory award could have a substantial effect on the employment rights of better paid employees, particularly those in the professions, middle management and the public sector where they still have final salary pension schemes. Could this proposal be aimed at saving money in the public sector where 2/3 of the cuts are still to be made

20. Enterprise and Regulatory Reform Bill Protected Conversation & Settlement Agreements The Bill provides for the terms "compromise agreement" and "compromise contract" to be replaced with "settlement agreement" where they appear in specified legislation relating to employment matters. The Government are now consulting on introducing template letters and model agreements. They appear to wish to retain independent legal advice for employees on the terms & effect of agreements but make it easier to offer such agreements without requiring legal advice to draft the agreement. The fact an employer has made an offer of a settlement agreement will be inadmissible in subsequent tribunal proceedings subject to certain exceptions. There will be an ACAS code of practice to guide parties as to improper conduct.

21. Enterprise and Regulatory Reform Bill The Public Interest Disclosure Act The bill proposes to reverse the decision in Parkins v Sodexho Ltd [2002] IRLR 109 Mr Parkins claimed that a breach of a contract of employment is a breach of "any legal obligation". The Employment Appeal Tribunal held that there is no reason to distinguish a legal obligation which arises from a contract of employment from any other form of legal obligation. This decision has raised the possibility that any complaint about any aspect of an individual’s employment contract could lay the foundation for a protected disclosure. This means that public interest disclosures must in future satisfy a public interest test and excludes those which can be characterised as being of a personal rather than public interest. For example, if a worker does not receive the correct amount of holiday pay (which may be a breach of the terms of his contract of employment), this is a matter of personal rather than wider interest.

22. Enterprise and Regulatory Reform Bill Financial Penalties The Bill proposes a power to make regulations so a financial penalty can be imposed on the employer irrespective of the nature of the remedy awarded to the claimant. Any financial penalty imposed must be at least £100 and cannot exceed £5,000. If the remedy awarded by the employment tribunal to the claimant is a financial award (e.g. compensation) then any financial penalty imposed must be set at 50% of the amount of the claimant’s financial award subject to the minimum and maximum amounts.. If the employer complies with the order to pay a financial penalty no later than 21 days after the date that written notice of the decision is sent by the employment tribunal to the employer, the amount of the financial penalty is reduced by 50%. There must be “an aggravating factor” in order for the tribunal to impose a penalty but these are not defined in the Bill.

23. No-Fault Dismissals for Micro-businesses The Beecroft Report The venture capitalist Adrian Beecroft was invited by the Prime Minister to write a report on Employment Law. This was presented to the Cabinet in October 2011 but was only published, having first been leaked on 21 st May 2012. It is an extraordinary document full of legal and factual inaccuracies and assertions unsupported by any empirical evidence. One of it’s proposals was to introduce a regime of no-fault dismissals. This was rejected by the Minister (Vince Cable) but a call for evidence was published in respect of businesses with 10 employees or less. The Government have now published their response to the call for evidence. It appears to reject introducing a no-fault dismissal regime.

24. Conclusions Still lots of opportunities to change Government policy by responding to consultations and through lobbying on Bill in the Lords. The forthcoming consultation on amending the Civil Courts Remission system is very important. How remissions and pre-action ACAS conciliation mesh with tribunal fees and the new tribunal rules could be problematic. There will be a lot of fundamental changes to keep on top of and no doubt IER will be revisiting the subject at future conferences