Putting the Employment Tribunals out of business?

Change continues apace in the Employment Tribunals. | April.07.2014

In July last year, fees were introduced for employees to bring claims and the Ministry of Justice has just published Tribunal statistics for October to December 2013 (the first full quarter since the introduction of the fees) which show that in that time, Employment Tribunals received 79% fewer claims than the same quarter in 2012 and 75% fewer than in the previous quarter.

The number of claims brought by single individuals has dropped by 64% compared to the same period in 2012. There has been a general decline in claims over the past seven years, but even with that trend, this sudden huge drop in numbers of claims cannot be merely part of a gradual trend. This is clearly a result of the introduction of fees, which are not cheap - usually £250 to lodge a claim, with an additional £950 to have a hearing.

Another change that is due to take effect this week (6 April 2014) is the introduction of the ACAS mandatory early conciliation scheme which will be mandatory in respect of all claims issued on or after 6 May 2014. Until now, ACAS has had a duty to seek to settle Employment Tribunal claims once they are lodged and active and they provide a voluntary pre-claim conciliation service which can be requested by the parties prior to a tribunal claim being submitted, but this new scheme is mandatory and designed to head off claims at the pass and settle them before they are lodged.

The new rules create a mandatory four step procedure to focus the parties on settlement before a claim is lodged.

Step 1: Before lodging a claim, a prospective claimant must provide ACAS with certain 'prescribed information’ about their claim – usually over the phone.

Step 2: ACAS must then send a copy of that information to a conciliation officer which they say they will do within two days.

Step 3: The conciliation officer must try to promote settlement within a ‘prescribed period’. The officer can make attempts to conciliate for one month from the date of the first phone call to ACAS and this can be extended by two weeks if both parties agree and it looks like settlement is likely.

Step 4: If settlement is not reached either because settlement is not possible in the conciliation officer’s view (including if one party is not interested or if the officer cannot contact the employer) or the prescribed period expires, the officer must issue a certificate to that effect. A claimant cannot submit a claim in the Employment Tribunal without this certificate. The officer can continue to pursue settlement after the certificate has been issued.

If agreement is reached (either during or after the prescribed period), the claim is then settled via a COT3 agreement (which is effectively a short-form settlement agreement prepared and sent out by ACAS, which waives all claims). If agreement is not reached, employees have a minimum of one month from the issue of the certificate to lodge their claim which means that in some cases, the time frame for lodging a claim (which is usually three months from the date of dismissal or the discriminatory act in discrimination claims) could be extended by up to an additional two months.

ACAS reports good success rate with this process which is currently voluntary but it will be interesting to see how it works once it is mandatory. The introduction of the Employment Tribunal fees and the huge drop in claims may, in fact, have the effect of encouraging employers not to settle before a claim is lodged but to wait and see if the employee is willing to actually lodge the claim and go to the expense. No doubt there will also be some litigation around the time limits and whether they have been complied with in each case.

Other changes that take place this month are that the maximum damages for unfair dismissal are increased to £76,574 or a year’s salary (whichever is the lower) in relation to dismissals which took effect after 6 April 2014 and the cap on a week’s pay for the basic award and statutory redundancy pay is up from £450 to £464.