INFORMATION

UPDATE

JULY CHANGES

July was a significant month within the field of employment law with a number of changes being introduced.  Many of the changes are wrapped up in Employment Tribunal procedures etc, so have little bearing on the day-to-day life of running a business – but there are some useful bits for you to know about.  

Tribunal Fees

Those who wish to raise an Employment Tribunal claim are now required  to pay a fee to lodge the claim, and then a further fee for the case to proceed to a hearing.  The fees, effective from 29th July 2013, are based on the type of claim raised and are as follows:

Whilst these are to be paid by the claimant, the Respondent (employer) will also have to pay a fee if they wish to lodge a counter claim to any breach of contract claim against them.

New employment tribunal rules

In summary, there are new Claim Forms (for Claimant’s to complete to register their claim); new Response Forms (for Employers to complete responding to a claim); renaming and combining Pre Hearing Review and Case Management Discussions to Preliminary Hearings; revised powers for tribunal judges to strike out weak cases and a requirement that an employment tribunal must, where appropriate, encourage parties to use alternative dispute resolution.

Change to Maximum Compensation Award for Unfair Dismissal cases

When a Claimant has been successful in a claim for unfair dismissal, the Tribunal then goes on to considers remedy.  Whilst reinstatement and re-engagement orders remain available, the majority of Claimant’s seek financial compensation.  The Tribunal can award a Basic Award (calculated like a redundancy payment) and a Compensatory Award.  The Compensatory Award is based on the losses suffered by the Claimant but is subject to a maximum of £74,200. The change is to introduce an Individual Compensatory Award Cap equal to 12 months’ pay, where this is below the current maximum of £74,200.

Pre-termination negotiations become inadmissible in unfair dismissal proceedings

When an Employer has an employee whom they would like to exit the business, perhaps due to performance, conduct or clash of personalities etc, the usual ‘fair’ approach is to embark on (sometimes lengthy) procedures to resolve the problem, it has been difficult for the employer to initiate discussions about doing a ‘deal’ whereby the employee’s employment comes to an end, and the employer pays the employee a sum of money.  The risk being that it sends a message to the employee that the employer no longer wants them in the business, so if the ‘deal’ is not achieved, there is an implication that any procedure that is subsequently followed is unfair.  This is because it has been pre-determined.  Alternatively, it could amount to constructive dismissal.

The new change is that evidence of "pre-termination negotiations" between an employer and employee will be inadmissible in ordinary unfair dismissal claims. But - WARNING: they would be admissible in discrimination cases, and the automatic unfair dismissal type claims.

The legislation applies to negotiations held with a view to terminating employment under a settlement agreement; and this provision is wider than the "without prejudice" principle as it can apply even where no formal dispute has yet arisen.

Employers should act with caution before embarking on ‘pre-termination negotiations’ and legal advice should be sought from Sentient.  

And finally…

Compromise agreements renamed settlement agreements

Tribunal claims can be settled either with the assistance of ACAS producing a COT3 agreement or by the Employer and Employee / Claimant entering into a Compromise Agreement.  The Employee / Claimant must have legal advice on the terms and effect of signing the agreement for it to be enforceable.  Compromise agreements are now to be known as "settlement agreements".   

If you require any advice on any of the above please give us a call on 08456 446006.