19 April 2011
Hard hitting changes
The government's consultation on reforms to workplace dispute resolution includes a proposal which could result in a double whammy for employers if they breach employment legislation, as Ruth Nodder explains
The Department for Business, Innovation and Skills (DBIS) and the Tribunals Service have undertaken a joint consultation entitled 'Resolving Workplace Disputes'. The stated aim is to look at ways of increasing employer confidence in the hiring and management of staff to stimulate job creation.
The proposals are set against the backdrop of ever increasing numbers of employment tribunal claims – which reached 236,000 in England and Wales in 2010 – resulting in higher costs.
The proposals include:
- Increasing the qualifying period for unfair dismissal to two years
The government believes such an extension – which will bring the unfair dismissal qualifying period back to its pre-1999 position – will encourage growth by giving employers more confidence when recruiting that there will be sufficient time to ensure the employment relationship is workable.
Not surprisingly, unions have already voiced concern that this extension could be used by some employers as "a charter to dismiss more people unfairly". However, a more pertinent issue for employers is that the jurisdiction extension would only apply to unfair dismissal claims. Some aggrieved employees, dismissed before they have completed the two-year qualification period, may seek to pursue more speculative discrimination claims (which have no qualifying period) than they might otherwise have done. Discrimination claims tend to be more time consuming and costly to defend.
Introduction of fees for commencing employment tribunal complaints
The volume of claims presented to employment tribunals has also increased operating costs. The introduction of a fee-charging mechanism which ensures that users of the service contribute to the costs of running the system is one option under consideration. Not only would such a change bring the tribunal system in line with most other civil courts, the government also believes that introducing fees for claimants would also incentivise earlier settlement and act as a deterrent to the presentation of weak or vexatious claims.
The government has not suggested any specific level of fees, but has promised to conduct a more detailed consultation on the specifics of a proposed charging structure later this year. The idea itself, however, is a radical departure from the basic principle of free access to employment tribunals and is, again, inevitably meeting significant opposition from unions.
Additional financial penalties for employers found to have breached employment rights
One of the most controversial proposals is the introduction of additional financial penalties for those employers found to have breached employment rights. The proposal is that these fines will be imposed automatically when an employer loses at tribunal and will be payable directly to the Exchequer. The fines will be in addition to any compensation payable.
The suggested level of fine is half the total award of compensation payable, with a proposed maximum of £5,000. The fine would be reduced by half if paid within 21 days, thereby encouraging early payment.
The government acknowledges the strong business opposition this proposal has generated. It is hard to see how it can be reconciled with the overall stated aim of increasing employer confidence in recruitment and management. However, the government insists the primary rational for the proposal is to act as a further deterrent against breaching employment rights, not a method of revenue generation.
Encourage early dispute resolution
The government is seeking to encourage all parties to resolve workplace disputes as early as possible, including an increased use of mediation within the workplace. Another idea being considered is requiring all claims to be submitted to Acas for pre-claim conciliation before being allowed to proceed to tribunal. This service would be free to access by all parties. The government estimates this could lead to 12,000 fewer tribunal claims a year. However, unless the scheme were to include significant additional Acas resourcing, it is difficult to see how it could operate effectively.
Also on the table is a process for making 'formal' offers of settlement in tribunal, backed by a scheme of penalties and rewards for making and accepting reasonable settlement offers. Subject to the final procedure not being overly complicated, this proposal has been broadly well received.
Speeding up the tribunal process
There are several proposals aimed at increasing the efficiency of the tribunal process, so allowing cases to be dealt with as quickly and cost effectively as possible. These include extending the jurisdiction of cases where judges can sit alone; giving judges more powers to strike out weak cases or make deposit orders at any stage of proceedings; and a proposal to introduce legal officers to deal with some basic case management tasks, to free up employment judges' availability.
The consultation closes as this issue is published (20 April) but the document can be viewed in full – all 88 pages of it – at www.bis.gov.uk/consultations.
Ruth Nodder is principal legal adviser at EEF: www.eef.org.uk
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