Important Changes to Employment Law

A whole raft of changes took effect on 29 July, which affect the way in which employment claims are started and managed.  Important changes have also been made to compromise agreements and the way in which compensation for unfair dismissal will be assessed.

Employment Tribunal fees

Fees are payable for all employment claims commenced on or after 29 July 2013 unless the Claimant is eligible and applies for a fee remission and provides evidence to support it.  These are assessed by reference to the nature of the claim or claims.  Most claims will attract the higher, “Type B” fees, including unfair dismissal and all discrimination claims.  Significantly, only one fee is payable, irrespective of how many separate claims are issued together.

Fees for claim/s made by a single claimant

Claims will not have been validly served unless they have been issued correctly and are accompanied by the correct fee which can be paid by debit or credit card, or by cheque or postal order.  The ordinary limitation period applies and a Claimant will not be given an extension of time to submit their ET1 if it does not meet the minimum requirements.  Instead, if the limitation period has ended, they will have to apply to the Tribunal for an order and persuade it that it was not “reasonably practicable” (or otherwise) to have issued their claim in time.  We do not expect Tribunals to be particularly sympathetic to arguments about fees once the system is running smoothly.

This change is likely to result in fewer claims being brought.  It will clearly dissuade “nuisance” claims as well as others that may have some merit as many people may not want to risk losing up to £1,200 particularly if they are out of work or do not have the advantage of a legal expense policy of insurance.

Respondents may also have to pay some fees.  For example, a fee of £160 is payable to issue a counter-claim and the following fees are payable by the applying party:

Fees payable by applicant

New forms and procedures for service

New forms have been introduced for Claimants and Respondents.  A copy of the new ET3 can be accessed here: ET3 .

Claimants are required to submit their ET1 online or by post at the new central processing office in Leicester.  In addition and contrary to everything the Government has previously said, some regional Tribunals will also be able to accept ET1’s and payment provided service is made in person and within stated hours.

Respondent’s will have more flexibility and can serve their ET3 online, by post via the processing centre or by email.  However, it will no longer be possible to serve by fax.  The ET3 will have to be lodged within 28 days of receiving the claim (as normal), unless an application to extend time is made. 

ET rules

New rules apply from 29 July 2013 to all claims, including those already in the system.  Claimants who win are likely to ask the Tribunal to order the Respondent to reimburse their issue and hearing fees even if they have no grounds to ask for a general costs order.  This is because the new rules give Judges more discretion to order payment for these.   Even if cases are settled, Claimant’s are likely to ask for the settlement to include an amount to reimburse them for the fees they have incurred.

Settlement agreements

From 29 July 2013 compromise agreements have been replaced with “settlement agreements” which have the same “look and feel” and serve the same function as compromise agreements.  However, due to a drafting error, not all of the legislation setting out the conditions for settlement agreements has been amended.  This means that the agreement must refer to both settlement and compromise agreements.  Employers that maintain their own “compromise agreements” must therefore amend these to reflect the new changes to avoid arguments that the agreement is not valid.

Unfair dismissal compensation

Compensation for successful unfair dismissal claims, will change where the dismissal took place on or after 29 July 2013.  The compensatory award will still be determined by a Judge on the basis of what is just and equitable to award, but will be subject to a new cap which is the lower of 12 months gross salary or £74,200.  The calculation of salary will not include pension contributions, discretionary bonuses or benefits in kind which will significantly reduce expectations (and hopefully arguments between the parties) as the calculation will be relatively straightforward. 

It should therefore be easier to settle unfair dismissal claims, unless they are accompanied by other claims such as discrimination etc.