Cutting the red tape

How is the employment tribunal system changing?

Employment tribunals have been in existence for almost 50 years, creating more controversy than any other part of the judicial system and costing the taxpayer £84m annually. With the government’s nationwide launch of the ‘Red Tape Challenge’, employment laws are set to change dramatically – but will they really aid economic recovery? Chris Busst, senior lecturer in Law and course leader of the Legal Practice Course at the University of Wolverhampton explains how these new proposals will affect businesses.

With the widespread agreement that the current tribunal system is not working efficiently, the new proposals attempt to deter frivolous claims and help both parties avoid legal costs through straightforward negotiation. Of the 70 categories of tribunal claims made, 50 of these are very unusual and it is only a few that continue to dominate the tribunal caseload – including unfair dismissal, unlawful discrimination, illegal wage deductions and breach of contract.

When will the changes come into effect?

There have been several changes confirmed for April 2012. The government is also consulting on other possible changes, which won’t come into effect until at least 2013.

What are the key proposals?

• An increase in the qualifying period for unfair dismissal claims from one year to two years for new employees.
• The introduction of fees for lodging tribunal claims.
• An increase in maximum costs that may be awarded from £10,000 to £20,000.
• Micro-businesses (organisations with fewer than 10 employees) will be free to use a ‘compensated no fault dismissal system’.
• The introduction of ‘protected conversations’ within the workplace, promoting earlier discussions of issues affecting both parties.
• A requirement to go to the Advisory, Conciliation and Arbitration Service (ACAS) for mediation before proceeding to tribunal.

Who are ACAS?

For many employers who find themselves on the wrong end of a claim, these new measures are thought to reduce tribunal costs and encourage employers to resolve disputes through conciliation before going to a tribunal. ACAS offer Pre-Claim Conciliation (PCC) in individual workplace disputes prior to a tribunal case being taken out. First introduced in 2009, there has been a drastic reduction in the number of tribunal proceedings. The need for additional funding for ACAS will apparently be met through these savings.

How will the changes affect my business?

Key benefits of the new measures:

• Possible early resolution of disputes before reaching the tribunal system.
• More confidence to hire and manage staff.
• ‘Protected conversations’ – allowing employers to talk to staff about difficult issues without fear of the discussion being used as evidence in a tribunal.
• Elimination of weaker claims – a nationwide estimate of 3,700, and 4,700 fewer unfair dismissal claims per year.

What other changes to employment laws do I need to be aware of?

As of April 2012:

• An increase to the statutory pay for those on maternity and paternity leave, rising from £128.73 to £135.45 per week
• Statutory sick pay will see an increment of £4.25, rising to £85.85 per week.
• As of February 2012, the maximum week’s pay used to calculate a redundancy payment has increased by £30 to £430.

Potential negatives of the changes

Although the changes are said to encourage employment and reduce the regulatory burden on businesses, trade unions see the amendments as the government’s way of making it easier for employers to sack staff. Trade union Unite branded the announcement “a charter for bullies and rogue employers”, underlining that the reforms reduce protection for employees and will not increase employment law in such a tough economic climate. As with all employment matters, the key is to be prepared. Take the time now to consider what issues will be relevant to your business and how you plan to solve them.

For free impartial advice and guidance on employment law, book an appointment with the University of Wolverhampton’s Legal Advice Centre by calling: 01902 322 484 or call into the drop-in shop in Wolverhampton City Centre.