All the fun of the unfair

Employment tribunal reforms are unlikely to achieve their objectives, but the state should do well out of them

Next year is the 50th anniversary of the formation of the industrial tribunals. Accessible to all, handing out justice quickly, efficiently and without the need for lawyers, they initially provided a level playing field for employees wishing to take on their unscrupulous employers.

Things have changed. Employment law is now made up of layers of often conflicting European and domestic legislation, and case law; compensation caps and perceptions of compensation award levels have increased; the internet ensures that more people are aware of their rights; HR practices have improved and so claims are usually about grey rather than black and white; and the tribunals’ no-cost regime often leads to a ‘nothing to lose’ attitude, exacerbated by the settlement culture that emerged in the late 1990s and early 2000s. All this has meant more claims.

The Enterprise and Regulatory Reform Bill (ERRB) sets out initiatives that the Government hopes will ease the burden on the tribunals by encouraging early settlement of disputes. This forms part of its plan to cut red tape and thus promote the UK’s business-friendly credentials.

Among the proposals is the idea that the Advisory, Conciliation and Arbitration Service (Acas) must be notified of disputes before most tribunal claims can be issued. Acas will then try to conciliate, assuming it receives appropriate resources to do so, and time limits for bringing claims may be extended.

This is reminiscent of the statutory dismissal and grievance procedures that were forced on us a decade ago. I fear that now, as then, the result then will be lots of technical case law about time limits – more red tape.

Other proposals include the introduction of settlement discussions and agreements intended to make it easier for employers and employees to discuss and resolve disputes without fear that such discussions will be admissible before the tribunal in unfair dismissal cases.

However, these conversations take place anyway and I do not see the benefit of statutory intervention, particularly where the new law leaves more questions than answers. Again, I fear we will end up with more uncertainty, case law and red tape. We must also consider the impact of the introduction of employment tribunal fees – the rights and wrongs of which are beyond the scope of this article – that are going to provide a far greater incentive for employers not to settle claims early.

In addition, there is the proposal for the imposition of financial penalties for losing respondents. This money will go into state coffers. Conversely, the unfair dismissal compensatory award will probably be capped at one year’s net salary, or £74,200. So, an employee who is unfairly dismissed and subsequently out of work for two years will not be adequately compensated, yet the state could receive a nice windfall.

I am not convinced the ERRB is likely to have an impact on the overloading of the employment tribunal system, let alone achieve the wider objective of promoting growth in the economy. The headlines have pleased the business community, but I fear the reality may be more headaches, not fewer.