Eversheds comments on changes ahead for the UK employment tribunal system

Geoffrey Mead, partner at Eversheds, has commented on the raft of changes ahead for the UK tribunal system. New changes coming in on 6 April 2014 will mean tribunals on or after this date will have a discretion to order an employer to pay a financial penalty if they are found to have breached employment rights in an aggravated way. Separately, a process of early conciliation (EC) for employment disputes is also being introduced from 6 April 2014. EC, a government initiative, is aimed at helping to settle workplace disputes without going to an employment tribunal.

Mead said: ‘Any penalty will be payable, in addition to any compensation due to the employee, to the secretary of state. The starting point for determining the amount of any penalty the tribunal decides to award is 50 per cent of the compensation awarded, subject to a minimum penalty of £100 and maximum of £5,000, with a 50 per cent reduction applying for early payment.

‘Significant amounts could be awarded under this provision. Where an individual brings multiple claims relating to different acts, then each claim may be the subject of its own penalty. Similarly, where a tribunal determines claims brought by several workers against the same employer together, each claim potentially gives rise to a separate penalty. In these circumstances, the £100 minimum applies to the amount of the penalties in total, but the £5,000 maximum applies to each of the penalties/claims individually.

‘Despite this, there may be a lack of awareness that this provision will apply from April 2014, or a degree of complacency that the little-understood “aggravating features” will not apply, as our recent survey reveals that only a third of organisations have taken preparatory steps. Despite employers’ receiving fewer claims, none will surely wish to risk additional penalty and the adverse publicity that will inevitably follow the first penalties imposed, yet 66 per cent of employers admit to taking no practical steps, such as reviewing disciplinary and training needs, to prepare for this change.’

For tribunal claims lodged on or after 6 May 2014, it is a legal requirement for most claimants to have notified Acas, in order to provide an opportunity for EC to take place, before proceeding to lodge a claim. While contacting Acas will be mandatory, both parties to the dispute can refuse to engage in the process. Between 6 April and 6 May, EC will be available with no compulsion on the claimant to have contacted Acas.

Mead added: ‘The new EC scheme is laudable in its aim to settle “settleable” cases before they enter the tribunal system. However, there are factors that may affect the scheme’s efficacy. First, either party may decline to engage with the conciliation process. Second, many employers may be reluctant to settle on the basis that they will want to see the colour of the prospective claimant’s money. Third, although simple in its aim, the complexities of the scheme mean that satellite litigation is likely to abound. Fourth, as the impact of the fees regime on the number of cases is not yet established, it will be difficult to analyse the effect of the scheme on the number of tribunal cases.

‘In more practical terms, although participation in EC is voluntary, employers should give thought now to how they will respond to contact from Acas. One option might be to nominate a member of staff to whom Acas will refer all EC calls, for example someone in HR, so that they might conduct a brief risk analysis and seek advice, where the circumstances are more complex or sensitive. It will also be important for employers to be aware of the EC period so as to appreciate when tribunal time limits expire.’