Employment lawyers are shifting their focus to non-contentious areas as the coalition promotes conciliation
On 6 April the latest in a raft of recent employment reforms was introduced, compelling prospective claimants to contact the Advisory, Conciliation and Arbitration Service (Acas) before lodging proceedings at the employment tribunal.
A month into the regime, which was made compulsory on 6 May, Acas reported that around 1,000 people have contacted it about the new ‘Early Conciliation’ process every week since its launch. It is not compulsory to use Acas, only to make it the first port of call. But according to the service’s report 98 per cent of those who have got in touch have opted to try early conciliation.
The moves are all part of a drive to encourage early settlement of claims and come partly in the wake of venture capitalist Adrian Beecroft’s highly controversial report on employment law in May 2012.
Other changes include the introduction of employment tribunal fees, extending the period of time in which employees can bring a claim of unfair dismissal from one to two years and a reduction in the consultation period from 90 to 45 days.
According to Mills & Reeve Manchester employment partner Sara Barrett, some of the changes have led to a notable drop in the number of claims being received by employment tribunals.
“Our commercial clients have reported that the change concerning the cap on unfair dismissal [to 12 months’ pay] has been useful in negotiating with lower paid staff,” she says. “It reduced their expectations to the real value of their claim, not the previous cap of £74,200.”
Barrett adds that such clients feel that they have benefitted.
However, Hamor believes there are bigger issues to come out of the reforms, in particular concerns around access to justice.The knock-on effect, as Pannone Corporate employment partner Fiona Hamor points out, is that “the 79 per cent fall in employment tribunal claims has led to a substantial fall in incoming work”.
“If employment law practices fail this has a further impact on access to justice as it will become more difficult for potential claimants to get access to good, sensible legal advice,” she says, adding: “That isn’t good for employees or employers.”
Slater & Gordon partner Samantha Mangwana echoes Hamor’s concerns: “When the industrial tribunals, as they were then known, were established, it was on the principle that they were cost-free regimes.”
The point was to take into account the unequal positions of employer and employee, and prevent employees being deterred from pursuing action for fear they may have to cover their employer’s costs if they lost.
Despite concerns however, trade union Unison failed to prove the reforms were ‘unjust and discriminatory’ in judicial review proceedings earlier this year.
Mangwana says her practice has not been adversely affected by the reforms, but that she knows many employment lawyers have concerns and are looking at ways to diversify, for example by expanding into non-contentious areas, advisory roles, business support and broader civil litigation.
Firms and chambers that have always relied on tribunal claims to support their practices are likely to suffer under the new regime, but Barrett says that advising clients on how to avoid being at the tribunal has always been a significant part of her work.
“I can’t envisage, particularly with the continuing development of the employment law regime, that the need for quality strategic advice will fundamentally change,” Mangwana adds.
Hamor is also unfazed by the changes and their effect on her practice, observing: “Employment law has always been an area of law where the goalposts are constantly shifting as the political wind changes, so employment lawyers are used to having to be flexible in their approach and their business planning.”
The real issue, she says, is getting the balance between protecting employers from nuisance claims and ensuring access to justice in the process. Without a union backing employment claims, individuals will find that taking action is generally more cost-prohibitive.
According to Hamor, Pannone Corporate is following suit and diversifying its approach to employment law by looking at prevention. She says the firm is working on training for employers, the development of audits and health checks for contractual documentation, procedures and policies, data protection issues, and equality and diversity issues.
There is another consequence of the reduction in claims nationally, according to Mangwana, who has seen hearing dates listed sooner than previously and, as a result, fees falling due for payment sooner.
“This means there’s less of a window for successful negotiation and resolution of a claim,” she says. “Since both parties are more invested in the outcome, given the need to comply with directions ahead of usual time, it can also discourage settlement.”
As prospective claimants get used to the new regime, lawyers are likely to see further changes in the way they work.
Claims in numbers, Oct-Dec 2013
132,000 cases accepted by the HM Courts and Tribunal Service, a 40 per cent drop on the previous year and the lowest since the stats series began in 2008/09.
23,000 cases or claims disposed of, up 19 per cent on 2012 and the highest volume since 2008/09.
844,000 Caseload outstanding at the end of December, similar to a year earlier but 10 per cent lower than the previous quarter.
Source: Ministry of Justice
Timeline of change
Changes to collective redundancy consultation rules, including the reduction of the minimum consultation period from 90 to 45 days where employers are making large-scale redundancies, take effect on 6 April.
Provisions of the Equality Act 2010, which deals with harassment of employees by third parties are repealed, as are those relating to the discrimination questionnaire procedure.
Claimants with less than two years’ service may still be able to progress their claims if the dismissal was for an “automatically unfair” reason, for example discrimination or whistleblowing. Compensation is also limited to around £72,500 if 12 months’ salary is less but again, this does not apply to discrimination or whistleblowing claims. With regard to pre-termination, employers and employees will be able to hold discussions concerning the termination of employment on agreed terms and, provided there is no “improper behaviour” by either party, these discussions will not be admissible before an employment tribunal in a subsequent ordinary unfair dismissal claim.
New Employment Tribunal rules are implemented, with new fees introduced for the Employment Tribunal and the Employment Appeal Tribunal (EAT). Complex cases such as unfair dismissal, discrimination, equal pay and whistleblowing will now cost a litigant £1,200 to be heard by the tribunal. The top level cost of an EAT claim will be £1,600.
31 January 2014
The amended Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) come into force.
6 April 2014
The annual index-linked change to the compensatory award limits take effect. A week’s pay increases to £464 and the maximum compensatory award for an unfair dismissal claim increases to £76,574. The secondary cap of a maximum of 12 months’ pay still applies. Early conciliation is introduced under which the Advisory, Conciliation and Arbitration Service has a duty to try to conciliate in all cases prior to a claim being presented to the Employment Tribunal. Discrimination questionnaires are abolished. Discretionary penalties for employers who lose Tribunal claims come into force. This applies where there is an “aggravating factor”. If there is, a Tribunal may order that a penalty is paid to the Secretary of State of between £100 and £5,000.
1 May 2014
The time period for a transferor to provide employee liability information to a transferee in the context of a TUPE transfer increases from 14 to 28 days where the TUPE transfer takes place on or after 1 May.
30 June 2014
The Children and Families Bill will alter the Employment Rights Act 1996 to extend the right to request flexible working to all employees with 26 weeks of service.
Annual increase to national minimum wage rates. As of 1 October 2014 the new rates will be £6.50 per hour for workers aged 21 and over; £5.13 per hour for workers aged between 18 and 20; £2.73 per hour for an apprentice.
The creation of shared parental leave and pay by the Children and Families Bill, allowing parents to share childcare responsibilities in the first year of the baby’s life, are expected to be implemented at some point in 2015. Caste discrimination is to be made unlawful in the second half of 2015.