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Changes to tribunals reviewed

There are newly-introduced tribunal regulations as part of the Government’s plans for reforming the employment tribunal system, which of course additionally include the increase in the qualifying period for unfair dismissal and the proposal for charging fees. Simon Rice-Birchall, Partner at Eversheds, reports.

The Government hopes to succeed where previous governments have failed, by reducing the number of employment tribunal claims, speeding up the tribunal process and lessening the burgeoning cost to both employers and the taxpayer. Further future change includes imposing financial penalties on employers found to have breached employment law. A minimum threshold of £100 is proposed, with an upper ceiling of £5000 which will be payable to the Exchequer, rather than to claimants. Judges will have a discretion as to whether to impose such a penalty depending on the circumstances. From 6 April 2012 unfair dismissal cases will normally be heard by an employment judge sitting alone. Clearly, the time and cost saving which this approach will produce is attractive. However, a fundamental aspect of unfair dismissal law is that, in assessing fairness or otherwise of dismissal, the tribunal must have regard to the possible range of employer responses. Many believe that non-legal members play an essential role in this by reflecting industry practice and also adding a broader perspective (by way of majority view) on what might be “reasonable” in a given situation. Many employers have a particular nervousness that this measure will undermine confidence in the system. There is also a perception that the current balance of views reduces opportunity for bias of any kind.

In January 2012 Eversheds canvassed the views of more than 600 employers. The survey indicated that a small majority of respondents (51 percent) agreed with this proposal. The Government’s view is that unfair dismissal claims are generally straightforward and that, if judges sit alone, the cost of the other two members is saved. The added benefits are that the hearings should take less time and part heard cases will be relisted more quickly and easily. While just over half of the respondents appeared to agree with the Government, the rest did not and this was reflected in the Government’s consultation response where it admitted receiving many objections to this change. However, given the potential savings available and the fact that discretion would be retained for more complex cases to be heard by a full panel, it decided to proceed.

The survey results also indicated that employers do not expect this change to make their organisation more likely to appeal cases where it has unsuccessfully defended an unfair dismissal complaint. This may be because there will no longer be scope for “majority” decisions, in which the full panel is split in reaching its decision. Fifty-five percent of the respondents did not think that their organisation would be more likely to appeal, while 45 percent did. One of the most commonly aired criticisms of the current employment tribunal system is a perception by employers that it allows employees with weak claims to impose unjustifiable burdens on employers. Introducing fees will not deter some employees from bringing weak, speculative or purely vexatious claims. While powers exist currently to deal with such claims, in practice they have made little impact. These Regulations amend the existing power to make deposit orders, under which a party is required to pay a deposit as a condition of being permitted to continue, by increasing the maximum level of a deposit from £500 to £1000. There will also be an increase, from £10,000 to £20,000, in the current cap on cost awards which the tribunal has the power to make without referral to the County Court.

One of the Government’s key aims is to shorten tribunal hearings and thereby cut costs and wasted time. To this end, witness statements will, in any new claim lodged on or after 6 April, be taken as read unless a judge or tribunal directs otherwise. Reading out witness statements can cause considerable and unnecessary delays, but it can also prove an indication of witness credibility and ensures the tribunal hears the evidence. In practice, this will only work effectively if witness statements are properly cross referenced to any relevant documents in the bundle. Additionally, parties and witnesses attending tribunal hearings will no longer be able to claim for the payment of their expenses from the State. The Government has asked Mr Justice Underhill, outgoing President of the Employment Appeals Tribunal, to lead a fundamental review of the Employment Tribunal Rules of Procedure, to address concerns that the Rules have become increasingly complex and unwieldy over time and are therefore no longer fit for purpose. The terms of reference for the review is that it should focus on the need for proportionality, speed and efficiency, certainty and simplicity. The intention is that a more streamlined procedural code will be the outcome of the review and the aim is that this should save users of the system, as well as taxpayers, both time and money. Mr Justice Underhill is due to report back with findings and recommendations by the end of April 2012 and this will then be followed by a full consultation.

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