Employment Law Update – April 2012

Amendments, improvements and reforms – these are the main ingredients making up the latest streamlined employment package offered up by the government. The aim? To allow businesses to grow, hire with confidence and be faithfully fair to their employees.

There have been the usual expected changes with regards to statutory payments, but we’ve also seen some rather significant changes, in particular to the law on Unfair Dismissal. Here’s our summary:

Unfair Dismissal

The term ‘Unfair Dismissal’ is a daunting one. No employer wants to be accused of unfairly dismissing someone and no employee wants to feel as though they have been dismissed without real cause. The law on Unfair Dismissal is aimed at regulating employers to ensure some consistency in the workplace whilst protecting employees who have been unfairly dismissed and entitling them to some form of redress. Prior to April 6 2012, an employee who had been dismissed had the right to claim Unfair Dismissal if their length of service was at least for one continuous year. However, for those employees who started work on or after 6 April 2012, the qualifying period to bring a claim for Unfair Dismissal is now going to be two years continuous service.

The changes to the qualifying period for Unfair Dismissal claims are arguably the most talked about and the ones to take note of. This could have an adverse effect on the working practices within businesses of all sizes. Indicators show that this change could lead to an increase in job vacancies allowing employers to hire with confidence as there is no fear of a claim after a year to the Employment Tribunal. Employers should, however, be mindful of the fact that although employees may have lesser rights with regard to Unfair Dismissal, there are other claims they may still make such as discrimination claims – which have no qualifying period (right start to accrue from day one) and are more expensive to defend. Also bear in mind that employees are likely to be concerned that they have little protection and this may affect the attitude of some towards their job…

It goes without saying that it’s vitally important for employers to keep their records up to date, so that they are aware of when employees commenced employment. And remember that any employee(s) employed during the 12 months before 6 April 2012 retain the right to bring a claim once they have achieved 12 months service.

Employment Tribunal Procedure

For an employee that does meet the criteria for bringing a claim for Unfair Dismissal, it is likely that they will now only be faced with one judge as opposed to a judge and two lay members. The lay members would often have been one member from an employers’ background and one member from an employees’ background. To some extent the removal of this may seem unfair in itself. How can a judge take on all three points of view? Luckily this won’t always be the case. Where the tribunal recognises that a case is complicated, the judge may make an order for some assistance from lay members. The benefit of this approach is that listing hearings becomes easier to schedule, as there will be fewer dates to avoid to satisfy all attendees. It is hoped that cases will consequently be dealt with far more quickly; we all know that employment related cases can be sensitive and dealing with them quickly can only be a good thing. In a bid to further cut down the amount of claims being made and to save more time, in instances where the tribunal feels a claim has little prospect of success, the tribunal will order a party to pay a Deposit Order if they wish to continue the proceedings. Naturally this will lead to many claims being withdrawn, allowing other stronger cases to be heard. The amount payable under the Deposit Order has increased from £500 to £1000. The purpose of the Deposit Order is to discourage parties from ‘wasting’ the tribunal’s time, as many claims are brought as a matter of principle. This change is aimed at only allowing viable claims to proceed.

The tribunal now also has the power to award the costs of a legally represented party, up to a maximum of £20,000; it was previously £10,000. This will avoid the need to refer the case to County Court for a summary assessment. It should, however, be noted that it is very difficult to persuade a tribunal judge to award costs, it is only in exceptional circumstances that a judge would consider it. It will be interesting to see just how many cases have £20,000 costs awarded to the winning party, if any at all!

A point which will be of interest to anyone involved in the employment tribunal proceedings, is that there will no longer be any need to worry about getting stage fright when asked to read out your statement. Witnesses will have their witness statements accepted ‘as read’ – they simply have to acknowledge that it’s their statement. This is actually a common practice in many tribunals already and is another time-saving exercise. Cross-examination will take place as normal, where appropriate.

Witness expenses were previously funded by a state fund. The state has now withdrawn this fund and the tribunal may direct the parties to pay the costs borne by any witnesses. So be prepared for additional costs for any witnesses you may wish to call.

Statutory Payments – new rates

Statutory payments are often reviewed – and here are the latest figures:

• statutory pay for maternity, paternity and adoption increased to £135.45 from £128.73; • statutory sick pay increased to £85.85 from £81.60 • the weekly earning threshold increased to £107.00 from £102.00

As you can see, there are several layers that make up the ‘new and improved’ system. As a whole these seem like positive progress towards an efficient system for managing claims. There are still many ongoing discussions regarding further changes due to be implemented – among them, tribunal claims for bringing a claim, financial penalties for employers who lose, auto-enrolment into a workplace pension scheme, requirements for reporting to ACAS, changes to leave rights for family reasons and holidays and changes to minimum wages. As always, we’ll be pleased to update you as new legislation is introduced.