Three important legislative changes take effect on 6 April 2014 that will impact employment litigation and dispute resolution strategy in the United Kingdom.

  1. Early Conciliation: New Pre-Claim Settlement Regime

What is changing?

  • ACAS provide free conciliation services to parties in UK employment disputes. Use of these services has, to date, been optional, but this is going to change.
  • Prospective claimants will in future be obliged to contact ACAS and obtain an “early conciliation certificate” (ECC) before commencing litigation in the majority of employment tribunal cases. Once involved, ACAS will attempt to broker a settlement for a one month “early conciliation period”, which may, by agreement, be extended by up to14 days. If settlement is not achieved in this time, or if ACAS earlier concludes that settlement is not possible, an ECC will be issued.

What does this mean? 

  • Prospective claimants generally have three months to start tribunal proceedings.  The clock will be stopped, however, while the parties are engaged in ACAS early conciliation and will start again upon receipt of the ECC.  This means that time limits for most claims in the future will be three months, plus this early conciliation period.  The exception will be where a time period was due to expire during the early conciliation period, in which case a claimant will have a fixed period of one month after receipt of the ECC to submit his or her claim.
  • The new regime does not oblige any party to actually negotiate.  It remains to be seen, therefore, whether or not it will result in more/earlier settlements, without recourse to litigation.
  1. Statutory Discrimination Questionnaires: Gone But Not Forgotten

What is changing?

  • UK legislation currently enables prospective claimants to submit questionnaires designed to elicit information from prospective respondents.  Failure to respond fully to these questionnaires within eight weeks of receipt can increase the risk of a later finding of unlawful discrimination against the respondent, should litigation ensue.
  • This statutory questionnaire regime will be abolished in relation to unlawful acts of discrimination alleged to occur on or after 6 April 2014. It will be replaced by a more informal, less prescriptive, non-statutory regime underpinned by new ACAS guidance.

What does this mean?

  • .The new regime will loosen some of the strictures imposed by the formal questionnaire process but tribunals will still consider how an employer has responded to questions submitted, in any form, when determining a discrimination claim.
  • Employers should still treat all information requests seriously, and consider their response, as an integral part of their litigation strategy. Managers should be reminded of the importance of promptly passing any written correspondence hinting at possible discrimination to HR or their legal team.
  1. Financial Penalties: Increased Litigation Risk For Employers

What is changing?

  • For claims submitted on or after 6 April 2014, employment tribunals will have a new power to impose financial penalties on employers where they consider a breach of employment rights to have “one or more aggravating features”.
  • Relevant factors are likely to include the size of the employer and duration of the breach.  It is expected that penalties will be more likely when acts are malicious or repeated, or, concerningly, where an employer has a “dedicated human resources team”.
  • Financial penalties will range from £100 to £5,000, although a 50 per cent discount will be applied to payments made within 21 days.

What does this mean?

  • The possibility of a financial penalty being imposed (on top of any employee compensation) will increase litigation exposure for employers in certain cases.  It is another factor that will need to be considered when weighing up litigation risk and the merits of settlement.
  • The likelihood of such penalties being awarded will depend heavily on the approach employment tribunals develop to determining what constitutes an aggravating feature for these purposes.