In the lead-up to the Chancellor’s autumn statement, the Government has published its response to the consultation on resolving workplace disputes launched in January. In this briefing we offer an outline of the main proposals for change and a brief assessment of their likely effect.

The plans in outline

As well as confirming that the unfair dismissal qualifying period will be doubled, the Government’s response addresses three areas of particular significance: early conciliation, compromise agreements, and modernising tribunals. There are also plans to impose financial penalties on employers, to promote mediation and to launch a “rapid resolution” process for simpler claims. Plans for the introduction of fees in the employment tribunal will be the subject of a separate consultation.

In most cases the plans need to be worked up in more detail before they can be brought into effect, and in some cases they are no more than ideas that may or may not be workable. It is likely that few of the proposals, even if fully implemented, will have a significant effect on employee’s rights, with the obvious exception of the increase in the qualifying period for unfair dismissal. They will however have a major impact on how these rights are enforced in the employment tribunal.

Except for the increase in the unfair dismissal qualifying period, which will happen in April 2012 (subject, we assume, to transitional provisions) there is currently no firm timetable for most of these proposals.

Early conciliation

What is the main idea?

Workers wishing to lodge claims in the employment tribunal will first need to lodge details of their claim with the Advisory and Conciliation Service (ACAS). It will not be compulsory to engage in the conciliation process, but claimants will have to wait a month before they can lodge proceedings in the tribunal.

What still needs to be worked out?

Work needs to be done on the form to be used to start the conciliation process and the impact that the one month waiting period will have on the normal three month time limit for bringing claims.

What are the practical implications?

Most would welcome the involvement of ACAS at the earliest possible stage, but fear a return to satellite litigation over time limits and procedures which were a feature of the statutory dispute resolution procedures, repealed in 2009.

Compromise agreements

What is the main idea?

The Government wishes to make it easier for employers to settle claims with employees. To that end it is thinking of introducing standard wording for compromise agreements and amending the rule that requires each potential statutory claim to be itemised in order for the agreement to be valid. It is also planning to introduce “protected conversations” with the aim of allowing employers to raise issues like performance or retirement without the fear that this may trigger a claim.

The Government also plans to change the term “compromise agreement” to “settlement agreement” which it believes more accurately reflects what is involved.  

What still needs to be worked out?

No one is clear how the idea of a protected conversation will be translated into legal practice. Many feel that the existing legal framework already allows employers to address difficult issues with their workforce if it is done in the right way. The Government has promised separate consultation on this and the other ideas in this section of the response.

What are the practical implications?

Any proposals which make it easier to use compromise agreements are to be welcomed. However the Government’s proposals are unlikely to make a significant difference in practice. Both parties will continue to need legal advice, and any standard clauses will still need to be supplemented to reflect the terms of the underlying agreement.

It is difficult to assess the impact of protected conversations without any idea of how they might work.

Modernising tribunals

What is the main idea?

The Government is committed to making both parties’ experience of the tribunal system more streamlined and efficient. That will involve a re-think of the rules of procedure, particularly to strengthen powers to weed out weak cases. Changes already decided on, which are to take effect next April, include:

  • Allowing employment judges to hear unfair dismissal claims alone, and making this the normal rule in the Employment Appeal Tribunal
  • Increasing to £20,000 the maximum award of costs a tribunal can make without ordering detailed assessment
  • Increasing the limit for deposit orders to £1000
  • Introducing a rule that witness statements should generally be taken as read, rather than read out aloud
  • Removing the possibility of claiming witnesses expenses from Government funds.

What still needs to be worked out

Mr Justice Underhill, the outgoing President of the EAT, has been asked to undertake a fundamental review of the employment tribunal rules of procedure by April 2012. The Government also needs to work out how the planned introduction of fees in the employment tribunal will work – there has as yet been no decision on the overall levels of these fees, and what exemptions will be available.  

What are the practical implications?

Even from what we know so far, the character of employment tribunals is likely to be very different in the future. They will cease to be state funded, so funds for witness expenses and court fees will need to be found by the users of the system. In addition the idea of employment judges sitting alone to hear unfair dismissal claims – a step opposed by the majority of respondents to the consultation – is likely to represent a significant cultural shift.

Other ideas in brief

There are plenty of other ideas and proposals in the Government’s response. Some can also be found in the speech by Vince Cable which launched this document on 23 November 2011.  

The firm proposals include:

  • The imposition of financial penalties on employers who lose in the employment tribunal. These will be at the discretion of the tribunal but will normally be half of the compensation awarded, subject to an overall cap of £5000 and a 50% discount for early payment
  • The creation of regional mediation networks
  • Changing the system of uprating the maximum compensatory award and other financial limits.

Ideas that will be explored in more detail include:

  • The creation of a “rapid resolution” procedure for low-value, straightforward claims
  • Slimming down the dismissal processes, perhaps involving revisions to the ACAS code
  • Introducing a compensated no-fault dismissal for micro firms.