The new Employment Tribunal rules of procedure came into force on 29 July 2013, alongside the new Tribunal fees. The new rules apply to all claims, including those which were presented before 29 July (subject to a few specific exceptions, for example relating to counter claims).
The rules include changes of both style and substance. The stylistic changes are intended to make the rules shorter and less technical, making the Tribunal process more accessible to all. The substantive changes aim to provide flexibility in the procedure, increase the scope for removing unmeritorious claims before a full hearing and encourage settlement. They also aim to deter unmeritorious claims. Whether these substantive changes will have a significant impact in practice remains to be seen. We have produced a guide to explain the key changes in the new procedure.
The key changes introduced by the new rules are:
- new ET1 and ET3 forms which can be found here;
- separate case management discussions and pre-hearing reviews have been combined into one "preliminary hearing"; an initial paper sift has been introduced, which seeks to ensure that weak cases are identified and dealt with more effectively at an early stage;
- there is now a more flexible regime for applying for an extension of time to put in a response and applications can be made even after the deadline for submitting a response has passed;
- claims which have been withdrawn should be dismissed automatically, without the need for an application from the respondent;
- there is now a clear legal structure has for combining multiple cases, to be headed up by a lead case mechanism;
- alternative dispute resolution is to be encouraged throughout the tribunal process;
- it is no longer necessary for cost orders of over GBP20,000 to be referred to the county court for assessment; and
- there is a greater degree of flexibility in the issuing of deposit orders, so that a deposit order can be made in relation to a specific allegation or argument which has little reasonable prospect of success, rather than the claim as a whole.
For clients who manage a high volume of litigation, we have set out below a more detailed explanation of the new rules highlighting some of the areas where respondents may be able to take a more strategic approach in how the Tribunal process is run.
Starting a claim
New ET1 form
All claims should now be submitted on the revised forms. Claims must now be presented in accordance with the Presidential Practice Direction, which requires that they are submitted, online, by post or by personally presenting the claim at one of the specified Employment Tribunal offices. However, claims can no longer be sent by email or fax.
The new form ET1 is not substantially different from the previous version but now includes a section for the claimant to specify the compensation they are seeking together with how it has been calculated. This might help to focus claimants' minds on the value of their claim at the outset and will also help the respondent to understand the claim and consider settlement at an early stage. However, completion of this section is not compulsory, and claimants will not be bound by the information they give if they do complete it, which can be revised at the later stage.
Rejection of claims
A claim will be rejected by the Tribunal if:
- It is not on a prescribed form;
- It does not contain the name and address of each claimant and each respondent;
- It is not accompanied by a Tribunal fee or remission application (see below under "Fees");
- An Employment Judge considers it is one which the Tribunal has no jurisdiction to consider;
- An Employment Judge considers that it is in a form which cannot sensibly be responded to or is otherwise an abuse of process.
The provision that a claim will be rejected if it is not in a form which can "sensibly be responded to" is new. It could potentially reduce the need for respondents to spend time and money seeking further and better particulars in order to understand the legal basis of the claim against them. However, it remains to be seen how robustly the power will be exercised. It seems likely that it will only be in extreme cases.
The claimant can apply for reconsideration of the rejection of the claim either on the basis that the decision to reject was wrong or on the basis that the defect can be rectified. The application must be made in writing within 14 days. The claimant may request a hearing to consider the application, but the respondent may not attend. If the Judge decides that the original decision to reject was correct but that the defect has been rectified, the claim will be treated as having been presented on the date that the defect was rectified, so could be out of time.
Responding to a claim
New ET3 form
All responses should now be submitted on the revised form, which is not substantially different from the old form. Unlike claim forms, responses may be submitted by e-mail or fax, as well as online, by post or by personal presentation.
Rejection of responses
A response will be rejected by the Tribunal if:
- It is not on a prescribed form;
- It does not contain the respondents full name and address;
- It does not state whether the respondent wishes to resist any part of the claim;
- It is received out of time and is not accompanied by an application for an extension of time (see below).
The respondent can apply for reconsideration of the rejection of the claim on the basis that the decision to reject was wrong or (except where the response was presented out of time) that the notified defect can be rectified. The application must be in writing within 14 days of the date the notice of rejection was sent and must state why the decision is said to have been wrong or must rectify the defect and must also state whether the respondent requests a hearing. If a hearing is requested it must be granted unless the response is then accepted in full. The claimant is not entitled to attend any hearing. If the Judge decides the original rejection was correct but that the defect has been rectified, the response will be treated as presented when the defect was rectified, but the Judge may extend the time for presenting a response.
Time limits to submit a response
As with the current rules, a response will need to be submitted within 28 days of the date that a copy of the response was sent out by the Tribunal. As noted above, a response will be rejected if it is received outside the 28 day deadline unless an application for an extension of time has already been made or such an application accompanies/is included in the response.
However, in a welcome change to the old rules, respondents may also submit an application to present a late response after the 28 day deadline has passed. An application for an extension must be in writing and copied to the claimant. It must set out why an extension is sought and (unless the application is made before the time limit expires) it must be accompanied by a draft of the response or an explanation of why that is not possible. It must also set out whether a hearing is requested. The claimant may then set out reasons for objecting to an extension, within 7 days of receiving a copy of the application. The Judge has discretion whether to hold a hearing.
The test for whether an application is granted is no longer whether it is "just and equitable" to grant the extension. Presumably, Judges will make their decision in line with the overriding objective (see below).
Effect of a rejection of a claim
There are new, more flexible rules regarding the effect of a response not being accepted or not being presented in time. Under the old rules there was a strict requirement that a default judgment be issued where a respondent did not submit its ET3 or request an extension of time by the deadline.
Under the new rules, if a response is not presented within the relevant time limit, or is rejected and there is no outstanding request for a reconsideration, an Employment Judge will no longer automatically issue a default judgment but instead will decide whether he/she can properly determine the claim without a hearing, either based on the available material or on further information which may be requested from the parties. If so, a judgment will be issued. If not, a hearing will be fixed. However, the respondent may only participate in any hearing to the extent permitted by the Judge.
If a respondent subsequently makes a successful application for an extension of time to submit a response any judgment will be set aside and the respondent will be entitled to play a full part in proceedings.
The new rules have introduced a new "sift" stage into Tribunal proceedings, with the aim of weeding out unmeritorious claims. Once the claim and response are accepted, an Employment Judge will conduct an initial sift of all documents to confirm whether there are "arguable complaints and defenses within the jurisdiction of the Tribunal". The Judge must consider "all of the documents held by the Tribunal in relation to the claim" and may order the claimant or respondent to provide further information for this purpose.
If the Judge considers that the Tribunal does not have jurisdiction to consider a claim or the claim has no reasonable prospect of success he must give notice to the parties and order that the claim (or part of it) be struck out unless the claimant supplies written reasons why it should not be dismissed. If the claimant makes representations the Judge must either permit the claim to succeed (if he accepts the claimant's reasons) or hold a hearing (which either party can attend).
A similar process applies to the response, so that if the Judge considers the response has no reasonable prospect of success he/she must notify the parties and order that the response (or part of it) should be dismissed unless representations are received by a specified date. Again, if representations are received the Judge must either permit the response to stand or fix a hearing (at which both parties can attend). If a response is dismissed at the sift stage, the position is as if the response had been rejected (see above) so that the Judge must either determine the claim or fix a hearing to do so.
If the claim is proceeding, the Employment Judge must make a case management order which could list a preliminary or final hearing or propose judicial mediation.
The sift stage is one of the most significant changes to the Tribunal rules and is similar to the process in the Employment Appeal Tribunal. The aim is to prevent unmeritorious claims from reaching final hearing. It should certainly encourage the parties to undertake an assessment of the merits of their cases at the outset, and if Judges take a pro-active approach it could reduce the need to request further information.
Respondents will need to consider the impact of the sift stage on their litigation strategy. In particular:
- A more detailed response may be more likely to prompt a Judge to question whether there is jurisdiction and/or a claim has any reasonable prospect of success at the sift stage and at least ask for further information from the claimant.
- Respondents may wish to consider sending additional documents to support the argument that a claim be struck out at the sift stage, when they submit their responses. Traditionally, Tribunals have discouraged submission of documents at this stage, but it appears they will be required to consider them, if they are submitted.
- Where a claim is dismissed at this stage and the claimant makes representations as to why it should not be, the respondent will need to consider whether to participate in any hearing.
In practice, it may be difficult at such an early stage to put together a compelling case that a claim has no reasonable prospect of success. Certainly where there is any balancing of evidence required, it is unlikely that a Tribunal will be able to reach a decision on paper. We would therefore anticipate that there will be relatively few cases struck out at this stage and respondents may prefer to make strike out submissions at a preliminary hearing, rather than seeking to present additional information at the sift stage.
The distinction between Case Management Discussions (CMDs) and Pre-Hearing Reviews (PHRs) has now been removed. They have been replaced with "Preliminary Hearings" which will be able to deal with both case management and substantive issues (such as strike out applications, deposit orders and preliminary issues).
At least 14 days notice must be given if a preliminary issue is to be dealt with at a Preliminary Hearing, which should limit the possibility for the parties being surprised by substantive issues being raised. Preliminary hearings will be in private unless they are dealing with strike out applications or preliminary issues.
A judge may direct that a preliminary hearing be treated as a final hearing if satisfied that neither party will be substantially prejudiced by the change. We assume that such cases will be rare and are only likely to avoid such prejudice if witness statements have been prepared and exchanged and the witnesses are all present or purely legal issues are to be resolved.
New Employment Tribunal fees were introduced at the same time as the new rules.
Claimants who bring a claim are now required to pay an issue fee when they submit a claim, and a hearing fee prior to the hearing, (on a date specified by the Tribunal):
- Most claims (including unfair dismissal and discrimination) have an issue fee of GBP250 and a hearing fee of GBP950.
- Less complex claims (e.g. unlawful deductions from wages, statutory redundancy payments) have a lower issue fee of GBP160 and a hearing fee of GBP230.
Fees will also need to be paid in respect of certain specific applications including reconsideration of a judgment (GBP100), dismissal following withdrawal (GBP60), and judicial mediation (GBP600).
Parties with limited funds can apply for fee remission. Remission will be granted if the party is in receipt of certain state benefits or has a level of income below a specified threshold. The government is currently reviewing the remissions scheme and is expected to introduce a new test in October 2013 which will consider a party's savings as well as income.
Failure to pay the issue fee (or successfully apply for remission) will lead to the claim being rejected but a claimant may apply for reinstatement of the claim provided they have paid the hearing fee or the remission application has been granted (but the claim will be treated as first presented when the fee was paid). Where the amount of the issue fee submitted is lower than it should have been, the Tribunal will inform the claimant of the shortfall and the date by which the shortfall must be paid, failing which the claim will be rejected.
In respect of other fees, the claim or application will be struck out if the party fails to pay or obtain remission by a specified deadline although, again, the affected party will be able to apply for reinstatement.
The new fee regime should help prevent respondents incurring unnecessary time and costs in dealing with unmeritorious claims. The need to pay the hearing fee should focus the claimant's mind on settlement at an earlier stage, but the timing of the fees may mean that the respondent may have to prepare fully for a hearing without knowing that the claimant has no intention of paying the hearing fee. Late payment of hearing fees may also result in more postponements of the hearings until the appropriate fees have been paid or remission granted. Respondents may consider employing different proactive tactics to encourage claimants to focus on the need to pay a hearing fee at an early stage, but must ensure it does not amount to oppressive behavior on the part of the respondent.
A Tribunal will still only be able to make costs orders in limited circumstances where a party has acted "vexatiously, abusively, disruptively or otherwise unreasonably" in either bringing the proceedings or in the conduct of them.
Tribunals will also be able to deal with all costs awards whatever the amount. Therefore costs awards above GBP20,000 will no longer have to be referred to the County Court for a detailed assessment. Although it is questionable whether parties will have sufficient confidence in employment judges to assess high value costs applications.
Alternative dispute resolution and attempts to encourage settlement
The new rules reflect the government's commitment to alternative dispute resolution (ADR). In addition to the mandatory pre-claim early conciliation coming into force in April 2014, the rules set a framework to encourage early settlement.
- The Tribunal has a specific obligation wherever practicable and appropriate to encourage the parties to use ACAS, judicial or other mediation.
- The rules specifically provide that a Tribunal can use a preliminary hearing to explore the possibility of settlement or alternative dispute resolution and provide that ACAS can attend preliminary hearings. In practice the Tribunal will expect parties to have explored settlement together or at least given some thought to why settlement is not appropriate. It remains to be seen how much information they will require from the parties to fulfill this obligation.
- Note though that the fee regime has introduced a judicial mediation fee of GBP600. The rules provide for the respondent to pay this, but there appears to be no reason that it could not be shared with the claimant with their consent.
The overriding objective of the rules is to enable tribunals to deal with cases fairly and justly. This is the test that tribunals apply when considering whether to grant applications and orders. The new rules now include the new requirement for tribunals to avoid unnecessary formality and seek flexibility in the proceedings. This needs to be borne in mind when making applications, considering disclosure and general case management as tribunals will expect the parties to assist them in meeting this new objective.
Restrictions on evidence
New timetabling restrictions allow tribunals to set a hearing timetable, impose time limits for giving evidence, questioning witnesses and giving submissions. Although Tribunals had these powers already, the new rules are likely to encourage them to be used and this may require a more proactive strategy to trim down claims where possible.
Dismissal of proceedings
Under the old rules, where a claimant withdrew a claim it was necessary for the respondent to apply for the proceedings to be dismissed, to prevent the claim being brought again. Under the new rules a claim should normally be automatically dismissed. However, the new rules do not deal with the dismissal of a claim where settlement has been reached under a COT3 via ACAS and therefore the COT3 should retain the obligation for claimants to write to withdraw the claim.
The Enterprise and Regulatory Reform Act 2013 which came into force on 25 June 2013, provides that the tribunal can make a deposit order in respect of any specific allegation in a claim or response which it considers has little reasonable prospect of success. This should help to put pressure on claimants who bring multiple claims, some of which clearly have no merit.
In multiple claims, the rules provide that the tribunal may specify a lead case and stay the other related cases. Any decision on the common issues will be binding on the related cases.
Please click HERE for a link to the new rules.