Hard on the heels of the most recent employment law changes are several legislative measures that commence on 29 July 2013 which employers need to be aware of. In accordance with the Government's policy of reducing the burden and expense of employment law and tribunal procedures on employers, a number of changes have been announced. It does, of course, remain to be seen whether the changes will have the desired effect of reducing the cost and disruption of employee terminations and any resultant tribunal litigation.

On 29 July 2013:

Compromise agreements and pre-termination negotiations

Compromise agreements will be renamed settlement agreements (in theory) to better describe their purpose. Their effect will remain unchanged.

The interesting and, some may say, in practice challenging concept of "pre-termination negotiations" will be introduced. This stipulates that a tribunal "may not take account of any offer made or discussions held, before the termination of the employment in question, with a view to it being terminated on terms agreed between the employer and the employee." The idea is, effectively, to extend the without prejudice rule to where a dispute has not yet arisen.

The content of the negotiations cannot be disclosed in evidence should the employee later raise an ordinary unfair dismissal claim but this restriction will not apply where "improper behaviour" has taken place or where the complaint is one of discrimination or breach of contract.

Tribunal changes

The Employment Tribunal Rules 2013 (the Rules) will come into force with the aim of simplifying the current tribunal procedures. The Rules seek to ensure proportionality, certainty, consistency, simplicity and efficiency.

The Rules introduce the following main changes:

  • Amended ET1 and ET3 forms.
  • An early power for the Tribunal to reject ET1s if the claim is an abuse of process or if the tribunal does not have the jurisdiction to hear it.
  • The tribunal will no longer automatically issue a default judgment if a response has not been received by the 28-day deadline.
  • A new sifting stage in which employment judges will consider whether the claim or the response should be struck out because it has no reasonable prospect of success or if the tribunal does not have jurisdiction to hear the claim.
  • Either of the parties or the tribunal on its own initiative can request that the tribunal reconsider judgments.
  • Greater power for employment judges to run hearings as they see fit, including to set timetables, limit the length of witness evidence or to consider cost judgments; and
  • Preliminary hearings will replace case management discussions and pre-hearing reviews.

Tribunal fees

Of real significance, the Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013 shall also come into force. This will introduce issue fees in the tribunals for the first time ever.

There are two types of fee depending on the complexities of the case, with different level fees applying where the claims involve multiple claimants:

  • Level 1 claims which will have an issue fee of £160 and a hearing fee of £230. This covers claims for redundancy payments, unpaid wages and holiday pay amongst others; and
  • Level 2 claims which will have an issue fee of £250 and a hearing fee of £950. This covers claims for unfair dismissal, discrimination and whistleblowing.

In addition, parties will be required to pay further fees for certain applications, such as counterclaims. The HMCTS civil court service remission scheme will be in place to assist those who cannot afford to pay the fees. The tribunal will have the discretion to order the losing party to repay any fees paid by the successful party.

How long we have these new tribunal fees remains to be seen, however, as the unions have applied to the High Court to judicially review (and repeal) their introduction … watch this space.

New unfair dismissal cap

The cap for ordinary unfair dismissal will be amended so awards for successful claimants will be capped at the lower of £74,200 or one year's salary. Pension contributions and benefits in kind are excluded from the calculation of a year's pay which may penalise those who have entered into salary sacrifice arrangements and could influence the choices employees make.