Over recent weeks and months the government has announced a number of planned changes to employment law and the employment tribunal system.  Here we review the latest developments.

Unfair dismissal compensation

Earlier this year the Government launched the Enterprise and Regulatory reform Bill which contains a power for government ministers to reduce the maximum amount of compensation that can be claimed in a routine unfair dismissal claim from the present £72,300 cap.  The Bill is currently making its way through Parliament.  In the meantime the government launched a consultation in September on its proposal to limit compensatory awards to the lower of:

  1. an amount not less than £25,882 (annual median earnings) and no more than £77,646 (three times annual median earnings); or
  2. twelve months’ pay of the individual concerned.

Settlement agreements

The recent consultation paper also expands on the Government’s proposal to change the law with a view to enabling employers to explore with employees the possibility of a negotiated exit without fear of such discussions being used against them in a tribunal claim. The proposed new legislation is set out in the Enterprise and Regulatory Reform Bill. Due to the way the new clause is drafted, however, it is questionable whether it will have the desired effect. The Government hopes to allay any doubts with a statutory Code of Practice, to be drafted by ACAS, which will set out a recommended approach for employers wanting to adopt this course. However, concerns remain about the new legislation and the potential for it to complicate proceedings and give rise to satellite litigation.

The consultation paper includes a model settlement agreement which the Government suggests could be used by employers. Whilst this will be a useful starting point for employers, the fact remains that the law underpinning the settlement of employment related disputes is unnecessarily complicated. The tricky bit is ensuring a clean break and that means identifying in the agreement all the potential claims that a departing employee might have against the employer. Without knowledge of employment law it is easy to get this wrong, leaving employers exposed to tribunal claims they thought they had managed to settle. The risk is demonstrated by the fact that the list of potential claims in the model agreement runs to five pages. The Government has today indicated that it does not plan to simplify the law in this area. So employers are still going to have to be very careful about the way they use any template agreements.


Also in September Following the Government published its interim response to a call for evidence on the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). The response highlights a number of concerns identified by those who responded to the call for evidence and we can expect a formal consultation paper on possible law changes later this year.  One such issue identified is whether the concept of “service provision change”, which many see as “gold-plating” as it does not stem from the Acquired Rights Directive from which TUPE emanates, should be retained or repealed. Interestingly, the introduction of the service provision change was originally meant to simplify the application of TUPE by providing clarity. Whilst unpopular with some, it is somewhat ironic that clarifying case law has only just started to emerge in respect of the service provision change provisions and removing them all together may create a further period of uncertainty.

Collective redundancies

Over the summer the Government launched a separate consultation into the law on collective consultation.  One of the proposals under consideration is a reduction in the 90 day consultation period for larger scale redundancies.

Employment Tribunal Reform

The Enterprise and Regulatory Reform Bill also introduces a new ‘pre-claim conciliation’ system that will require all tribunal claimants to send details of their claim to ACAS before launching tribunal proceedings.  The idea is that this will encourage the parties to a dispute to see if they can reach agreement at an early stage.

In addition the Bill contains the framework for a ‘rapid resolution’ scheme for claims for unpaid wages and holiday pay, amongst others.  Under the new regime, parties to a dispute will be able to opt to have such claims determined without the need for a full hearing before a judge.

Besides these changes, in July, Mr Justice Underhill recommended a new set of rules for Employment Tribunal claims. Although the proposed new rules were published, the Government did not say whether or not it intended to adopt them. Instead, it promised a consultation exercise before reaching a decision. That consultation was launched in September.

The consultation, notably, includes a new draft claim and response form and a proposal for an initial sift stage, at which every case will be reviewed by an Employment Judge on the papers after the claim form and response have been received, to consider directions and strike-out of aspects lacking a reasonable prospect of success. Although attractive in theory, if this process is adopted, it will be interesting to see how robust it is in practice, given the resources that will be entailed in having every case reviewed by a judge before hearing. It is likely that very few cases will be knocked out at this stage as many cases involve disputes between the parties about what actually happened and it won’t be feasible for Judges to resolve such disputes without hearing the evidence.

Other proposed changes include:

  • removal of the £20,000 cap on costs assessed by a Tribunal. However, the criteria for awarding costs is to remain the same.
  • a more flexible regime around holding hearings in private, and making restricted reporting and anonymity orders.
  • non-prescriptive guidance from the Presidents of Employment Tribunals in England and Wales and Scotland respectively. The hope is that this will assist in ensuring that a consistent approach to case management is taken across different Tribunals, to the extent that this is possible without infringing on judicial independence.

In addition to these changes the government has confirmed it intends to press ahead with plans to introduce fees for those wanting to bring employment tribunal claims.  The aim is for the fee regime to take effect some time next year.

Please see the following links:

Ending the employment relationship

Employment Tribunal Rules - review by Mr Justice Underhill

Effectiveness of Transfer of Undertakings (Protection of Employment) Regulations 2006: government response to call for evidence (PDF, 215 Kb)