• Impact date: 2013

Generally intends to "overhaul the employment tribunal system and transform the dispute resolution landscape".

Proposals include:

  1. Compulsory ACAS conciliation for all Employment Tribunal claims (alongside extended time limits for bringing claims).
  2. Appointing new "legal officers" at the Tribunal - to resolve straightforward claims more quickly by dealing with certain simple or low value claims (such as non-payment of holiday pay) with the consent of the parties.
  3. Introducing binding shareholder votes on director’s pay (by amending the Companies Act 2006).
  4. Amending current whistle blowing legislation - under the proposed changes, whistle-blowers would only be protected under the law for disclosures made ‘in the public interest’, as well as in the reasonable belief of the worker making the disclosure.
  5. Financial penalties for employers who lose Employment Tribunal claims where there has been an "aggravating feature" (the ERRB's Explanatory Notes consider might constitute an "aggravating feature"). Payments would be made into the Consolidated Fund. The amount of the penalty would be 50% of any compensation award made to the Claimant, subject to a minimum of £100 and maximum of £5,000. Whilst employers will be able to reduce the financial penalty by 50% if they pay within 21 days, the reputational damage of such a finding is likely to be of greater concern. However, penalties won't apply to claims presented within six months of the ERRB being passed.
  6. Changing the cap in unfair dismissal compensation awards (likely to result in a reduction). Under current proposals, the government would have wide powers to decide to lower the cap. It could be set at an amount between one and three times' median annual earnings (currently £25,882 - £77,646) or a number of week's pay (not less than 52 weeks) - or the lower of these two figures. The amount could also differ for different types of employer.
  7. Settlement agreements and "protected conversations" (subject to the "Ending the Employment Relationship" consultation, closing on 23 November 2012). Proposals include compromise agreements being renamed as settlement agreements and employers being given more freedom to discuss discussions proposed terminations with employees (outside the context of an existing dispute) without fear of those conversations being used in evidence for unfair dismissal claims. These "protected conversations" go further than the current 'without prejudice' rule as there will be no need for an existing dispute to invoke the proposed protection. However, on current proposals, they wouldn't apply to automatically unfair dismissal claims (e.g. whistle blowing), where there has been "improper behaviour" (still to be defined), nor to discrimination or even breach of contract claims.
  8. EAT judges to sit alone.

In relation to discrimination, the Bill also proposes to:

  • repeal the provisions in the Equality Act 2010 relating to third party harassment and the discrimination questionnaire procedure;
  • give employment tribunals the power to order an employer to carry out a pay audit where it has lost an equal pay claim or discrimination claim relating to non-contractual pay, and to
  • extend the circumstances in which tribunals can make deposit orders and orders for the recovery of witness expenses for litigants in person.