On 27 January 2011, the government announced the start of a public consultation on reforming access to the Employment Tribunal system and also published an “Employer’s Charter” designed to dispel the myths surrounding employment law.

The headline-grabbing change is a proposal to extend the qualification period for employees to bring a claim of unfair dismissal from one to two years. The government believes that this will encourage growth by giving businesses more confidence in taking on new staff. This proposal would undoubtedly make it easier for an employer to dismiss an employee in the first two years of employment, provided the reason for doing so is not discriminatory - discrimination claims do not require any minimum qualifying period of employment. In particular, the lengthy procedures required to dismiss poor performers - involving a series of warnings and periods for improvement - can largely be bypassed for those without a minimum of two years in employment, provided discrimination issues do not arise. Termination payouts to poor performers, employed for less than two years, would decline substantially. These payouts are often made to settle potential unfair dismissal claims, where the employer wants the poor performer out of the business fairly swiftly and does not wish to engage in protracted procedures.

Encouraging settlement

The consultation advocates a greater focus on settling cases before they reach the Tribunal, envisaging a statutory period of one calendar month to attempt to conciliate disputes. A further proposal designed to encourage settlement is to formalise the procedure for offers to settle and introduce the concept of “payments in to court” in much the same way as currently used in civil litigation.

The government also proposes a greater use of deposit orders. These are, in effect, orders that require a party to pay a sum of money into court as a condition of being permitted to continue to pursue all, or any part of their claim. The government advocates wider use of these powers and increasing the maximum level of such an order to £1,000. These powers would also be extended, for the first time, to the Employment Appeal Tribunal.

Shortening Tribunal hearings

The consultation proposes various measures to shorten the length of Tribunal hearings. These include taking witness statements as read, withdrawal of payment of expenses to witnesses to reduce the numbers called and the introduction of “Legal Officers” to deal with certain case management functions freeing up judicial time. It also proposes to widen the claims where judges can sit alone to include unfair dismissal and to remove the general requirement for tripartite panels in the Employment Appeal Tribunal. These measures are designed to free up more judicial time, reduce delay and cut costs.

Employer penalties

The government also proposes to introduce the power for Tribunals to impose financial penalties on those employers who lose a claim. The penalty would generally be half the total award made to the claimant and would be payable to the Exchequer. The government believes that this will encourage employers to have greater regard to their legal obligations towards employees and ultimately lead to fewer workplace disputes. This proposal would go in some way to funding the estimated £1 billion cost of running the Tribunal Service.