Perhaps the most intriguing of the radical changes to the employment tribunal system is the recent introduction of mandatory early conciliation. As detailed in March's edition of Law at Work prospective claimants have been required since 6 May 2014 to refer a complaint to Acas for early conciliation before they instigate employment tribunal proceedings. The primary objective of this measure is to actively encourage dialogue between the parties at the very outset of a dispute before it reaches litigation, and to act in accordance with the objective to reduce the burden on employment tribunals. Any claim lodged in an employment tribunal must now include a unique early conciliation certificate number, and without this reference the claim will not be permitted to proceed.
So, just how mandatory is the mandatory process of conciliation and what are the respective obligations imposed on the prospective claimant and respondent as part of this initiative to promote a culture of resolution?
Obligations on prospective claimant and respondent
The compulsory element of early conciliation is the requirement for the claimant to send 'prescribed information' in the 'prescribed manner' to Acas which essentially involves the prospective claimant providing its name and address and the respondent's name and address either on an online form, by post or by telephone. The nature and details of the claim do not need to be provided and there is no obligation on either party to actively engage in good faith in early conciliation discussions (''EC discussions'').
This presents a number of potential scenarios: (i) the prospective claimant may not actually wish to enter into EC discussions, but will need to contact Acas in the first instance to receive the early conciliation certificate and then be able to proceed with his or her claim or (ii) the respondent may not wish to enter into settlement discussions and conveys this to Acas at the outset or (iii) the respondent may not actually be inclined to settle a prospective claim, but enters into EC discussions with the claimant to create a delay for the claimant in bringing a claim in the Employment Tribunal or (iv) both parties may genuinely wish to enter into EC discussions.
Neither party is under an obligation to hold EC discussions and either party may withdraw from the process at any time. Further, there are no costs consequences for either party where there is a refusal to enter into EC discussions, and there would be no adverse consequences for a respondent if it was to refuse to enter into EC discussions in a scenario where a prospective claimant genuinely does wish to hold such discussions. A failure to engage in EC discussions during the early conciliation period does not preclude the parties from holding settlement discussions at a later date, which is of particular relevance where a prospective claimant does proceed with a claim.
What is the potential impact in practice?
On an administrative level, the introduction of mandatory early conciliation will evidently result in employers receiving communications from Acas whenever a claimant is considering bringing a claim. As the procedural element in obtaining an early conciliation certificate is mandatory, it does not therefore evidence a genuine intention of a prospective claimant to bring a claim – it might simply be used by a claimant in the hope that an employer believes a claim will be brought and, in not wishing to exhaust management time and money defending a claim, leads the employer into EC discussions and towards a settlement offer.
A prospective claimant may also use the early conciliation process to artificially extend the tribunal time limit on a claim. In circumstances where the limitation period for bringing a claim is running out, instigating the early conciliation process will ‘’stop the clock’’ for a period of up to one calendar month from the point the prospective claimant first contacts Acas, as outlined in March’s edition of Law at Work. Again, this could be used in circumstances where a prospective claimant is looking to frustrate the respondent and almost force it to enter into settlement discussions. This might be particularly relevant where the claim is of low value and the respondent’s primary concern is not to expend further management time and money dealing with the issue.
It is important that the early conciliation process is viewed within the context of the introduction of tribunal fees, the lack of sanction for a failure to engage in settlement discussions and the option of settlement discussions remaining open further down the line outside of the early conciliation process. These factors appear to militate against the efficacy of this initiative since there is no glaring incentive for a respondent to enter into genuine settlement discussions. Since a claimant is now required to pay a fee to issue a claim and then a further fee to have it heard in an employment tribunal, the respondent has the luxury of being able to ‘’call the bluff’’ of a prospective claimant and assess whether he or she is genuinely minded to follow through with a claim. Since there are no costs consequences or duties on a respondent to enter into EC Discussions, it can take comfort in requiring a prospective claimant to make a decisive first move in instigating tribunal proceedings and knows that it can still look to enter into settlement discussions if required at a later date.
A respondent may also take the opportunity to engage in EC Discussions where it has no intention of settling, but wants to use the process as an opportunity to find out more about the nature of the claim and go some way towards making a decision on the strength of its own case. Acas will neither assess the merits of a claim nor quantify any potential losses, but a respondent might be able to ask tactical questions in order to elicit information from the claimant beyond the basic ‘prescribed information’ mentioned above.
Although it is still very early days, the success of mandatory early conciliation is likely to very much depend on the circumstances of the case. Given the apparent lack of consequences for not engaging in EC discussions, there is the potential for either party to use it as a tactical tool and not for its intended purpose in situations where both parties are not genuinely committed to entering into constructive conciliation talks.
From an employer’s perspective, it might be very useful in a situation where the claim appears to be of low value and both parties genuinely want to settle. An employer might decide that it would be easier to settle at this stage, although it has not been able to fully quantify the prospective claim, rather than spend management time and money defending the claim at a later stage.
Employers should look to strike a balance between avoiding the costs and time involved in defending tribunal claims and advancing settlement monies during the early conciliation process to an employee that has no intention of submitting a claim or paying the tribunal fees and is purely using the process as an attempt to extract financial gain from a situation in which it might otherwise receive nothing.
Employers should not look to adopt a blanket policy as to how they will deal with the early conciliation process. In a situation where an employer is confident that either the claimant will not bring a claim in an employment tribunal (or at least happy to take the risk that he or she won’t) or that the claim is not a particularly strong one, it might decide not to enter into EC discussions from the very outset, in the knowledge that it will not be penalised for doing so. Where a claimant has a claim for unfair dismissal, however, and an employer is not certain of the merits of its case, it might entertain EC discussions for as long as the claimant is prepared to do so during the one month ''stop the clock'' period as this will have the effect of delaying the prospective claimant from bringing a claim and from being granted a hearing date. All the while, the claimant would be under a duty to mitigate his or her losses and the more time used up here increases the likelihood of a claimant finding a job and reducing any potential compensatory award an employment tribunal might make. It would be advisable for an employer to treat each communication from Acas separately and assess whether it is of more value to enter into EC
discussions to promote a settlement at an earlier stage - or leave the prospective claimant to ''reveal their hand'' by paying the employment tribunal fees and bringing a claim.
It remains to be seen just how effective early mandatory conciliation will be in practice particularly given that either party can refuse to engage in EC discussions without adverse consequences. In order to prevent the procedure from becoming no more than just a further administrative hurdle to overcome, the skills of Acas in promoting settlement between the parties are going to become very much in play.