In January 2011, the Government launched a consultation on reforms to the employment tribunal system. The reforms are designed to encourage the early resolution of disputes, streamline the tribunal process and help businesses feel more confident about hiring people.
The Resolving workplace disputes (PDF format, 528K) consultation (on the UK Government website), published jointly by the Department for Business, Innovation and Skills and Tribunals Service, sets out proposals relating to: mediation and early conciliation; tackling weaker tribunal claims; encouraging settlements; simplifying the employment tribunal process; fees for bringing employment tribunal claims; and financial penalties for employers that have been found to have breached an individual's rights.
On 23 November 2011, the Government published its response to the consultation (Resolving Workplace Disputes: Government response to the consultation (PDF format, 364K) (on the UK Government website)). The Government described the proposals set out in its response "as the most radical reform to the employment law system for decades". The Government's proposals included a rapid resolution scheme for certain types of claims. The Government will consult on how to introduce a scheme to provide quicker, cheaper determinations in low value, straightforward claims such as those for holiday pay, with the intention of saving time and money. This scheme would be as an alternative to the tribunal process, and may not involve judges or oral hearings.
Reform of the employment tribunal system will be effected by the Enterprise and Regulatory Reform Act 2013 (1.05MB) (on the UK Legislation website) which, will, among other things:
- allow for certain employment tribunal claims to be heard by legal officers (who will be appointed in accordance with regulations) if the parties agree;
- change the EAT rules so that appeals to the EAT will be heard by a judge sitting alone, unless a judge directs otherwise; and
- introduce a power for employment tribunals to order employers that have breached workers' rights to pay a financial penalty of between £100 and £5,000 where there are "aggravating features", the penalty being, in most cases, 50% of the amount of any award that the tribunal has made against the employer.
In May 2013, BIS confirmed to XpertHR that the change to the EAT rules permitting appeals to be heard by a judge sitting alone will come into force on 25 June 2013. On 25 April 2013, the Government announced (on the UK Government website) that most of the provisions of the Enterprise and Regulatory Reform Act 2013 will come into force in October 2013 or April 2014. This may include those provisions that will permit certain employment tribunal claims to be heard by legal officers and those that introduce financial penalties.
Compensation limits: In September 2012, the Government issued a consultation (Ending the employment relationship (PDF format, 303K) (on the UK Government website)) on, among other things, imposing a reduced cap on the compensatory award for unfair dismissal. The Government sought views on whether the overall cap should be lowered to median annual earnings (£25,882) or three times median annual earnings (£77,646) in conjunction with an individual cap of 12 months' pay of the employee concerned where this is less than the overall cap. The Government's rationale for its proposals was that this would address the problem of unrealistic perceptions "of the likely level of awards and encourage employers and employees to make better informed choices when resolving employment disputes". On 17 January 2013, the Government published its response to the consultation (Ending the employment relationship: Government response to consultation (PDF format, 450K) (on the UK Government website)). The Government intends to introduce an individual cap of 12 months' pay of the employee concerned, which will apply where this amount is less than the overall cap. The Government response states that it anticipates that the change to the unfair dismissal compensatory award will come into effect in summer 2013. The Government confirmed that the change will be effected in summer 2013 in its report, Employment law 2013: progress on reform (PDF format, 511K) (on the UK Government website). Section 15 of the Enterprise and Regulatory Reform Act 2013 (1.05MB) (on the UK Legislation website) includes a provision permitting the Secretary of State to vary the compensatory award for unfair dismissal.