Employment law reform - changes happening on 29 July 2013


29 / 7 / 2013 9.57am

What's changing?

Compromise agreements and settlement discussions

Compromise agreements will be renamed as settlement agreements in most legislation. Provisions in the Enterprise and Regulatory Reform Act ("ERRA") will prevent pre-termination negotiations from being referred to in evidence in an ordinary unfair dismissal case, unless there has been "improper behaviour" by the employer.

ACAS has published its Code of Practice which supports the new legislation on the confidentiality of pre-termination negotiations and lists some examples of what might constitute "improper behaviour".

NHS employers will still be required to obtain HM Treasury approval to any offer of a termination payment, so any agreement to make such a payment reached during settlement discussions will need to be expressed to be subject to such approval being obtained.

Existing policies relating to disciplinary matters, capability and performance management will need to be amended to include provisions dealing with how the new procedure will be operated, including whether or not the employee can be accompanied during such meetings, who will conduct them and at what stages in the existing procedures they might be appropriate.

Employment Tribunal and Employment Appeal Tribunal (EAT) fees

For claims made to the Employment Tribunal on or after 29th July 2013 the Tribunal will not accept submission of an ET1 until the relevant issue fee (£160 or £250, depending on type of claim) has been paid by the claimant or a remission application has been granted exempting the claimant from payment of the fees.  There are no fees to lodge an ET3 form with the employment tribunal unless a counterclaim is made, the fee for lodging a counterclaim is £160. Unison have won the right to appeal against the fees gaining permission from the Royal Courts for a Judicial Review hearing in October. Unison leaders hope a further ruling could revoke the changes, possibly  refunding anyone who will have paid tribunal fees. We will continue to update the website with any progress on the Judicial Review. More information can be found at legislation.gov.uk.

Unfair dismissal compensation

Unfair dismissal compensation will be limited to which ever is the lower amount for the individual; 52 weeks' pay or the existing £74,200 limit for dismissals taking effect at 29 July 2013.

The government's stated intention in bringing in this change is to manage employees' expectations of likely compensation and create more certainty for employers. The change should make it easier to quantify the likely total cost of unfair dismissal claims and may facilitate the negotiation of realistic settlements.

Changes to interest on tribunal awards

Changes including the date when interest becomes payable, as well as the amount of interest, come into force on 29 July 2013:

  • increase to the rate of interest payable on a claimant's losses up to judgment, in discrimination claims, from 0.5% to 8%, in England and Wales. This brings England and Wales into line with Scotland where the interest rate has been 8% for the last 20 years;                                                             
  • and change to the rules on when interest becomes payable so that interest on a tribunal award accrues from the day after the decision day, unless the full amount is paid within 14 days after the decision day. Interest currently only accrues on an unpaid tribunal award after 42 days.

Employers will now have a fairly small window to pay the award before they become liable to pay interest. Employers may wish to review their internal systems to ensure requests for cheques or bank transfers in payment of tribunal awards can be turned around quickly.

Changes to the Tribunal and Employment Appeal Tribunal (EAT) Rules

The new tribunal rules use simpler language and are less than half the length of the old rules. They include:

  • sanctions for non-payment of fees: a new rule allowing the tribunal to reject a claim form if it is not accompanied by an issue fee or a remission application. In addition, a new rule allowing the tribunal to make an unless order, providing that a claim or employer's contract (counter) claim will be struck out or an application dismissed, if a relevant fee is not paid by a specified deadline;
  • a less rigid approach to applications to extend time to lodge an ET3;
  • an initial sift stage: a judge will review the case on the papers once the claim and response forms have been received in order to make directions or, if appropriate, consider whether to strike out a party's case for having no reasonable prospects of success or where the tribunal has no jurisdiction to hear the complaint;
  • a rule expressly permitting tribunals to limit oral evidence and submissions at hearings;
  • shorter time limit for employer contract claims;
  • a slightly more flexible regime on private hearings, restricted reporting and anonymity;
  • a simplified procedure for withdrawing and dismissing claims;
  • clarification that a judgment or order requiring a party to pay an amount of money must be complied with within 14 days of the date of the judgment or order;
  • a more flexible regime for reconsidering judgments (although there will be fees attached in certain circumstances – see above);
  • an emphasis on cooperation by the parties and a mandate to encourage mediation and settlement;
  • a variety of small but sometimes significant changes to other aspects of tribunal procedure including the approach to making deposit orders and costs awards.

Keeping up to date

For any further changes look for updates through the NHS Workforce Bulletin and on these web pages.  

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