International Employment Law Review - August 2013 - Issue 4: An Overview of Labor and Employment in England and Wales

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Fees in Employment Tribunals

In an effort to shift the burden of tribunal costs away from the taxpayer and to the parties using the service, the Employment Tribunals and the Employment Appeals Tribunal Fees Order 2013 (the “Order”) introduced fees for users of the tribunal system at the end of July 2013. Following implementation of this change, a claimant will have to pay fees at two stages: upon issuing their claim and at a later stage prior to the full hearing. The Tribunal will have the power to order the unsuccessful party to reimburse the fees of the successful party.

Types of Claim

Under the fee rules, different fees apply to different types of claims. “Type A claims” are supposed to require little or no pre-hearing work and should be resolved in approximately one hour at hearing e.g. a complaint of unauthorised deduction from wages, breach of contract, failure to pay redundancy payment or a complaint that the employer has failed to permit time off for trade union activities. All other claims are “Type B claims” and typically take longer to case manage and require much longer hearings e.g. discrimination, whistleblowing or unfair dismissal claims.

Type A claims will cost a claimant £390 to take to full hearing or £160 if the claim is settled before the hearing fee is payable, whereas Type B claims will cost £1200 to take to full hearing and £250 if settled before the hearing fee is payable. Fees increase for multiple claims depending on the number of claimants involved. Certain applications will also generate additional fees, which the applicant must pay such as a motion for reconsideration of a judgment or default judgment, and the respondent will be liable for a £600 fee where the parties agree to pursue judicial mediation.

Failure to pay the hearing fee will mean that the tribunal will not accept the claim.

Remissions

The civil court remissions system will be extended to the tribunal system and made available to those individuals who cannot afford to pay part or all of any fee. To be eligible, an individual claimant must provide proof either that they are in receipt of certain permitted state benefits or that their household income is below a certain threshold. The final full details of the remission system for tribunal fees have not yet been released.

Various concerns were raised about the remissions system during consultation and consequently the Ministry of Justice has launched a separate review of remissions. The current proposal involves a two stage test of assessing, first, a claimant’s “disposable capital” and then their gross monthly income. The consultation closed on May 16, 2013.

Unfair Dismissal Compensation

Under §15 of the ERRA, the Secretary of State will have the power to vary the statutory limit on the compensatory award in unfair dismissal claims. The Government believes that this will “better strike the balance between ensuring that claimants are fairly compensated and giving the parties more realistic expectations.”

Although the maximum compensation a tribunal can award will remain capped—currently at £74,200—there will also be a limit of one year’s pay. It should be noted that, in determining the amount of compensation, mitigation and compliance with the Acas codes of practice will still remain relevant, notwithstanding the changes to the cap.

These changes to the compensatory award are expected to come into effect during 2013.

Whistleblowing

In Parkins v. Sodexho, it was held that an employee could make a qualifying disclosure in respect of his own contract of employment, despite such a disclosure arguably lacking any “public interest” aspect. Employees who complained about their treatment by their employer—either in terms of a breach of an express terms of the employment contract or the implied duty to maintain trust and confidence—could therefore argue that they were whistleblowing and to claim unfair dismissal without needing a qualifying period of service. This would allow the employee to recover potentially unlimited compensation if dismissed because of the employee’s whistleblowing.

§17 of ERRA is designed to limit the circumstance in which employees will able to make this argument, with the aim that workers will be prevented from making a whistleblowing claim at an employment tribunal in respect of purely private matters. In order to qualify for the protection of the whistleblowing legislation, disclosures must, in the reasonable belief of the worker, be made in the public interest. By contrast, ERRA, §18 removes the ‘good faith’ requirement for a disclosure to qualify as protected. Nonetheless, ERRA, §18 also states that, where a disclosure was not made in good faith, compensation may be reduced by up to 25%.

In addition, the Government has sought to provide greater protection for individuals when they blow the whistle at work. This is achieved by ERRA, §19 which makes workers and agents personally liable for subjecting a fellow worker to retaliation because they have made a protected disclosure. Employers will also be vicariously liable for such retaliation under this provision, although there is a defense where all reasonable steps have been taken to prevent the retaliation.

These changes to the whistleblowing law became effective on June 25, 2013.

Dismissal for Political Opinions or Affiliations

Following a finding by the Court of Justice of the European Union in Redfearn v.United Kingdom in 2012 that the UK was in breach of the European Convention on Human Rights, the ERRA will amend §108 of Employment Rights Act of 1996 to provide that the unfair dismissal qualifying period (currently, two years) “does not apply if the reason (or, if more than one, the principal reason) is, or relates to, the employee's political opinions or affiliation.” In these circumstances, employees will be able to make a claim for unfair dismissal regardless of their length of service.

Collective Redundancy Consultation

The Trade Union and Labour Relations (Consolidation) Act of 1992 (Amendment) Order 2013, which became effective on April 6, 2013, introduced three key changes to the rules on collective consultation.

(a) Timetable

Where an employer is proposing to dismiss 100 or more employees at one establishment within 90 days, the employer must now begin consulting with the appropriate representatives at least 45 days before the first dismissal takes effect. This represents a reduction from the previous requirement to consult for 90 days before dismissal, although it is important for employers to note that the maximum potential protective award of up to 90 days’ gross pay in respect of each dismissed employee has not been reduced.

(b) HR1

Where an employer is proposing to dismiss 100 or more employees at one establishment within a period of 90 days or less, the employer must notify the Secretary of State of its redundancy proposal, using an HR1 form, at least 45 days (again, reduced from 90 days) before the first dismissal takes effect (and before giving notice to terminate an employee’s employment in respect of any of the dismissals).

(c) Fixed Term Employees and the Collective Redundancy Thresholds

Where an employer makes a proposal on or after April 6, 2013 to dismiss 20 or more employees, the collective redundancy consultation obligations will not apply to those individuals who are employed under a fixed term contract unless:

  • the employer is proposing to dismiss the employee as redundant; and
  • the dismissal will take effect before the expiry of the specific term, the completion of the particular task, or the occurrence (or non-occurrence) of the specific event that the employee was employed for.

In other words, where an employee’s fixed term contract is to terminate on the date agreed under the contract, the employer does not need to include that employee in the calculation of the number of proposed redundancies even if the dismissal will occur within the same period as the proposed redundancies.

Acas Guidance

In conjunction with the changes made to the statutory rules on collective redundancy consultation, Acas has published a guidance booklet on collective redundancy consultation aimed at employers entitled “How to manage collective redundancies.”

Compensation Limits

Increase in UK Compensation Limits

Pursuant to The Employment Rights (Increase of Limits) Order of 2012, beginning on February 1, 2013 the maximum compensation that the Employment Tribunal can award for unfair dismissal (save in the exceptional cases such as whistleblowing, where no cap applies to the compensatory award) and the weekly wage figure used for calculating statutory redundancy payments have increased.

As a result, for dismissals in respect of which the effective date of termination falls on or after February 1, 2013:

  • a week's pay (for the purposes of calculating the basic award in unfair dismissal cases and statutory redundancy payments) will be capped at £450 - the current limit is £430; and
  • the maximum compensatory award for unfair dismissal will be capped at £74,200 - the current limit is £72,300.

Calculation of Unfair Dismissal Awards

Compensation awarded for unfair dismissal claims is made up of two strands: the basic award and the compensatory award:

  • The basic award is calculated by applying a formula based on age, length of service and a week's pay. As a result of the increase in a week's pay, the maximum total basic award will from February be capped at £13,500.
  • The compensatory award is not based on a formula and is designed to compensate the employee for the loss that he/she has suffered. As a result of the increase in the maximum compensatory award, the maximum unfair dismissal award (basic plus compensatory awards) will be capped at £87,700.

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