Proposals for reform arising out of the Law Commission Report on employment law hearing structure

Dentons

Back in the autumn of 2018, the Law Commission for England and Wales (the Commission) published a consultation document that focused on the jurisdiction of employment tribunals and civil courts. Users of the judicial system acknowledged that there were issues.

Having received input into the consultation from various parties, the Commission published its report on employment law hearing structures at the end of April 2020. The report sets out 23 recommendations. 

Employment tribunals v. civil courts

Employment tribunals have always had different characteristics from civil courts and were intended to do so. The Commission's view is that these different characteristics are important and should be retained. 

These differing characteristics include that the employment tribunal is generally a no-costs jurisdiction; has a three-member composition for discrimination and equal pay claims; tends to be less formal than the civil courts; and is not bound by any rule of law relating to the admissibility of evidence in proceedings before the courts. Any party is also entitled to have lay representation.

Often considered unhelpful by users and practitioners alike, there are a number of discrepancies between the extent of the jurisdiction of the civil courts on the one hand and employment tribunals on the other, in relation to the same or similar types of claim. Indeed the Civil Courts Structure Review led by Lord Briggs from 2015 to 2016 noted what he described as an "awkward area" of shared and exclusive jurisdiction in the fields of discrimination and employment law, which has generated boundary issues between the courts and the employment tribunal system.

Despite far-reaching suggestions in the Briggs Review, including the creation of a new "Employment and Equalities Court", the government has indicated that it has no plans to restructure the employment tribunal system. There was, therefore, never any expectation that the current review would focus on anything more radical than improving the existing system and removing any illogical anomalies arising from the demarcation of the jurisdictions of employment tribunals and the civil courts. 

Terms of reference and objectives of the report

The Commission wanted to consider in particular:

  • the shared jurisdiction between civil courts and tribunals in relation to certain employment and discrimination matters, including equal pay; 
  • the restrictions on the employment tribunal's existing jurisdiction; 
  • the exclusive jurisdiction of the county court in certain types of discrimination claim; and
  • the handling of employment disputes in the civil courts. 

The main objectives included seeking to increase efficiency and consistency of approach by ensuring that employment and discrimination cases are, where possible, determined by the judges who are best equipped to hear them. It also sought to review whether the demarcation of jurisdictions and the restrictions on employment tribunals' jurisdiction are fit-for-purpose and in the interests of access to justice. 

UK-wide consistency, England and Wales applicability

The Commission can make recommendations for changing the law in England and Wales. The recommendations in the report do not extend to Scotland or Northern Ireland. The report does point out, however, that the Commission had the benefit of responses from outside England and Wales including the President and Vice President of Employment Tribunals (Scotland) who, we are told, agreed with the response of the Council of Employment Judges, while adding some observations on the extent of devolution. The Council of Employment Judges, Employment Tribunals (Scotland) and Employment Lawyers Association emphasised the importance of maintaining consistency in relation to employment tribunal claims north and south of the Scottish border. The Commission states that it can "see the case for maintaining consistency in relation to certain aspects of employment tribunals in both England and Wales, and Scotland". 

Exclusive jurisdiction and time limits

The Commission's provisional view was that unfair dismissal, discrimination in employment, detriment of various specified types and redundancy should remain the exclusive jurisdiction of employment tribunals. This was almost entirely agreed upon by the consultation responders. The main reason appears to be a recognition of the significant expertise employment tribunals have developed in the areas over which they have exclusive jurisdiction. Ultimately, the Commission concluded that employment tribunals should retain this exclusive jurisdiction over these types of employment claim. 

One recommendation that could, if implemented, lead to fairly wide-ranging ramifications is time limits. Recommendations include that: there should be a single time limit of six months for claimants to bring employment tribunal claims; and that the test for extending time limits should be the "just and equitable" test in all cases (not whether it was "reasonably practicable"). This "just and equitable" test is currently used in discrimination cases.

Jurisdiction in discrimination claims

The consultation paper focused on the desirability and feasibility of softening the hard line between the civil courts (which hear non-employment discrimination claims, such as in goods and services) and employment tribunals (which hear employment discrimination claims). It explored two options for optimising the use of employment judges' discrimination expertise: formally sharing jurisdiction between the tribunals and the county court, or deploying employment judges to hear discrimination cases in the county court.

Whilst there was significant consensus from responders that the court system as a whole would benefit from having expert discrimination judges hear non-employment discrimination claims, there is also widespread concern about exacerbating the call on limited judicial resources in employment tribunals. 

In conclusion, the Commission recognised that transferring non-employment discrimination jurisdiction entirely to the employment tribunal would be a major alteration of the nature of employment tribunals. It would, in substance, create a single "employment and equalities tribunal" which (as discussed earlier) was outside the Commission's terms of reference). Further, the balance of consultee opinion was against such a combination.

Breach of contract claims

Recommendations in respect of breach of contract claims include that employment tribunals should have jurisdiction to hear breach of contract claims, and related counterclaims, arising during or after employment. (Currently such claims can only be raised in tribunals in respect of claims arising from or outstanding on termination of employment.) The Commission has also recommended that the limit on the tribunal's contractual jurisdiction is increased from £25,000 to £100,000. All or any of these amendments would no doubt see a rise in tribunal claims overall.

Equal pay and equality of terms

An equal pay claim may be brought either in an employment tribunal or in the civil courts. In an employment tribunal there is, in practice, no time limit so long as the claimant remains employed in the relevant employment. A time limit of six months runs from the date that the claimant ceases to be so employed.

There is no discretion for the tribunal to extend the deadline, save in the limited circumstances set out in the Equality Act 2010 (the 2010 Act). In the English civil courts, the time limit is six years from the date of the breach. In Scotland, that limit is five years. Both jurisdictions enable claimants to claim arrears of pay going back six years (England and Wales) or five years (Scotland) – this means that a claimant who delays making a claim may receive less compensation as a result. Equal pay claims are most commonly pursued in employment tribunals.

The recognition of the specialist knowledge, procedures and expertise of employment tribunals in determining equal pay claims is implicit in the existence of these powers. It is also expressly acknowledged in the Explanatory Notes accompanying the 2010 Act.

There was somewhat of an "if it ain't broke, don't fix it" response to proposals that the concurrent jurisdiction of equal pay claims should change. Another argument advanced was that claimants' choice of forum should be preserved, particularly in relation to choosing whether to bring their claim in a costs-shifting or a no-costs jurisdiction, since there are benefits and disadvantages to both. 

Ultimately, in respect of equal pay claims, the Commission recommended:

  • the 2010 Act should be amended to provide a power to transfer equal pay cases to employment tribunals, with a presumption in favour of transfer; and
  • employment tribunal judges should be given a discretionary power to extend the limitation period for equal pay claims where it is just and equitable to do so. 

Enforcement powers

There has for some time been significant concern raised about the number of tribunal judgments which are effectively ignored by respondents. The consultation specifically asked whether employment tribunals should "be given the jurisdiction to enforce their own orders for the payment of money". 

The Commission recognised that there are enforcement possibilities available, but that the enforcement of tribunal awards is not satisfactory. In particular, claimants have to complete a new set of paperwork and pay additional fees. These difficulties are exacerbated by the fact that claimants have to engage with a new institution, which will not be familiar with the details of their case. All of this is particularly resented (and vocalised by law clinics and trade unions in their responses, as you might expect) because it would not be necessary if employers simply paid sums due on receipt of the judgment. 

Despite claimants facing understandable confusion when, having won their case in front of the employment tribunal, they are then required to go somewhere else to enforce the decision, the Commission was not persuaded that giving enforcement powers to employment tribunals would alleviate all of the problems with enforcement. The most common suggestion from consultees was that employment tribunals could be granted the same range of powers that civil courts have to enforce orders. This would involve duplicating the significant infrastructure which has built up in the civil courts to enable the enforcement of orders. It is not clear that this duplication would necessarily result in a higher enforcement rate of tribunal awards. 

Ultimately, the Commission has recommended that the government should investigate the possibility of: 

  • creating a fast track for enforcement which allows the claimant to remain within the employment tribunal structure when seeking enforcement;
  • extending the current BEIS employment tribunal penalty scheme so that it is triggered automatically by the issuing of a tribunal award (including sending a copy of the judgment to the BEIS enforcement team);
  • sending a notice with the judgment to inform an employer that, if it does not pay the award by a set date, it will be subject to a financial penalty; and
  • improving the information sent to successful claimants on how to enforce awards.

The report does address a number of anomalies and discrepancies that users of the judicial system have highlighted over the years. The Law Commission has taken a pragmatic approach to addressing these. The government is now to consider the recommendations. An interim response should be published by the end of October this year and a full response by next April. The full response should set out which recommendations are accepted, rejected and modified. Whether or not the current COVID-19 pandemic and associated legislative changes and delays will result in a delay to the interim or full response remains to be seen. We will keep you advised of the government's response in due course.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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