Articles & Updates

2012 promises to be an eventful year in the world of employment law with a number of proposals for tribunal reform and other changes on their way, and yet more in the pipeline for the years ahead.  We have summarised some of the most important changes in this bulletin and will keep you posted about developments as the year goes on.

Increase in tribunal awards: 1 February 2012
The maximum limit on a week's pay will increase from £400 to £430 and the maximum unfair dismissal compensatory award will increase from £68,400 to £72,300 for dismissals taking effect on or after 1 February 2012.

New statutory payment rates: April 2012
The standard rates for statutory maternity pay, statutory paternity pay and statutory adoption pay will increase from £128.73 to £135.45. The weekly earnings threshold for these payments will rise from £102 to £107.

Statutory sick pay will increase from £81.60 to £85.85, with the weekly earnings threshold also rising from £102 to £107.

Maternity allowance will increase from £124.88 to £135.45, with the earnings threshold remaining at £30.

April 2012 – employment law changes
In its response to the Resolving Workplace Disputes consultation, the government stated that it intends to bring into force a number of its planned changes in April 2012 (although it has not yet published the draft legislation required in order to do so). These include:

Unfair dismissal. The qualifying period will be increased from one to two years. It is unclear at this stage whether the new qualifying period will apply to existing employees or only new joiners.

Deposit orders. The amount of deposit order a tribunal will be able to order a party with a weak claim to pay will increase from £500 to £1,000.

Costs awards. The maximum amount of costs an employment tribunal can award (without referring the case to the county court for detailed assessment) will increase from £10,000 to £20,000.

Witness statements. Witness statements will no longer be read out loud in the tribunal but will be taken as read, unless a judge directs otherwise.

Witness expenses. Tribunals will be given powers to direct parties to bear the costs of witness attendance, including the costs of witnesses called by the successful party. The government will withdraw state-funded expenses.

Judges to sit alone on unfair dismissal cases. Unfair dismissal cases in the tribunal will be heard by a judge sitting alone without lay members.

Early Acas conciliation. Claimants will be required to submit details of their dispute to Acas first, at which point they will be offered pre-claim conciliation (PCC) for a period of one month. If it is refused by either party or is unsuccessful, the claimant will be able to go ahead and present their claim to the tribunal. If the parties enter into PCC this will "stop the clock" on the limitation period to present the claim to the tribunal. The claimant will have one month after the conclusion of PCC to present their claim to the tribunal. The Acas website advises that the new service is not expected to be introduced until April 2014 at the earliest.

Mediation. The government will undertake a "long term reform programme" to increase the use of mediation to resolve disputes. It proposes to work with the private sector to share knowledge of mediation with smaller businesses.

Financial penalties for employers. The government intends to introduce financial penalties for employers who lose at tribunal at the levels proposed in the consultation: half of the total award made by the tribunal, with a minimum threshold of £100 and a maximum cap of £5,000. Where a non-financial award is made, the tribunal will be able to ascribe a monetary value. The penalty will be reduced by 50% if paid within 21 days. However, the levy of a financial penalty will be at the tribunal's discretion; it will not be automatic.

Up-rating tribunal awards and statutory redundancy payments. Increases to a week's pay for tribunal award and statutory redundancy payment purposes will be rounded up to the nearest £1, rather than the nearest £10.

Protected conversations. In David Cameron’s words, "so a boss and an employee feel able to sit down together and have a frank conversation at either's request". Nick Clegg previously suggested that such a conversation could concern performance or retirement.  On 23 November 2011, the government confirmed that the government would consult on protected conversations "in the new year", although it is unclear whether this will be within the context of a broader consultation on compromise agreements.

Pensions - auto-enrolment.  New laws will require all employers in Great Britain to automatically enrol eligible jobholders into a pension scheme. The new duties will be formally implemented over four years starting on 1 October 2012, with larger employers being affected before smaller employers and new businesses. The Pensions Regulator has published a timeline to confirm the likely staging dates that will apply to different sizes of employer, although the exact dates will depend on the number of workers in an employer's PAYE scheme on 1 April 2012.

Tribunal fees.   The Ministry of Justice is currently consulting on charging fees in employment tribunals and the Employment Appeal Tribunal.  In the employment tribunal, two alternative options are put forward. 

Option 1
The fee would depend on the nature of the claim, with three suggested levels. Separate issue and hearing fees are proposed.  Suggested fees to issue a claim are £150 (wages/redundancy), £200 (unfair dismissal) and £250 (discrimination/whistleblowing); with a subsequent hearing fee of £250 (wages/redundancy), £1000 (unfair dismissal) and £1,250 (discrimination/whistleblowing).

Option 2
The second option would introduce a single fee determined by the nature of the claim and the amount claimed.  Wages/redundancy claims with a value of less than £30,000 would attract a £200 fee.  Unfair dismissal claims for under £30,000 a fee of £500.  Discrimination/whistleblowing for under £30,000 a fee of £600 and any claim with a value of £30,000 or more a £1,750 fee.

Additional fees would be payable for making preparatory applications.  Further, system of fee exemption would operate for those in receipt of certain state benefits e.g. income based JSA and those whose combined family income is very low. 

Crucially, the party who is unsuccessful at hearing will usually bear the cost of the fee.  This means that an employer who loses at tribunal will have to reimburse the claimant with any fees he or she has paid.  This is likely to lead to more expensive settlements in advance of hearing and may make claimants who have paid the fees more inclined to refuse to consider any settlement which does not refund the fees incurred.  The consultation closes on 6 March 2012.