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Upcoming changes in Employment Law by Seb Walker, a solicitor at Premier Legal LLP

Published 08 March 2012

Seb Walker, a solicitor at Premier Legal LLP – a firm of specialist employment lawyers in the city centre of Nottingham - highlights some of the key changes to employment law from next month onwards and provides an analysis of how these affect you and your business.

Unfair dismissal qualifying period
Currently, employees generally only need to have continuously worked for their employer for 1 year in order to gain the protection from unfair dismissal and be able to bring an unfair dismissal claim against their employer in the Employment Tribunal. Previously, over the years, this qualifying period has been as high as 5 years and as low as 6 months.

However, from 6th April 2012, that qualifying period will increase to 2 years. This will affect all employees who start work on or after this date. Employees who start work on or before 5th April 2012 will be unaffected.

This will clearly reduce the number of unfair dismissal claims issued in the Employment Tribunal this year. However, it is likely that the number of discrimination claims will increase, as no qualifying period of service is required in such cases. If increasing the qualifying period for unfair dismissal is an attempt by the Government to reduce the cost of the Employment Tribunal system, that is unlikely to be the case. Discrimination cases tend to be listed for longer hearings (3 days plus) whereas unfair dismissal claims tend to be listed for single day hearings. Therefore any increase in discrimination cases being issued will increase the cost of the Employment Tribunal system. Further, in terms of financial liability for employers, discrimination compensation is uncapped whereas unfair dismissal compensation is capped at a total of £85,200.

I would certainly advise any employer who is either in or about to start a recruitment process to have any new employees’ start dates on or after 6th April 2012 in order to protect themselves from any unfair dismissal claims for a year longer until at least 6th April 2014.

The Pensions Act 2011 brings about 2 major changes in pension provisions this year – firstly it adjusts pensionable age for state pensions – we have seen demonstrations and strikes because of this and secondly it sets out legislation that forces employers to contribute to a pension for their employees for the first time. The legislation is fairly lengthy, in part because of the phasing in of the provisions. The basics are however quite simple – within the next few years all employers will have to contribute 3% towards an employee’s pension - if that employee enters the scheme and contributes himself. The legislation makes the employer positively enrol the employee in into the scheme unless he specifically opts out in writing and this must be repeated every 3 years. There are penalties for employers who try to circumnavigate the scheme.

Changes to Employment Tribunal practice and procedure
There are also the following changes due to affect the Employment Tribunal practice and procedure from 6th April 2012, subject to Parliamentary approval:

  • The maximum amount an Employment Tribunal can require by way of a deposit order is set to increase from £500 to £1,000.  A deposit order is an order of an Employment Tribunal, requiring either party to pay a deposit, as a condition of continuing with the proceedings, when the Employment Tribunal has determined that the relevant party’s case has little reasonable prospects of success.
  • This may deter a party who has a costs order against them from continuing with a weak claim. However, Employment Tribunals only issue deposit orders in the minority of cases and therefore the majority of cases will be unaffected by this change. It also only gives the Employment Tribunal the power to issue a deposit order of up to £1,000. Whether this power will be used to its full extent in practice is uncertain.
  • The introduction of Employment Tribunal fees. The current position is that, in contrast with the County Courts, bringing a claim in the Employment Tribunal is free of charge. However, that is set to change following the Government’s consultation and fees for issuing claims and/or Employment Tribunal hearings are set to be introduced. The amount of the fee will depend on the complexity and the total value of the claim.
  • Introducing Employment Tribunal fees will help reduce tribunal litigation and the proposal to impose a significantly higher Employment Tribunal fee for claims valued above £30,000 will be likely to deter some higher value claims including discrimination, whistle-blowing and equal pay. The Employment Appeal Tribunal fees may deter some claimants from appealing. It may also deter vexatious employees from bringing ill-founded or unmeritorious claims. However, the fees will undoubtedly be subject to an income threshold, so employees who do not have any income will not have to pay. Given that a large proportion of claims relate to dismissals, this may substantially reduce the impact of this proposal.
  • The maximum amount of a costs order (an order requiring a litigant who has acted unfairly in the conduct of a claim to pay part or all of another party’s legal costs) which an Employment Tribunal may award in favour of a legally represented party (without detailed assessment) is set to increase from £10,000 to £20,000.
  • However, this is unlikely to impact upon the vast majority of cases, as costs orders are only issued in a tiny proportion of cases. Typically, when Employment Tribunals do issue costs orders, they are for say £500. It is therefore unlikely the Employment Tribunal will exercise its power to the full extent in these circumstances. Any high costs order against a party will also have to be separately enforced in the civil courts in the probable event that the party doesn’t pay.
  • Witness statements prepared in advance of a hearing will no longer be read aloud unless an Employment Tribunal Judge directs otherwise. This is all part of the process of speeding up and reducing the cost of the Employment Tribunal system. Witnesses will still be cross examined on their witness statement. However, many Employment Tribunal Judges already adopt this practice and so it is not really anything new.
  • Witness expenses will no longer be state funded but will instead be borne by the party calling the witness. The Employment Tribunal will have the power to direct parties to pay witness costs and order the losing party to reimburse the successful party for these costs. Expenses are only paid out for nominal amounts and for only certain types of expenses in any event.
  • Judges sitting alone in unfair dismissal cases (instead of sitting with two non-lawyer “wing members”) unless an Employment Tribunal Judge directs otherwise. Again, this is all part of the process of speeding up and reducing the cost of the Employment Tribunal system, although cases will lose out on the impact lay members can add to the deliberations.

Increase to “family friendly” payments and sick pay
Statutory maternity, paternity and adoption pay will all increase to £135.45 (from £128.73) per week from 1st April 2012. Statutory sick pay will also increase to £85.85 (from £81.60) per week from 6th April 2012.

You should inform your payroll departments of these changes to ensure that all recipients of these statutory payments are paid the correct rates from the above-mentioned dates.

Seb Walker
Premier Legal LLP

Tel:     0115 988 6211

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