All Change

The Tribunal rules and the way in which compensation are calculated are both to be changed. The main changes are set out below.

Compensation

All employers are very aware that any claim for unfair dismissal could cost them significantly. Currently the basic award, which is calculated on the same basis as a statutory redundancy payment is capped at £13,500.

The compensatory award is an amount which the Tribunal considers to be “just and equitable” and is subject to a statutory cap of £74,200. Employers must be ever mindful that in some cases, there is no cap at all.

The Government believe that the current cap has contributed to unrealistic perceptions about the likely level of Tribunal awards and in the Enterprise and Regulatory Reform Bill it has been proposed that the overall cap will continue to apply as well as a new individual cap. This will mean that where an employee’s earnings and award are less than the £74,200, they will be capped at only being able to be compensated for a maximum of 12 months pay.

This change is expected to be brought into force in the summer at around the same time as the proposed changes to the Tribunal rules.

Tribunal Rules

As of 6th April 2012 new employees do not acquire the right to claim unfair dismissal or redundancy for 2 years from joining unless their dismissal is automatically unfair. In addition the Employment Tribunal rules themselves are due to be changed in the summer to try to make them more understandable by unrepresented parties.

The most significant of the proposed changes are that the Tribunal will become fee paying. Anyone wishing to make a claim in the Tribunal will need to pay an issue fee as in the County Courts. The level of fees is going to depend upon the nature of the claim and it is anticipate that the fee, payable by the Claimant, will be between £160 - £250 In addition there will also then be a hearing fee of between £230 - £950.

Employers will also be hit financially where claims are made and are successful, they will be subjected to a penalty imposed by the Tribunal which will be payable to the exchequer and will be in addition to any awards made to the Claimant.

The penalties will have a minimum threshold of £100 and a maximum ceiling of £5,000 although a 50% reduction will apply if that penalty is paid within 21 days. The Tribunal will continue to have discretion as to whether they are in a position to waive the penalty where there are cases of inadvertent error.

There will also be additional costs for employers to consider. Employers will need to make payment of £160 if they wish to issue a counter claim, £600 if they require judicial mediation, £160 if they want to set aside default Judgment and a further £60 if they wish to dismiss a claim following settlement.

Employers will need to bear the new charges in mind particularly when looking at any negotiated settlement and also when considering the likely risk at a Tribunal. Tribunals themselves are likely to make heavy use of their discretionary power to order the losing party to reimburse any fees paid so although the rules are going to be simplified, you should never under value the benefit of good legal representation.