Dismissal legislation overhauls – everything you need to know!

Posted on Apr 11th, 2012 | Employment law

In December 2011 we reported on the Government’s plans to ‘overhaul’ key areas of employment legislation, around dismissals, which were:

  • That micro-businesses – organisations with fewer than 10 employees – could use a “compensated no-fault dismissal” system that would allow employers to sack underperforming staff with basic redundancy pay and notice
  • The “slimming down” and simplifying of existing dismissal processes, potentially by making changes to the “Acas code of practice on disciplinary and grievance procedures”

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  • In 2012, the Government will consult on the introduction of a system of “protected conversations” that would allow either employers or employees to initiate a discussion about an employment issue “at any time…as a way of resolving the matter without fear”. These measures are designed to reduce bureaucracy and would not be admissible conversations at an Employment Tribunal. Protected Conversations could be used by employers to discuss difficult issues like productivity and retirement without threat of legal action from the employee, but they would not shield employers from discrimination claims.
  • The Tribunal System – a “fundamental review” of the Employment Tribunal Rules of Procedure, with the intention of producing a streamlined procedural code that addresses concerns that the Rules have become too complex over time. There would also be a consultation on the introduction of tribunal fees where users of the system will have to pay fees in order to encourage them to “consider seriously the validity of their claim”. In another proposed change to the tribunal system, all employment disputes would be required to go to Acas for pre-claim conciliation before proceeding to a tribunal.

All of these suggestions have caused much debate and many concerns and we are still awaiting the outcome of all these consultations.

In March, however, the Chancellor George Osborne confirmed that the consultation for ‘compensated no-fault dismissals’ was about to begin and urged employers to back the plan to relax the dismissal legislation.

He confirmed that Employers, under the proposals, who have 10 or fewer staff could dismiss a member of staff, without proving any fault, but would need to pay them an agreed settlement (the Government is expected to lay down in law the appropriate level of compensation) and give them appropriate notice. The Employee, on accepting the payment, would be required to waive their right to subsequently claim for unfair dismissal at an Employment Tribunal. If the Employee refused the payment, the conversation would be classed as a ‘protected conversation’ (see above) and not be admissible at Employment Tribunal.

With regards to changes to the Tribunal system, consultation on tribunal fees ended on 6th March 2012 and we await the details! However, there are changes to the Tribunal system which went into effect on 6th April 2012. These are:

  • Employment Tribunals are normally made up of a Judge and 2 lay members. Certain proceedings may be currently heard by a Judge alone – including breach of contract and redundancy pay claims. From 6th April a Judge may also hear an unfair dismissal case alone, unless they are directed not to. This should make claims quicker and reduce the cost of hearings
  • In Employment Tribunals, unlike in Civil Courts, witnesses are asked to read out the whole content of their witness statement. After 6th April witness statements will normally be ‘taken as read’. This should make claims quicker and again reduce the cost of hearings – it is seen as largely a waste of time to read out the whole statement as all the parties will be familiar with the statement before-hand. However, Judges will be able to order statements to be read out in complicated cases.
  • Deposit Orders (different to the potential tribunal fees above). Judges can currently require any party to pay a sum to the Court in a pre-hearing review, to allow the case to continue, if there is seen to be ‘little reasonable prospect of success’. There was previously a £500 limit which was raised to £1,000 from 6th April. At the moment Deposit Orders are rarely used and there is consensus that if tribunal fees are introduced then deposit orders would be used even less.
  • Cost Orders. There are 3 types of awards that a Court may make against any party to a Tribunal – Cost awards (for fees and expenses incurred by a party); Preparation Time orders (made in favour of a party who has not been legally represented); and Wasted Costs orders (made against a representative as a result of their conduct). Awards are capped at £10,000 for the first 2 types of orders but there is no cap on the 3rd. Since 6th April all cost orders will be between £10,000 – £20,000. It is hoped this will put off serial litigants and those pursuing weak claims; however there is always the difficulty of recovering these costs.
  • Witness expenses. Previously parties to a claim and their witnesses could apply to recover some of their travelling costs and other expenses associated with attending the Employment Tribunal hearing to give evidence. This was withdrawn on 6th April, as there is no equivalent ability in the Civil Courts to reimburse expenses out of public money. However, Employment Tribunals will be able to direct a party to the case to bear the costs of a witness attending a tribunal hearing where they attend under a witness order. This may result in fewer witnesses being called so lead to shorter hearings but it may also provide a further disincentive for witnesses to agree to attend the tribunal.

Workline is supported by Employment Lawyers Goodman Derrick LLP. Please note that the advice given on this website and by our Advisors is guidance only and cannot be taken as an authoritative interpretation of the law. It can also not be seen as specific advice for individual cases. Please also note that there are differences in legislation in Northern Ireland.

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