About Time Too – Two Important Changes to Tribunal Claims

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It has was revealed on 2nd October that Chancellor George Osborne plans to boost the economy and help businesses by announcing two important changes to employment legislation, intended to reduce the number of employment tribunal claims. Expected to come into force from April 2012, the qualifying period for unfair dismissal will be increased from one year’s service to two years. It is hoped that this will help employers feel more confident about employing people if the risk of being taken to a tribunal for unfair dismissal is reduced. However, employees can still take action, no matter what their length of service, if they suffer discrimination. Secondly, it is proposed that fees be introduced for tribunal claims. Although the information we have has not yet been clarified, if the following fee structure is put into place, we could see a reduction in the “serial tribunal-er” in years to come, which will be a good thing for employers:
  • upfront fee of £250 when lodging an ET1 claim form;
  • further fee of £1,000 payable by Claimant when the hearing is listed;
  • higher fees if the claim is for over £30,000;
  • fee to be refunded if Claimant wins, and forfeited if they lose
  • fees to be waived for those with no money
The devil is always in the detail. If the test for a fee-waiver is simply claiming income support, then most ex-employees will automatically qualify for the waiver, whereas those still employed will not. Also, the issue fee of £250 (and hearing fee of £1,000) is substantially greater than the small claims issue fee of £150 (and £500 for a fast track hearing fee). However, it is unlikely that raising threshold for unfair dismissal by a year would reduce the overall number of tribunal claims, because employees are increasingly bringing claims that link unfair dismissal with discrimination. Last year there were 236,000 cases of unfair dismissal, with an average award for successful complainants of about £9,000. Office for National Statistics figures suggest that the length of service change would only affect a maximum of 12% of claimants. What are the current basic awards? Basic awards are calculated by taking the employee’s age, years of service and average weekly pay to arrive at a figure. However, the weekly pay figure is limited to a maximum of £400 per week and the maximum years that will be considered is 20. However, the years of service also depend upon the age of the employee. This is how it is calculated in detail. After one year of service, the weekly pay is multiplied by 0.5 For each year of service not below the age of 22, the weekly pay is multiplied by 1 For each year of service not below the age of 41, the weekly pay is multiplied by 1.5 Therefore the absolute maximum that can be awarded is: 20 years at £400 x 1.5 = £12,000. Basic Award Deductions The tribunal will reduce the Basic Award in the following circumstances:
  1. If the employee refuses an offer to be reinstated and it is unreasonable to refuse the offer.
  2. The employee is partly to blame for their own dismissal.
  3. Conduct before the employee was dismissed, this does not have to be linked with the actual dismissal. The conduct can still be taken into account if it is discovered after the dismissal.
  4. Redundancy payments already paid to the employee where the dismissal was due to redundancy.
  5. Ex gratia payments expressly or impliedly connected to the basic award.

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