U.K. Employment Law Update: Tribunal Claims Fall Off, more

By Alex Denny, Victoria FitzGerald, Emma Vennesson Apr 1, 2014

Significant Drop in Employment Tribunal Claims

Recently published statistics show a 79 percent drop in the number of Employment Tribunal claims brought during a three month period in 2013 since the equivalent period in 2012. Although the Ministry of Justice is keen to point out that this figure is only provisional and should be treated with “extreme caution,” the figure is significant enough to raise serious questions about the possible cause of the drop.

The number of claims by individuals has been declining generally for the past five years. However, it is hard to imagine that this alone has caused such a significant fall in claims. A much more likely explanation is the introduction of Tribunal fees in July 2013. Time will tell whether this is a temporary dip (perhaps caused following a surge of Tribunal claims just before the Tribunal fees were introduced) or whether it is indicative of a more long-term decline in numbers. However, the trade union Unison will be watching the statistics keenly because their recent challenge to the fee regime failed in large part because of a lack of evidence of the impact of fees on access to justice. These statistics will no doubt reignite Unison’s challenge and fuel further calls by employee representative bodies for the fee regime to be amended or abolished altogether.

Mandatory Settlement Discussions

Important new rules come into force April 6, 2014, which will require the parties to a dispute to try to settle through Acas, the U.K. conciliation service, before the prospective claimant can bring a formal Employment Tribunal claim.

The steps which must be followed are prescriptive and detailed, but the key points are as follows:

The prospective claimant must initiate settlement discussions by sending certain prescribed information to Acas on an early conciliation form. Interestingly, there is no obligation on the claimant to disclose any information on the form about the potential claims.

Acas will then try to contact the prospective claimant and respondent, with a view to establishing a dialogue through which the complaints are discussed, information is exchanged and hopefully, settlement is reached.

The parties typically have one month to reach settlement, although this period can be extended by up to two weeks in certain circumstances. If settlement is reached, it should be recorded on an Acas COT3 form or settlement agreement.

During the settlement period, the clock is stopped on the time limits for bringing a claim, so the prospective claimant can rest assured that he or she will not miss the deadline for bringing a claim simply by entering into settlement discussions.

If settlement is not reached for any reason (including if the prospective claimant or respondent refuse to engage in settlement discussions), Acas will issue an “EC certificate.” The certificate will contain a unique reference number which the claimant must include on their claim form, otherwise it will be rejected.

These new rules are significant because they affect virtually all potential Tribunal claims. It is possible that the rules will lead to “satellite litigation” (i.e., a situation where claims are fought theoretically before going through the Tribunal system), but in many cases the early disclosure of information will help both parties understand the strength of their cases, and in many instances this will aid early and cost-effective resolution.

Have Redundancy Payments Become Contractual?

In Peacock Stores v Peregrine & Ors [2014] UKEAT, the Employment Appeal Tribunal considered whether an employer’s history of making enhanced redundancy payments established a contractual right to enhanced payments.

Three employees of Peacock Stores were made redundant and brought a claim for enhanced redundancy pay. They argued that, although there was no written redundancy pay policy, Peacock had in fact consistently paid enhanced terms to employees who were made redundant.Typically, payments were based on the statutory regime but with the statutory caps on length of service and weekly pay removed. The exact terms had varied from employee to employee over time, but the claimants argued that the pattern was consistent enough to create a contractual right to enhanced payments through custom and practice. The judge agreed with the claimants. He said that “there was a consistently applied and well-understood policy of enhanced redundancy payments” and there was no evidence to the contrary.

This is not a particularly surprising result, although it is interesting that a contractual right was found to exist even where the enhanced terms had varied over time. This is a reminder to employers to take care when offering enhanced redundancy terms to employees. Unless the company already has a contractual policy, enhanced payments should only be made in exceptional circumstances to avoid allegations that they have become a contractual right.

Alex Denny is a partner, Victoria FitzGerald an associate and Emma Vennesson an associate in Faegre Baker Daniels’ London office.

Copyright 2014 © Faegre Baker Daniels LLP. All rights reserved.

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