April 2012 Employment Tribunal Reforms

In November 2011, the Government confirmed its intention to carry out a wide ranging review of employment practices in England and Wales, in an effort to reduce employment costs for businesses and taxpayers. Legislation has already been published that will increase the qualifying service required to bring an unfair dismissal claim from one year to two years and providing for an Employment Judge sitting alone to consider unfair dismissal claims, from 6 April 2012.

The Employment Tribunals (Constitution and Rules of Procedure) (Amendment) Regulations 2012 were laid before Parliament on 24 February 2012, and set out further reforms that will apply to Employment Tribunal claims presented on or after 6 April 2012:

• witness statements shall be taken "as read" by the parties (unless specifically ordered otherwise) in order to avoid the time and cost associated with each witness reading their statement out loud during hearings;
• public funding of witness expenses will be withdrawn and Employment Judges shall instead be given a wide discretion to make costs orders against parties in respect of the expenses incurred by witnesses who attend to give oral evidence at hearings;
• the maximum deposit that an Employment Judge can order to be paid to the Employment Tribunal by a party, where it is considered that their claim has little reasonable prospect of success, shall be doubled from £500 to £1,000;
• the value of costs orders that may be awarded against a party by an Employment Judge shall be increased from £10,000 to £20,000; and
• a copy of the judgment and written reasons in any discrimination and equal pay claims must be forwarded by the Employment Tribunal to the Equality and Human Rights Commission (except in cases where it is against the interests of national security).

The increases to the value of deposit and costs orders that may be made by the Employment Tribunal are likely to be particularly welcomed by those employers that have seen an increase in the number of speculative or weak claims pursued against them in recent years. The costs and management time involved in defending Employment Tribunal claims mean that it is often commercially preferable to offer a financial payment to settle them; a tactical consideration often exploited by claimants.

In theory, the increase in deposit and costs orders should assist in deterring these unmeritorious claims being pursued. However, the number of deposit and costs orders made against claimants is relatively low, and it remains to be seen if the increased limits will encourage Employment Judges to use them more often.

Mike Tremeer, Solicitor, Fladgate LLP (mtremeer@fladgate.com)