The usual annual increase for redundancy payments and unfair dismissal awards takes effect from 1st February 2013.
The limit on a week’s pay (which is used to calculate statutory redundancy pay and unfair dismissal basic awards) increases from £430 to £450 per week. The maximum statutory redundancy payment and basic award for any employee dismissed after that date increases from £12,900 to £13,500. As before the maximum award will only apply if you are at least 61 years old and have 20 years or more continuous service.
The maximum compensatory award for unfair dismissal claims goes up from £72,300 from £74,200, but as ever bear in mind that although Tribunals can award up to this amount compensation is dependent on the dismissed employee’s actual losses and is subject to the duty to mitigate loss.
Most unfair dismissal awards are in fact much lower than the maximum award (the median is still less than £5000.00). The Government plans to reduce the maximum compensatory award later this year to a limit of one year’s pay. This will not affect most awards but is likely to bring downward pressure on settlement negotiations and could mean that some unfairly dismissed employees (eg those with pension losses or non cash benefits) will no longer be fully compensated for their losses if their award is limited to one year’s salary.
Only a small percentage of unfair dismissal claims actually reach a final tribunal hearing. Many are settled without the need for a tribunal judgment. Employers would have you think that the only reason employees settle a claim is because they know that the claim is no good and would fail at the tribunal. However, as below and in no particular order, there is a multitude of reasons for agreeing to a settlement.
Sometimes the employer agrees to pay the full value of the claim and so there is nothing to be gained from pursuing it, unless a finding of unfair dismissal is needed (eg to obtain the benefit of an insurance policy or for professional reasons)
Settlement tends to be more likely where the dismissed employee has found new employment and the claim is not worth that much. In some cases the costs of pursuing and/or defending the claim may outweigh its actual value, and this will be even more of a problem when tribunal fees are introduced later this year. In other cases the employee may decide that a reasonable offer of settlement outweighs the time and stress involved in pursuing the claim, and will lead to payment being made sooner.
In all cases there are two sides to the story and there are inevitable risks in pursuing litigation, including delays and possible appeals. Also, even where an employee believes that there is every chance of the claim succeeding, there is no set amount awarded for an unfair dismissal claim, and this can lead to uncertainty about the value of the claim.
A potential reason for settlement is concern about the employer’s ability or willingness to pay. Sometimes it is better to reach a settlement with the employer rather than worry that they may try to evade payment of a Tribunal award.
Another advantage of settling a claim is that the parties can agree terms which the Tribunal has no power to order. The employer may agree to provide a reference as part of the agreement and it is also common for the parties to agree to keep the settlement terms confidential.
So if you are pursuing a claim do keep an open mind about possible settlement, and remember that an employer’s first offer is very often not its last. I was involved in a case recently where the employer’s representative started by inviting the claimant to withdraw the claim, but the employer’s offers gradually increased, until they finally agreed to pay the sum of £45,000 in settlement.
Recently published statistics for the employment tribunal show that there was a decrease in the number of employment tribunal claims filed in the period April 2011 to March 2012, which surely challenges the Government’s notion that the Tribunal system is overstretched and that drastic action needs to be taken to reduce the number of claims being made.
The total number of claims submitted fell by 15% to 186,300. Of these only 59,200 were single claims and the rest were multiple claims (which are largely made up of equal pay claims against local authorities and NHS trusts, plus working time holiday pay claims against airlines). The most significant drop in number of claims filed is in relation to age discrimination where only 3700 claims were filed last year compared to 6,800 in the previous year. This is likely to be as a result of the abolition of the default retirement age and complex retirement procedure.
The Tribunal’s outstanding caseload of claims has also fallen from the number at the end of the previous year. As at 31st March 2012 there were 26,500 single claims outstanding – a drop of 7% from last year.
The statistics show that slightly more single claims (59,400) were dealt with than the number filed (59,200) so any suggestion that the Employment Tribunal’s backlog of such claims is increasing is misleading.
The Employment Tribunal has a target to list normal claims for hearing within 26 weeks of the claim being filed. The figures produced show that the Tribunal met this target in 64% of cases, and that 75% of single cases were disposed of completely in 32 weeks or less. When looking at unfair dismissal claims (some of which will be part of a multiple claim), the figures show that 75% of such claims were disposed of within 43 weeks or less. Now that unfair dismissal claims are being heard by a judge alone rather than a full tribunal panel it is likely that claims will be dealt with more quickly in future
Tables are also produced to show the outcome of those claims completed in 2011 to 2012. These show that of the 230,000 complaints dealt with, 33% were settled through ACAS, default judgment was given in 6% of cases, 12% of claims were successful following a tribunal hearing and 7% of claims were lost at a tribunal hearing.
Looking at the figures in a little more detail it can be seen that some jurisdictions fare better than others at the Tribunal. For example less than 3% of all discrimination claims filed were successful at a Tribunal hearing whereas 22% of redundancy claims were successful. Slightly more unfair dismissal claims failed than were successful at the final hearing.
Of the 46,100 unfair dismissal claims disposed of 42% were conciliated by ACAS, default judgment was given in 3% and 8% were successful following a Tribunal hearing, showing that the majority of claims appear to result in a successful outcome for the claimant – at least on paper. Of the total claims that went to a full hearing 26,900 were successful compared with 15,900 complaints which failed. So I for one fail to understand why the Government continues to argue that employers need to be protected from unmeritorious claims. However this argument appears to have been lost with the publication today of the Government’s response to its consultation on charging fees in the Employment Tribunal. Unsurprisingly, they have announced that fees will be introduced from next year.
In my last blog I considered the increase in the qualifying period from 1 year to 2 years continuous service before an employee has the right to make an unfair dismissal claim.
There are more changes to the tribunal system which came into effect on the same day and which will alter the way a claim is dealt with by the employment tribunal, all of which have the aim of saving the Government money.
The most obvious change is that for many cases an employment tribunal will no longer be made up of three members, but will be heard by an employment judge sitting alone. This will apply to all unfair dismissal claims which don’t involve a claim for discrimination too, unless the tribunal decide it would be more appropriate to have a full tribunal hear the claim. If you think there are good reasons why your case should still be heard by a full panel then you can make representations about this to the tribunal which is obliged to consider the wishes of the parties. However at this stage it is unclear what factors, if any, are likely to be classed as good reasons for a tribunal to sit with lay members
A further change aimed to speed up the process is that in nearly all cases witnesses will no longer read out their evidence aloud but the judge will simply read their prepared statement. This has the advantage of shortening the length of hearing (the Government estimates the average hearing length will fall by 10%) and hopefully as a result the time taken for a case to be listed will also be quicker. It has the disadvantage that the witness will be unable to correct any typing errors in their statement or clarify what they meant, and so it is more important than ever that your witness statement is fully accurate and contains everything you want to say.
The maximum amount that the employment tribunal can award in costs has increased from £10,000 to £20,000. However this does not change the general rule that in most cases each side is responsible for their own legal costs, whether they win or lose their case. It is only where a party acts vexatiously or unreasonably or where the bringing or conducting of proceedings is misconceived that costs may be awarded.
Previously at the end of your case you could claim limited amounts from the employment tribunal for the costs involved in attending a tribunal hearing. This has now stopped and you can no longer claim the cost of travel or loss of earnings from the tribunal. However the tribunal now has discretion to order that the losing party pays the costs of the other side’s witnesses attending the hearing. It remains to be seen how often this will be ordered. If you require a medical report to try to show that you have a disability then you can still apply to the tribunal for a contribution towards the costs of such a report.
Congratulations to anyone who is due to start a new job on or after 6th April 2012- but the bad news is that, unlike those who are already in employment, you will have to be employed for 2 full years before you have the right not to be unfairly dismissed. The new rules are not retrospective. They do not affect employees who started their job before 6th April this year who still need only one year’s continuous service before they have the right to make an unfair dismissal claim.
The Government has said that it wants businesses to feel more confident in hiring people and it estimates that this change will lead to about 2000 fewer unfair dismissal claims each year. It also believes that employers are more likely to take on new employees if they are not faced with the possibility of an unfair dismissal claim after just a year, but it has not estimated how many jobs will be created because of this new measure. The answer may be not very many given that a recent survey found that fear of unfair dismissal claims is not in the list of top ten reasons given by employers for not taking on more staff. We will just have to wait and see.
What national statistics do show is that there are approximately 2.5 million employees in the UK who have between 1 and 2 years’ service. The workers in that position next year will have far less employment protection than any employee who started work before 6th April.
There has been a 2 year qualifying period before- it was raised to 2 years in 1985 by Margaret Thatcher’s Government and only reduced back down to one year when Labour came into power. Last time an unsuccessful challenge was made against the increase on the basis that a longer qualifying period discriminated against women. This time the Government accepts that the increase in qualifying period will have a disproportionate effect on younger workers but believes this is just a fact of life and that the increase is a proportionate means of achieving a legitimate aim. However, if this view is challenged by trades unions claiming that the increase to two years amounts to age discrimination, this will lead to a lot of stayed claims clogging up the Tribunal system- hardly an obvious improvement – whilst the Government attempts to justify the increase through the Courts.
If you are dismissed and do not have sufficient service to claim unfair dismissal, all may not be lost. You may still have the right to claim that you have been automatically unfairly dismissed or that you suffered discrimination because of a protected characteristic, but this may be hard to prove, and it is never a good idea to just assume that the reason you were dismissed was because you happen to be gay/ black/ disabled. You will need some evidence of discrimination if your claim is to have any chance of success.
At the moment we already receive a lot of enquiries from employees who believe they have been dismissed unfairly, often just short of one full year’s service, and whom we have to advise that they do not have the right to make an unfair dismissal claim. In the future we have no doubt that we will receive calls from employees who believe they have done a good job but are dismissed by their employer just before they have completed 2 years service.
The Employment Tribunal and EAT statistics published for last year show that 382,400 tribunal claims were made in the year ending March 2011. Of these 29% were resolved through an ACAS settlement and the tribunal gave a final order in favour of the claimants in respect of 18% of all claims made – either following a full hearing or because the employer did not defend the claim.
Of the 49300 claims that reached a full hearing last year 57% were successful. So although making a claim against your employer can be a daunting prospect, and employers and their representatives may try to make this difficult for you, this shouldn’t dissuade you from bringing a legitimate complaint- whether it be for unfair dismissal, discrimination or some other claim. There are risks and costs involved in all litigation which is why many claims are settled before a Tribunal hearing is reached, and again this is borne out by the statistics.
However what the statistics don’t show is how many settlements and Tribunal awards are actually paid by the employer. It is hard enough to bring and win an unfair dismissal claim, but often winning the claim is the easy part. Some unscrupulous former employers go into liquidation, or start trading under a different name to try to avoid payment of tribunal judgments.
If an employer is insolvent, the Government may pay a small part of the judgment through the Insolvency Service, but the vast majority of any award is likely to be unenforceable.
Ministry of Justice research in 2009 found that 39% of recent tribunal awards had not been paid at all and a further 8% had only been paid in part. As a result of this research a so called fast track enforcement scheme was introduced in April 2010 to allow successful claimants to enforce Tribunal awards and settlements through the High Court Enforcement Office.
The idea of the scheme was to simplify and speed up the enforcement process. Judgments no longer have to be registered with the County Court and if you have an unsatisfied judgment or settlement you just need to complete a simple application form and pay a court fee of £60 to start off the process. If the enforcement is completely successful you will be paid back the court fee together with the full tribunal award and interest. On behalf of our clients we needed to make use of this scheme on several occasions last year- with mixed results.
Sometimes the Sheriff manages to obtain immediate payment in full. In other cases the employer will agree a payment plan to pay the debt in instalments.
The High Court Enforcement Office that we use has also reported delays in paperwork mean that the scheme is not as fast as originally envisaged, giving rogue employers plenty of time to find ways to evade payment.
The Ministry of Justice advised that in the first year since it was introduced successful claimants have tried to enforce 1495 unpaid Employment Tribunal awards using the fast track enforcement scheme, resulting in 42.5% of these awards being fully recovered. This percentage may improve but so far the results are worse than the results of the research in 2009 when it was found that 53% of judgments had been fully paid. They did not state in how many cases no recovery has been made at all.
So although using a High Court Enforcement Officer is likely to be the best method to try to enforce an unpaid settlement or judgment, in our experience and on the Ministry of Justice’s own figures, there is still a long way to go before there is a completely effective enforcement process.
The usual annual increase for redundancy payments and unfair dismissal awards takes effect from 1st February 2012.
The limit on a week’s pay (which is used to calculate statutory redundancy pay and unfair dismissal basic awards) increases from £400 to £430 per week which means that the maximum statutory redundancy payment and basic award increases from £12,000 to £12,900. As before the maximum award will only apply if you are at least 61 years old and have 20 years or more continuous service.
The maximum compensatory award for unfair dismissal claims will rise to £72,300 from £68,400, but bear in mind that although Tribunals can award up to this amount, compensation is dependent on the dismissed employee’s actual losses and is subject to the duty to mitigate loss. Employment Tribunal statistics published last year show that in the majority of successful unfair dismissal claims less than £5000 was actually awarded.
The new limits apply in all cases where dismissal takes place on or after 1st February 2012. For earlier dismissal dates the old figures still apply.