15th July 2013

Settlement Agreements and Tribunal Fees coming this July


Settlement Agreements and Pre-termination negotiations

Some employers may be familiar with Compromise Agreements, whereby the employee signs an Agreement in return for a sum of money and agrees not to make any further claims against the company.  Compromise Agreements, to be renamed ‘Settlement Agreements’, often provide an effective way of settling disputes. 

The Government aims to protect negotiations between employer and employees which occur prior to termination of employment. The current ‘without prejudice’ rule prevents some discussions from being admissible in Tribunal if a dispute exists between the parties, but the government wants to give employers protection where no such dispute exists.

Pre-termination negotiations are defined as ‘any offer made or discussions held before the termination of the employment in question with a view to it being terminated on terms agreed between the employer and employee’.   The protection would mean that evidence of pre-termination negotiations would not be admissible in unfair dismissal cases. There would be no such protection if there was any ‘improper behaviour’ and it does not apply to other claims e.g. breach of contract, discrimination and whistle blowing claims.

This protection is supposed to give employers certainty when they want to discuss ending an employee’s employment, avoiding concerns about claims for constructive unfair dismissal. However, it is difficult to see how employers can feel reassured as there are still pitfalls they need to be aware and the employee may still refer to the conversations for discrimination claims. The advice would be that Settlement Agreements have their place as one possible situation for work place disputes, but they should only be introduced once the employer has taken legal advice.

These changes are due to come in on 29 July 2013 and have been brought in by the Enterprise and Regulatory Reform Act 2013 (‘the Enterprise Act’). We can advise on, and prepare, Settlement Agreements and can also advise you with respect to any Tribunal claim. If you would like more information, or would like to see how we can help, please do give us a call on 01730 268211.

New Tribunal Rules and Fees

Also due to come into force on 29 July 2013 are the new Tribunal Rules and Fees.

The Tribunal Rules

Broadly the Employment Tribunal Rules (the Rules) have been amended to try and reduce the burden on the Tribunal system and to try and deal with cases more flexibly and effectively. There is an emphasis in sifting out weak claims at an early stage and a greater importance being placed on the drafting of the Claim Form, and any Response, to avoid it being rejected for no reasonable prospects of success. Therefore if you are making a Claim, or responding to a claim with a Response, ensure your forms are thorough, filled in correctly, clearly identify your claims and, ideally, you should seek legal advice.

The Rules also set out the consequences related to the new fees which are explained below

The Tribunal Fees

Fees are being introduced for all claims submitted on or after 29 July 2013. This means if a claimant wishes to submit a claim in the Tribunal they will need to pay a fee (or apply for remission) or their claim will be rejected.

If the claimant cannot afford the fee they must an application for remission. Whether they are successful or not will depend whether they meet the remission criteria which is based on  what benefits they may be receiving and/or their income.

The amount of fee depends on the type of claim but for an unfair dismissal claim, the claimant will face a fee of £230 to issue the claim. If the claim goes to hearing, the claimant must pay a hearing fee of £950.

Some have argued it is going too far, preventing access to justice. UNISON and Fox and Partners in Scotland have even taken the matter to the Courts so watch this space! However, assuming the changes come into force (with maybe minor amendments), most employers will welcome the changes. 

Penalties for employers? 

One proposed change under the Enterprise Act not in favour of the employer was that if you lose a Tribunal claim you could face a penalty where the breach of your workers’ rights has “one or more aggravating features”. Unfortunately there is no definition of an ‘aggravating feature’ but governments guidance suggests it “involves unreasonable behaviour, for example where there has been negligence or malice involved”. 

The minimum amount of the penalty is £100 and the maximum is £5,000. This to be paid to the state, not the claimant. 

The Government has decided that rather than this coming into force at the same as those changes above, it now expects this change will wait until Spring 2014.

This Government has brought in raft of employment law changes including removing the AWB and changes to the whistleblowing protection. If you have any employment law queries, please do not hesitate to contact Linda Wilson or Simon Arneaud in the Petersfield office on 01730 268 211, or see our contact details below.