Employment law reform - ‘rogue’s charter’ or saving grace?

The Coalition government are shortly expected to launch a consultation containing theirs plans to reform employment law.  Proposals within the consultation are understood to include the introduction of an ‘issue’ fee, to be paid by Claimants when they lodge a claim with an Employment Tribunal. They may also include:

• the extension of the qualifying period for employees to claim Unfair Dismissal from the current one year to two years;
• a reduction in the number of weeks employers must pay their staff Statutory Sick Pay, from the current 28 week period;
• exemption for small businesses from certain legal obligations in relation to employing staff.

Such proposals are clearly controversial, and have provoked strong reactions from the unions and from business leaders. Len McCluskey, General Secretary-elect of the trade union ‘Unite’, said the proposals were a “shameless, cynical attack on workers rights” and that the plans have “about as much to do with job creation as the tooth fairy has to dental hygiene”.

Which of the proposals the Coalition do decide to push forward following the consultation remains to be seen. What is clear, however, is the pressure which the current Employment Tribunal system is under. This pressure appears to be caused by a combination of internal staffing issues and the higher number of claims being issued. This leads to substantial delays in between lodging a client’s response to an Employment Tribunal claim, and the Employment Tribunal hearing that claim.

One organisation, for whom the Employment Team submitted a response to an Employment Tribunal claim in August 2010 is, according to the Employment Tribunal, unlikely to have the case against them heard before July 2011. Long delays whilst waiting for the Employment Tribunal for the hearing mean organisations are left “in limbo”, waiting to give evidence – a nerve racking prospect for most - and in some cases –in an uncertain financial situation. 

What is also clear is the heavy burden on businesses caused by the high number of ‘nuisance’ or ‘vexatious’ claims currently being issued in the Employment Tribunal. Whilst these claims have little or no legal merit and are therefore highly unlikely to succeed should they proceed to a full Employment Tribunal hearing, those issuing them nevertheless force their former employers into a difficult situation: whether to defend the claim to full Employment Tribunal hearing and incur the associated stress, cost and loss of management time – or to settle the claim, but pay the individual a sum to which they should not be entitled. 

It seems likely that introducing an issue fee may deter at least some vexatious Claimants – many of whom have no other costs, as they either represent themselves, are represented by Trade Unions, or more rarely, are assisted through the ‘Legal Help’ scheme. However, others do not believe the proposal goes far enough.

A more extreme idea mooted by some business leaders (although it is currently unclear as to whether it will form part of the government’s consultation) would be to overhaul the costs system used in the Employment Tribunal system to mirror that used in the majority of civil court cases. Currently, and unless exceptional circumstances apply, parties pay their own costs in Employment Tribunal cases, whereas in the civil court system, the losing party generally bears the winning parties costs. Clearly if the system were overhauled in this way, a Claimant would be taking a much greater risk when issuing a claim.

However, others believe that such a change would lead to a system where justice is only available to those who can afford to pay and would exclude some Claimants who have genuinely been poorly treated by their employers.

Perhaps then, the introduction of an issue fee represents the closest to a ‘happy medium’ likely to be found on this question, on which unions and business leaders appear to be so much at odds.  The outcome of the government’s consultation is awaited with great interest.

For further information contact Sian Stubberfield, Solicitor specialising in Employment Law on 01227 727393.