Changes to Employment Tribunal Awards and the Introduction of Fees

The maximum awards that can be made by employment tribunals will rise on 1 February 2012.

The key changes...

The key change will be the increase in the amount of the compensatory award for unfair dismissal claims from £68,400 to £72,300. Other changes include:

• An increase in the maximum amount of a 'week's pay' for the purposes of calculating a basic or additional award of compensation for unfair dismissal or redundancy payment from £400 to £430 and
• An increase in the maximum amount of guarantee payment payable to an employee in respect of any day from £22.20 to £23.50. This is relevant where employees have been laid off.

Both changes will apply where the 'event' leading to the claim happens on or after 1 February 2012. Reports suggest that small businesses in particular may suffer as a result of the above increases, particularly in the current economic climate, and when taken alongside other proposed changes likely to favour an employee.

Introduction of fees for Employment Tribunals...

Conversely, plans made in December 2011 to introduce fees for employment tribunals are hoped to relieve pressure on businesses. It is also hoped that the fees will lower the cost to the taxpayer of running the tribunals, which amounted to £84 million in 2011, and had increased sharply on previous years.

The Consultation puts forward two options which it is hoped will protect access to justice for claimants on limited means whilst ensuring they make a financial contribution to the tribunal process:

1. An initial fee of between £150 and £250 for a claimant to start a claim, with an additional fee of between £250 and £1250 if a claim goes to a hearing, with no limit to the maximum award of compensation payable; or
2. A single fee of between £200 and £600 but this would limit the maximum award to £30,000, with the option of an additional fee of £1,750 for those who seek awards above this.

With both options the employment tribunal would have the power to order the unsuccessful party to reimburse fees paid by the successful party.

Bring Employment Tribunals in line with civil courts...

These changes would bring employment tribunals in line with civil courts and would arguably encourage both sides to consider properly their prospects of success and explore the possibility of settlement prior to taking the tribunal route, and would therefore save taxpayers money and prevent unwarranted claims. However, one may also argue that many less well off claimants with genuine claims will be wrongly deterred from the tribunal process which, it must be said was created as a tribunal rather than a court in order to allow accessibility and a certain degree of informality.

The consultation in relation to the fees will be closed on 6 March 2012 with a view to the fees not being introduced before 2013 - 2014