The Government's motivation for making sweeping changes to Tribunal rules cannot be criticised. Tribunals, now 30 years old, have changed out of all recognition from the informal, speedy and cheap sources of justice for employment disputes that they were originally intended to be. In the past 10 years, their case load has doubled to more than 90,000 per year. The number of legal issues over which Tribunals have jurisdiction has similarly increased. The complexity of these issues has given rise to profitable legal practices. Yet the actual changes contemplated by the Government may, in certain areas, show too much enthusiasm for limiting the number of applications heard, and too little regard for justice for the individual. The three points that will have the greatest practical impact are:
New Costs Penalty
Briefly, the proposal is that if an applicant employee refuses a reasonable offer of settlement and obtains an award at the hearing that is equal to or lower than the offer, then, despite winning the case, the Tribunal could order the applicant to pay the legal costs of the employer (plus his own) from the date of the offer being made. While the rule is also meant to work the other way round, in practice it will put applicants at a severe psychological (and financial) disadvantage in any proceedings.
At the moment, it is often difficult enough as a dismissed employee, with no income, to bring proceedings against a potentially hostile ex- employer with greater resources, who may not hesitate to draw out proceedings for tactical and financial reasons. This new rule could deter many proper claims from being litigated at all. Unscrupulous employers will routinely make scandalously low offers to put pressure on applicants. The fact that, increasingly, employers are taking expensive legal advice will ironically be in their favour, since the applicant's potential costs bill will be ever higher. Employers will, no doubt, point this out in negotiations.
The absence of any limit on the new costs penalty further weakens the position of applicants. From the proposal's current wording, it could be realistic for an applicant (having rejected an offer of pounds 7,500) to win his case and be awarded unfair dismissal compensation of pounds 7,000, only to walk away with nothing but a debt of more than pounds 5,000 in legal fees.
Penalty for failure to appeal
There is a proposal to give Tribunals discretion to cut compensation otherwise due if the applicant did not use an in-house appeals procedure before lodging his unfair dismissal claim. Currently, a failure to appeal in-house is not penalised as a failure to mitigate loss since, in many cases, it has no realistic chance of success and is therefore a waste of everyone's time and effort.
Now, applicants could be obliged to go through a procedure, despite its often futile nature, to safeguard their legal position. Forcing this on employees may, in fact, entrench hostilities, with the result that employees are more determined than ever to have "their day in court". At the very least, justice may not be seen to be done if an applicant's proper remedy is limited simply for a failure to jump through a procedural hoop.
Again, practical realities reinforce this. Employers have a free hand in drafting their appeals procedures and often impose very short deadlines for (usually written) appeals to be made. Unscrupulous employers could take advantage of this, knowing that dismissed employees are often not sure of their rights and usually cannot obtain immediate legal advice. Although an employer may potentially be penalised for failing to facilitate the use of an appeals procedure, in practice the employer's duty will simply be to state that the procedure is there to be used.
New Compromise Agreement Signatories
The Government proposes to extend sources of advice for compromise agreements (where an employee may waive all rights), by relaxing the qualification requirements for advisors so that any independent person with insurance can conclude these agreements. Although this, quite rightly, breaks the current lawyer monopoly on officiating in these circumstances, by not limiting the scope of advisers to those recognised to have some expertise (eg trade union officials, CAB or law centre workers), this may lead to a poor quality of advice for individuals in the future. Employees may well find they have waived their rights for a pittance, having been advised to do so by someone with little or no legal training who is paid a fixed- fee-per-compromise agreement (and thus has financial interest in settling as many as possible).
The author is an associate of Boodle Hatfield and head of its Employment Group.