Employment Law Update

Update covers introduction of mandatory ACAS early conciliation, penalties for losing employers at tribunal and new employment rates and limits.

Mandatory ACAS Early Conciliation

As part of the government’s plans to make the tribunal system more efficient, there is a new duty on the parties and ACAS to attempt conciliation before a claim is submitted. It is referred to as “early conciliation” (EC) and is now mandatory for all claims.

This new EC procedure involves four steps:

Step 1. Before lodging a claim to institute “relevant proceedings” (claims listed in section 18(1) of the ETA 1996), a prospective claimant must send ACAS a completed EC form, either by post or e-mail, or telephone ACAS who will complete the form on their behalf. A separate form must be submitted for each potential respondent.
Step 2. ACAS must then send a copy of the information to a conciliation officer.
Step 3. The officer must try to promote a settlement within the “prescribed period” of one month (which can be extended by a further 14 days).
Step 4. If a settlement is not reached, either because one or both parties do not wish to start early conciliation, settlement is not possible in the conciliation officer’s view, or the prescribed period expires, the officer must issue an EC certificate to that effect. A claimant must insert the EC certificate number (or numbers if there is more than one respondent) onto their ET1, or the claim will be rejected by the employment tribunal.
It is unclear if the introduction of EC will increase the number of successful settlements before a claim is issued although ACAS has a good track record of settling claims when parties choose to use its services. What is possible however is that with the introduction of tribunal fees, claimants may be more eager than previously to try to settle via EC in order to avoid the issue fee. Conversely, employers may feel they have less incentive to settle than previously.

Penalties for losing employers at tribunals

Tribunals now have the power to order an employer who has lost at tribunal to pay a financial penalty of up to £5,000 to the Secretary of State, where the case has “aggravating features”. The minimum amount of the penalty is £100. The maximum is £5,000. If a financial award has been awarded, the financial penalty must be 50% of the amount of the award. However, an employer does not have to pay the full penalty if it pays 50% of the penalty within 21 days and tribunals must take account of the employer’s ability to pay.

Unfortunately, there is a lack of clarity on what will amount to “aggravating features”, which are not explained or defined in the legislation. In its response to the consultation, the government suggested that tribunals would impose penalties where “the breach involves unreasonable behaviour, for example where there has been negligence or malice involved”. A further question is why it is the government and not the claimant (who has been subject to the employer’s conduct) who will benefit from the fine?

New employment rates and limits

The maximum compensatory award for unfair dismissal has risen to £76,574 and the maximum amount of a week’s pay, used to calculate statutory redundancy pay (among other things) has risen to £464.

For more information, please contact:-

Jenny Maxwell- Harris jmh@joelsonwilson.com or Adam Taylor ajt@joelsonwilson.com
Jolson Wilson LLP
30 Portland Place, London W1B 1LZ
Telephone: +44 (0) 20 7580 5721
Fax: +44 (0) 20 7580 2251
Web: www.joelsonwilson.com

This document is not intended to be a comprehensive review of all developments in the law or practice, or to cover all aspects of those referred to. Readers should take legal advice before applying the information contained in this publication to specific issues or transactions.
© Joelson Wilson LLP 2014

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This article is for reference purposes only. It does not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any action.