On 29 July 2013 a number of significant changes to employment tribunal litigation were introduced to give effect to the Government’s proposals to reduce the cost of employment disputes to both the employer and the Public Purse.

1. The introduction of fees to employment tribunals.

Employment Tribunal cases are now divided into category A cases (straightforward cases such as claims for unpaid wages) and category B cases (complicated cases such as unfair dismissal and discrimination claims). A single claimant will have to pay a fee of £160 on presenting a claim in a category A case and £250 in a category B case. If the matter proceeds to trial a single claimant will have to pay a hearing fee of £230 in a category A case and £950 in a category B case. In certain circumstances (for example financial hardship) a claimant will be able to apply for fee remission. Higher fees apply for groups and multiple claimants. It is hoped that the requirement to pay a fee will deter potential claimants from making purely speculative claims.

2. New employment tribunal rules

New employment tribunal rules were introduced which provide for a procedure to sift out unmeritorious claims. As soon as possible after the tribunal receives the employer’s response the case papers will be referred to an employment judge who will consider the file to decide whether the claim or response should be struck out because it has no reasonable prospect of success.

3. New unfair dismissal compensatory limit

Whilst compensation for claims of discrimination remains unlimited, the cap on a compensatory award in unfair dismissal cases has now been fixed at one year’s gross pay or £74,200 whichever the lower is. The new cap will probably have limited effect as the vast majority of compensatory awards have always fallen within these limits.

4. Pre – termination negotiations

Until 29 July it was difficult for an employer to raise the subject of “a parting of the ways” for fear of breaking the relationship of trust and confidence and giving grounds for a claim of “constructive dismissal”. If an employer now makes an offer of a negotiated settlement before a dismissal, this will be inadmissible in any subsequent unfair dismissal proceedings unless there has been improper behaviour. ACAS have issued a statutory Code of Practice which should be observed in approaching such conversations.

5. Compromise agreements

Compromise agreements have now been renamed “settlement agreements”.

Between January and March 2013, Employment Tribunals received 57,737 claims in total – 36 per cent more than in the same quarter of 2011/12. The increase was driven by an increase in claims under the Working Time Directive, which doubled over the period, and accounted for just over a third of claims.