ERRA2013

This summer has seen some radical changes in the field of employment law, notably the introduction of fees in employment tribunals on 29 July, alongside new Employment Tribunal forms and rules, a new cap on unfair dismissal compensation and the new “shareholder-employee” provisions came into force on 1 September.

Time will tell how these changes will affect practice in the long term, but in the short term and perhaps unsurprisingly, there are reports of a number of teething problems – for example:

  • – A backlog of cases waiting to be processed, likely to be related to a surge of claims going in before 29 July (where the effective cut-off was actually the Friday before the Monday implementation date).
  • – Problems with the new forms (once it was possible to track them down) – whereas previously it was possible to save partly completed forms, practitioners have been having trouble with these.
  • – Glitches with online submission of responses, where only part of the employer’s response could be submitted – with all but 25 lines of their defence being cut off.
  • – At the same time, the old forms have remained valid, as no action had been taken to “unprescribe” them – just as well, given the problems experienced.
  • – Whereas previously, claims could be submitted online, in person, by fax, or email the latter two options are no longer available to make claims (although it seems emailed ET3 forms will be accepted).

Feedback has mainly come from organisations acting primarily for employers, so we don’t know how claimants are getting on with the need to pay a fee or apply for fee remission when submitting a claim, but some thought has been needed on matters of detail, such as whether a claim will be in time if submitted close to a time limit with a fee cheque which subsequently bounces (yes, it’s in time, but a Notice to Pay will be issued), and what will happen if the wrong fee is tendered (the same, so long as it matches a recognisable fee amount e.g. £160 or £250). I’ve also commented in an earlier post about the problems with fee remissions generally.

It will be interesting to see if there will be a drop in smaller money claims as a result of the introduction of fees. Workers on the minimum wage who suffer unlawful deductions may not be prepared to invest the best part of a week’s wages in a tribunal claim (they are unlikely to get a fee remission if they have a working partner). Whether this is fair, equitable or a denial of access to justice are questions which go beyond the scope of this post.

The new cap for unfair dismissals is now also in force, and will be the lower of 12 months’ pay or £74,200. While the £74,200 cap bites most for those on higher salaries, the 12 months pay cap will have a big impact on those with poorer prospects of finding alternative employment.

Turning finally to employee shareholders I have aired my views (again) in the introduction to this month’s newsletter. Employers who wish to use the scheme will need to consider how to structure a scheme, how shares will be valued, and what rights shareholders will have. HMRC have provided some guidance on valuation, and will check valuations before an award – see http://www.hmrc.gov.uk/manuals/svmanualnew/SVM109090.htm

Generally, the scheme will be most accessible for employers who already run share incentive schemes, and most attractive for higher paid employees who are interested in the tax breaks.