At the beginning of 2011, the Government launched a consultation, Resolving Workplace Disputes which set out detailed proposals on how workplace dispute resolution could be changed so that employment tribunals become the very last resort for parties.
The Government's response to that consultation was finally published on 23 November 2011.
The objective of reducing reliance on the tribunal system results from a collision of various factors: firstly, the Government needs to cut costs where it can due to the economic situation; secondly, the Government is convinced that fear of litigation is preventing businesses taking on staff and hence sees some current employment legislation as a barrier to much needed growth.
The consultation response makes it clear that the Government will adopt a four pronged approach to deliver its aim.
Early dispute resolution without the need for an employment tribunal
The Government's ambitious aim is to 'change the whole culture' of employment litigation by placing far greater emphasis on mediation at an earlier stage of the process and making it a more accepted part of the process.
Lack of understanding and costs were cited as the two major reasons why this is not yet the case and a major pilot will be undertaken in the retail sector together with a pilot of regional mediation networks through which smaller businesses can receive training.
The Government wants to embed mediation within the resolution of workplace disputes and says it will work with the mediation industry to achieve this. However, with typical costs for one day mediation around £800 to £1,000 plus VAT, this may be easier said than done for the majority of small businesses and hard pressed public sector employers.
In addition, ACAS is to play an even more significant role that it does now through a new Early Conciliation service (EC) before a claim is lodged with an employment tribunal. Claimants will have to submit details of their claim to ACAS and will then be offered conciliation.
The period for conciliation will be one month, with the ability for it to be extended by two weeks where ACAS considers there is a reasonable prospect of settlement. This will apply for all types of claim and regardless of the size of the relevant employer.
However, EC will not be compulsory; either party may refuse to take part in the process and move straight to submitting a claim to a tribunal.
During the consultation concerns were expressed about the increase in resources which would be required to enable ACAS to take up this enhanced role. The Government says it is aware of this, and that additional requirements will be met through the savings accruing as a result of fewer cases going to tribunal.
Finally, there will be further work with the Ministry of Justice to consider an alternative dispute resolution scheme for some straightforward employment cases. This 'Rapid Resolution Scheme' could see determinations delivered without a hearing and by non-judicial individuals. A separate consultation on these proposals will be launched in due course.
Overhaul of employment tribunal rules
The Government believes that the time is right for a root and branch review of the existing employment tribunal rules of procedure as piecemeal changes over recent years have led to difficulties. There is a general view that this can present a real obstacle to robust case management by employment judges.
Mr Justice Underhill (outgoing President of the Employment Appeal tribunal) will lead a fundamental review of the rules and report back by the end of April 2012 with his proposal.
The Government will, however, press ahead with some rule changes before Mr Justice Underhill's report. It will bring forward secondary legislation immediately to increase the limit for deposit orders from £500 to £1,000, and costs awards from £10,000 to £20,000.
Introduction of fees for claimants and financial penalties for employers
Where an employer loses a tribunal claim there will be a new power for tribunals to order an additional financial penalty which will be payable to the Exchequer, not the claimant.
Where an award has been made in favour of the claimant the financial penalty will be half of that amount. This is subject to £100 minimum and £5,000 maximum. There will be a 50% reduction for payment within 21.
However, contrary to the original proposal, this penalty will not be automatic but will be at the discretion of the employment judge. Penalties will not be awarded for unintended or accidental short comings and it will be possible to appeal against such an award.
A separate consultation on the introduction of fees for lodging tribunal claims was subsequently launched on 14 December 2011 and closes on 6 March 2012. Two different proposals are put forward.
The first option, which could be implemented in 2013, would see both an issue fee and a hearing fee payable by a claimant. The actual amount paid would depend on the nature of the claim and whether it was an individual claim or a multiple claim. For example, in an unfair dismissal claim, the claimant would have to pay an issue fee of £200 and a hearing fee of £1,000.
The second option proposed would not be implemented until 2014 and would involve the payment of just an issue fee, the amount of which would depend upon what the claimant stated their claim to be worth. For example, an unfair dismissal worth less than £30,000 would cost £500 to issue; one worth more would cost £1,750.
Miscellaneous changes to legislation to support employers
The qualifying period for bringing a claim of unfair dismissal will rise from 12 months to two years from April 2012.
The Government was unconvinced by arguments that this change would simply result in more claims being made in other jurisdictions such as discrimination where no qualifying period applies.
The Government is also going to proceed with rule changes 'at the earliest opportunity' to enable employment judges to hear unfair dismissal cases alone (i.e. without lay members).
Compromise agreements will be re-named 'settlement agreements'.
The Government will work on developing a model text for compromise agreements and associated guidance. Some legal advice would still be required by individuals, but it is hoped this will be less than at present hence reducing time and costs for all parties.
The Government will also look at amending the current provision which requires relevant claims to be listed separately in a compromise agreement to enable a "blanket waiver" of all claims.
New legislation will be implemented 'at the earliest opportunity' to clarify perceived problems with the validity of compromise agreements in discrimination claims, as a result of the current wording of section 147 of the Equality Act 2010.
Currently, the without prejudice rule only works to keep 'off the record' conversations out of the employment tribunal if there is already a tangible dispute between the parties. Some responses to the consultation suggested that if any party could initiate early conversations about say, performance issues or retirement plans, at any time, without fear of the matter ending up in tribunal this may actually allow potential disputes to be 'nipped in the bud' so that employment can continue. The Government has agreed to consult on the introduction of such 'protected conversations'.
There is a lot in this consultation response, and although we now know that various proposals will go ahead, there are still many areas where we will need to wait and see.
What we do know for sure is that there will be significant change and upheaval to get to grips with in 2012 for employers, employees and their advisers.
Given attempts by previous administrations to relieve the pressure on the tribunal system, the current Government's much wished for change of culture may struggle to take root very quickly.