Helping salon owners negotiate the law relating to employment tribunals

HR legal expert David Wright answers your questions on the law relating to Tribunals and helps decipher the raft of new legislation coming into force. I understand employees now have to pay to take their employer to Tribunal. Is that true? Yes, since 29 July, this has been the case. Presently, there is no cost to an employee for putting a claim through the Employment Tribunal. It has been suggested this has results in some employees thinking they have nothing to lose in making a claim. It will remain free after 29 July if the former employee is single and has under £3,000 in cash assets or earned under £13,000 in the previous 12 months. Then, there is a sliding scale where the ceiling increases if the person has a partner and children. To say the administrative process for an applicant to gain exemption from charges is complicated is an understatement: 1. The fee goes to the government to help to pay for the costs of providing Tribunals. 2. The employer will repay the fee if the employee wins the case. 3. The level of the fee will depend on the type of claim as shown below: Level 1 – these consist of unlawful deduction of wages, statutory redundancy pay and payment in lieu of notice. The cost is £160 to make a claim and a further £230 if the case reaches a hearing. Level 2 – these include claims relating to unfair dismissal, discrimination, equal pay and whistleblowing (the costs are £250 to issue a claim and £950 if the case gets to a hearing. If fees are unpaid, the claim will not be allowed to proceed. Clearly, the view is that the initial cost of over £1,000 will reduce the number of claims, but time will tell. I have read something about “settlement agreements” with staff, but I am unclear what these are. Can you clarify this for me? Presently, employers can have a conversation with an employee with a view to end their employment, both parties agree a sum of money, and the employee then signs a compromise agreement under which they agree to leave and not to then go to Employment Tribunal. But if the employee did not subsequently go down this route, and was later dismissed, they could refer to the conversation at an Employment Tribunal as evidence that the employer had been looking to get them out of the business. From the end of July 2013, compromise agreements have been replaced by Settlement Agreements. These will give protection to salon owners who want to have a heart-to-heart talk with an employee about ending their employment, without the conversation then being used against the employer at a later date. For example, “I am afraid I can’t tolerate your poor performance any longer and I will be arranging a disciplinary hearing, however I wanted to talk to you about a possible settlement agreement.” Most employers and many employees will have found themselves in a position where ending the relationship is the best outcome, but neither want to go through a difficult or hostile disciplinary route. The new law specifically bans employees from using discussions about a possible settlement agreement at any subsequent Employment Tribunal. There are detailed rules regarding settlement agreements and you should seek professional advice before speaking to an employee. It is clear you can’t bully or threaten an employee to sign an agreement and, once the document is produced, they must have 10 days to consider the agreement to decide if they are happy with it. However, the new settlement agreements are certainly helpful to employers and once again should reduce the number of Tribunal cases. What has changed regarding the maximum pay-out an employee can receive for unfair dismissal? Currently, the maximum pay-out at Tribunal for unfair dismissal is £74,200. Few, if any, employees receive that much, but it’s a frightening figure and is often quoted by applicants or their representatives to frighten employers. From the 29 July, the £74,000 will remain the maximum pay-out, but there has been a significant change. An employee can now be awarded this maximum figure or one-year’s pay, whichever is lower. Clearly, few employees earn £74,000 or over. Is anything being done to stop frivolous or weak cases going to Tribunal, as employers still incur costs defending them? It is hoped the introduction fees will help reduce the number of claims. But more significantly, from early 2014 all potential applicants will have to first liaise with ACAS to see if an agreement can be reached prior to their case being formally lodged at Tribunal. Only at the end of this conciliation period will employees be able to take their claim to the Employment Tribunal. At this stage, the majority would have to pay a fee for doing so. This is a positive initiative. First, it will give the employer breathing space and secondly we already know that ACAS are successful at resolving disputes and settling cases. ACAS reported that in 2012/13, less than a quarter of people who used the voluntary Pre-Claim Conciliation service went on to make a claim to an employment tribunal.