Be Alert UK: Employment law e-bulletin

April employment law changes

30 March 2012

In this Be Alert we highlight the key provisions for businesses coming into force in April 2012.

Extension of the unfair dismissal qualifying period

At present, an employee must work for their employer for a continuous period of one year in order to gain the right to claim unfair dismissal. The qualifying period will be extended to two years from 6 April 2012. Employees starting new employment from 6 April 2012 will need to be employed for two continuous years before they can make a claim for unfair dismissal. Existing employees as at 5 April 2012 will only need one year's continuous service to qualify for the right to bring an unfair dismissal claim. Employers planning to take on new employees around the beginning of April would be advised to wait until after 5 April in order to benefit from the longer qualifying period.

The government has estimated that this will lead to a reduction of around 2,000 unfair dismissal claims per year. However, that does not necessarily mean 2,000 fewer tribunal claims. Potential litigants may start exploring more complicated and costly claims which do not require the qualifying period, such as automatically unfair dismissal and discrimination.

However, the extension to the qualifying period may yet be the subject of challenge as being indirectly discriminatory against younger or female workers.

Employment tribunal reform

The government has proposed wide-reaching reform to employment tribunal procedure, including the introduction of fees. Some of the measures being introduced in April 2012 have provoked considerable controversy.

Witnesses, deposits and costs

The Employment Tribunals (Constitution and Rules of Procedure) (Amendment) Regulations 2012 were laid before Parliament on 24 February 2012 to amend the employment tribunal rules. For cases presented on or after 6 April 2012:

• witness statements will stand as evidence-in-chief and will be taken as read
• witness expenses will be borne by the losing party at the tribunal's discretion (rather than being paid by the Tribunals Service), and
• employment judges will have the power to order deposit orders of up to £1,000 (increased from £500) and costs of up to £20,000 (increased from £10,000).

In practice the increase to the maximum deposit order and costs order is unlikely to have much practical effect. Both deposit orders and orders for costs are relatively rare, and it is even rarer for employment judges to make use of the maximum permitted.

For cases presented on or after 6 April there will be a presumption that witness statements will be 'taken as read' rather than read aloud by the witness. Witness statements have increasingly been 'taken as read' following EAT guidance in 2011 that this should be the practice. The April change will mean that this will now be the default position, although either of the parties will still be able to make an application for the tribunal to exercise its discretion to allow witnesses to read their statement aloud.

Taking witness statements as read will save a considerable amount of time during hearings, but will also make it vital that statements are carefully prepared and direct the tribunal to any additional documents which they need to consider. When a witness reads a statement in tribunal, the normal practice is that when a document is referred to, the witness will pause in reading the statement to allow the representative to direct the tribunal to the relevant document and any particular parts which the representative would like the tribunal to take note of. This will not be possible when statements are taken as read, and the statement itself will need to take account of this.

The change will also mean that tribunal proceedings will launch straight into witness cross-examinations, which can be quite personal and nerve-wracking for individuals. Witnesses will have little time to adjust and familiarise themselves with the tribunal environment. This places extra importance on preparing witnesses for the often hostile cross-examination stage prior to the proceedings starting.

Over time the change may also lead to change in the structure of tribunal hearings in longer cases. At present tribunals usually have very little, if any, time for pre-reading. As going straight into cross-examination only works if the tribunal has already read and digested the witness statement and any supporting documents, tribunals may increasingly schedule 'reading days' at the beginning of longer cases to allow this to happen.

Judges sitting alone

The Employment Tribunals Act 1996 (Tribunal Composition) Order 2012 will amend section 4(3) of the Employment Tribunals Act 1996 to allow for employment judges to sit alone to hear unfair dismissal claims from 6 April 2012. This applies to claims with a hearing date on or after 6 April, not just claims submitted on or after that date.

Even where at present a judge is permitted to sit alone a full tribunal must determine the claim if the judge considers that any one of four considerations applies:

• there is the likelihood of a factual dispute which makes it desirable for there to be a full tribunal
• there is the likelihood of an issue of law making a full tribunal desirable
• the parties have expressed a view that a full tribunal is required, or
• there are other proceedings being held concurrently in which there is a full tribunal.

Unfair dismissal cases being heard on or after 6 April are generally automatically being listed in front of a judge sitting alone. However, there is EAT guidance that listing of cases is a judicial function and the decision whether to hold a hearing before a full panel or a judge sitting alone is a judicial decision. The decision whether or not to hold a full hearing ought to be taken at a case management discussion (CMD) after inviting the parties’ submissions and recorded in the case management order. Where there has been no CMD, the notice convening the hearing must state whether it is to be before a full panel or the judge sitting alone. The parties must be invited to make representations on that issue and the judge must make a judicial ruling with reasons. Both those decisions are susceptible to appeal. Employees and their representatives may seek to use this tactically to their advantage. The likelihood is that some employers turning up to an unfair dismissal hearing after 5 April will face an application for a full hearing which at best will delay the start of proceedings and at worst may lead to a postponement if the judge orders a full hearing and members have to be found at short notice.

Further tribunal reform

The Underhill review into tribunal procedure is due to report at the end of April. In November of last year, the government announced that it was asking Mr Justice Underhill, the outgoing President of the Employment Appeal Tribunal, to lead a Fundamental Review of the Rules of Procedure for Employment Tribunals, with an emphasis on the need for simplicity. Mr Justice Underhill was asked to produce "a streamlined procedural code", so that “where claims are brought to an employment tribunal, all users’ experiences will be improved”. Further suggestions about what might be in the new Code were set out in the terms of reference, which set out that the purpose of the review was to enable “robust case management powers” to “be applied flexibly, effectively and (insofar as is practicable) consistently in individual cases”.

Whatever the outcome of the review, further consultation is likely before any proposals are implemented.

Meanwhile, the consultation on fee charging in the employment tribunals closed on 6 March 2012 and the response is awaited.

Rises to SMP, SAP and SSP

On 6 April 2012 the following increases to statutory payments will take effect:

• the flat rate of statutory maternity pay, statutory paternity pay and statutory adoption pay rises from £128.73 to £135.45 per week, and
• statutory sick pay rises from £81.60 to £85.85 per week.

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