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Summary of changes to employment law

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JulyOn 29 July 2013, a number of changes to employment law came into effect.

These include the introduction of fees in employment tribunals, a cap on compensation for unfair dismissal claims, changes to compromise agreements and pre-termination negotiations.

Employment tribunal fees

For the first time, employees have to pay a fee to the employment tribunal when they issue a claim and a further fee prior to the hearing date. The issue fee will be either £160 or £250 depending on the type of claim.  In addition a hearing fee is payable by the claimant and this will either be £230 or £950 depending on the type of claim.

New unfair dismissal compensation limit

The unfair dismissal compensatory award limit is now the lower of the statutory cap (currently £74,000) or one year’s gross pay.  Previously it was within the discretion of the employment tribunal to make an award of more than 1 year’s pay.

Compromise agreement renamed “settlement agreements”

A compromise agreement is a legally binding document entered into between an employee and his / her employer, in which the employee agrees not to pursue claims against the employer in return for a payment.  In the interests of simplifying terminology, these agreements have been renamed “settlement agreements” in all relevant current primary legislation.

Pre-termination negotiations

Originally the government had discussed introducing “protected conversations” i.e. frank conversations that employers could have with their employees in order to settle a dispute safe in the knowledge that the discussions could not be used by the employee in subsequent proceedings. The government rowed back from this in its proposals and has instead introduced ‘pre-termination negotiations’ and the statutory ACAS Code of Practice on Settlement Agreements will also operate from 29 July 2013.

Pre-termination negotiations will allow employers to make offers or have discussions with a view to terminating the employment contract on agreed terms. These negotiations will be inadmissible in court and therefore cannot be used as evidence in any subsequent unfair dismissal proceedings, unless there has been improper behaviour by the employer. The protection only applies to unfair dismissal claims and does not apply to any other potential claims that an employee may bring, such as discrimination or breach of contract.

It is anticipated that these changes will on the whole assist employers in bringing employment relations to an amicable end. In addition the introduction of ET fees will certainly dissuade employees from bringing weak claims.  Previously employers chose to settle cases rather than risk the time and legal costs of defending cases.  It is likely that the number of claims will reduce.

However, it remains to be seen whether cases which are actually commenced may well be pursued more vigorously and with more determination by employees who have gone to the expense of issuing the claim.

For more information, or advice on any aspect of employment law, contact our Employment team on 01772 258321.


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