The Coalition has removed the best features of Employment Tribunals and kept the worst

22 February 2013

By David Renton

Today’s tribunal system is not perfect, but the Coalition’s reforms are taking away the best things about them and keeping the worst.

Few readers of the Morning Star will have forgotten George Osborne’s speech to last year’s Tory Party conference, announcing a new type of employee contract. In return for £2,000 in shares, so-called “employee-owners” will be required to sign away their rights to bring unfair dismissal claims. The incentive is that the employees who are signed up to the scheme will not have to pay Capital Gains Tax on their shares.

How are the workers supposed to claim these shares? The employers that the scheme is aimed at are small companies, not listed on the stock market, whose valuation is usually at the whim of a single owner.

We’re “all in it together”, Osborne told his fellow Tories in the snidest quote of 2012, “Workers of the world unite”.

Along with “employee-owner” contracts, this spring will see the introduction of new rules for collective redundancies, enabling employers to race through redundancy consultations in less than 7 weeks, and the introduction of a new rule that an employee winning an unfair dismissal claim cannot receive a compensatory award of more than just a single year’s wages. To grasp the injustice of this, think of the employee who wins her unfair dismissal claim and is appealed by the employer. From issuing a claim to a final decision, her case is likely to take between two and three years for its final resolution.

The one-year limit will still apply to her.

A new system of “protected conversations” will prevent Tribunals from asking how the employer handled the employee’s dismissal. It will alter how dismissals are managed, and will be an open invitation for employers to bully staff.

Claimants are going to be required for the first time to pay issuing and hearing fees before a claim can be heard. This will put the burden of funding the system on workers, whose pockets are shallower than employers’ and who in many cases will find themselves priced out of the legal system.

The hearing and issuing fees for bringing a discrimination or dismissal claim will be £1,200, on top of which a worker who appeals will be charged a further £1,600. Fees at this level are wholly out of kilter with the rest of the court system. They are several times higher than the fees charged for cases of the same complexity in the county courts, which are the nearest equivalent to the Employment Tribunal.

The government has said that where a worker wins their case they may get some of these fees back; but even this is bad news for workers, as a shift in Tribunal practice towards a rule that the loser usually paid the other side’s costs would hurt the poorest claimants. The average worker in Britain is paid around £26,000. A top commercial barrister representing a large company might charge this for a two-day Tribunal hearing. Everyone who has been a claimant in a Tribunal case will know how frightening it is to get letters from employers’ lawyers threatening them with costs.

The government is desperate to see costs orders become commonplace.

They grasp the opportunity that the threat of costs gives to employers to bully workers into conceding perfectly decent cases.

When Employment Tribunals (originally Industrial Tribunals) were first given the power to hear unfair dismissal cases in 1971, the allocation of these cases to a “tribunal” was deliberate; they were not intended to be heard in the ordinary “courts”. Rather they were meant to be decided in an informal setting that would be accessible to all. There was no idea that parties would ordinarily be represented by lawyers.

Either side, it was assumed, should be able to put their case directly to a panel comprising two people with industrial backgrounds and only one legally qualified Chair.

The 1968 Report of the Donovan Commission, which informs the modern Tribunal system, explained that the Tribunals should be “easily accessible, informal, speedy and inexpensive”.

It would be false to pretend that Tribunals have always held fast to this original vision. The Tribunal system has been over-determined by the decisions of a small number of Judges in the 1970s, who tried to assimilate the new statutory scheme to older principles of the “common law”, in which employers were still “Masters” and employees “Servants”.

If anyone was designing a system of employment law from scratch, they would be unlikely to come up with the Tribunal system we all know. But the present Coalition Government has embarked on a drastic programme of change which keeps the least valuable features of the current arrangements, while changing the system dramatically for the worse.

David Renton is one of the authors of the Institute of Employment Rights’ latest publication Justice Deferred: a critical guide to the Coalition’s Employment Tribunal reforms.

This article first appeared in the Morning Star