Peers criticise reform of employment tribunal process

06 December 2012

Yesterday, the Enterprise and Regulatory Reform Bill had its second day in Grand Committee, with the session focusing on Clauses 7 to 19 concerning employment law changes around conciliation, tribunal cases, unfair dismissal and financial penalties.

Labour peers Baroness Donaghy, Lord Monks, Lord Young, Baroness Turner and Baroness Dean were among those who attacked this section of the Bill for putting unjust pressure on workers and leaning the law too much in the favour of employers.

Lord Monks stated that the Bill as a whole was a “tilt in the law, particularly on unfair dismissal, towards the employer” and Baroness Turner said she felt that “in many respects the Bill represents an attack on employment rights” – views with which the IER strongly agrees.

ACAS Conciliation

In a discussion on the proposals for conciliation service ACAS to become the first port of call for workplace disputes, many welcomed the emphasis on mediation but were concerned about the ability of ACAS to deal with such a large volume of work. There were also worries about any changes that may make it more difficult for employees to take their employer to tribunal.

Baroness Donaghy, a former chair of ACAS, said it was essential the organisation is provided with extra resources, noting that the government’s response to the Resolving Workplace Disputes consultation said the required funds would be accrued through the savings made through fewer employment tribunals taking place under the new laws. She expressed concern about how this proposal would work in reality.

“If insufficient attention is given to resourcing ACAS, I am concerned about the impact on other services,” Baroness Donaghy explained. “The helpline takes more than one million calls a year and in itself helps to prevent disputes by providing crucial information impartially to both employer and employee. It is a trusted brand and the continuing development of the website, collective conciliation and promoting good employment relations are all vital elements of ACAS’s work.”

Lord Young, Lord Monks and Baroness Brinton (a Liberal Democrat peer) also shared their concerns about resourcing. Parliamentary Under Secretary Lord Marland promised the government intend to pile many more funds into ACAS and further information would be provided on this topic by Report stage of the Bill.

Baroness Turner also sought assurance that workers could take their claim immediately to an employment tribunal if ACAS conciliation was not effective. Lord Marland stated that ACAS conciliation would not be included in the time limit in which workers have to submit a claim.

Employment Tribunal Fees

When it comes to employment tribunal fees, Baroness Donaghy expressed concerns that employers may simply hold out during conciliation in the hope that workers cannot afford to take them to tribunal anyway. She also predicted that employees not currently in trade unions may be encouraged to join one because of this obstacle.

Legal officers deciding cases

The Enterprise and Regulatory Reform Bill also proposes legal officers can preside over some non-complex cases. Lord Young expressed concern over this idea, noting that legal officers are never currently asked to take on this role and they are untrained to do so.

“Legal officers currently do not receive the equivalent training to that of employment judges and may not be employment law specialists, but decisions made by a legal officer would have the same status as an employment tribunal decision,” he stated.

Baroness Donaghy added that she believes the proposal is simply “intended to be a cheap way of obtaining legal services”.

Lord Marland promised that the “decisions of a legal officer would be reviewed by a judge, so there is someone looking over their shoulder”.

Judges sitting alone at Employment Appeal Tribunals

The proposal in the Enterprise and Regulatory Reform Bill for judges to sit alone at Employment Appeal Tribunals (EATs) was one of the most hotly contested clauses discussed. Lord Young noted that the majority of EAT cases are currently decided by a panel that also includes lay members. He noted that plans removing lay members from the process represent “a real danger that the whole nature of employment tribunals will fundamentally change”.

“We do not agree that EAT cases should always be decided by a judge sitting alone … There is substantial evidence that lay members contribute significantly to the quality of decision-making in employment tribunals,” he stated.

Lord Monks and Baroness Turner agreed with Lord Young, with Lord Monks arguing: “The lay members … keep [the tribunal’s] feet on the ground and keep the costs of the whole exercise down”.

Lord Marland attempted to defend the government’s proposal by arguing: “Ultimately, the rule of law prevails. It is the interpretation of the law that prevails, and therefore it is a judge who is qualified to interpret the law, so I do not agree that there is a huge import in having lay members.”

Describing this response as “deeply unsatisfactory”, Lord Young promised to return to this issue in the Report as “the Minister’s response does not deal with the genuine concerns that have been expressed”.

Reporting on the impact of new Tribunal proceedings

Baroness Donaghy argued that an early review must be conducted on the impact of the changes to the tribunal process and, when Lord Marland said ACAS would be reporting annually and this aspect would be included in the report, she added that an independent assessment would be more beneficial.

‘Protected’ negotiations

Another part of the Enterprise and Regulatory Reform Bill proposes the introduction of settlement negotiations prior to termination, in which employers may address their concerns frankly with their workers and nothing they say can be used in evidence against them at an employment tribunal, with certain exceptions.

Lord Monks described these plans as “Beecroft-Lite”, saying the “without prejudice rule” could be extended by the Bill so that employers can offer their workers a financial settlement even where there has been no dispute and no application has been made.

Lord Young argued employees should be able to take a trade union official, workplace representative or legal advisor into the negotiations. His point was strengthened by Baroness Dean’s note that employer’s are likely to have already taken legal advice before a protected conversation that the employee may have previously known nothing about.

Cap on compensation awards

Lord Young sought an explanation from the government on why they had moved to cap compensation awards at 12 months’ pay, stating: “The reality is that this cap will affect no more than around 150 cases a year out of some 50,000-just 0.3% of all unfair dismissal claims. However, among those 150 individuals who will be denied full compensation, such as a substantial loss of pension rights, are people in the squeezed middle who were previously on above average wages but perhaps are close to retirement and therefore have fewer prospects of finding new employment.”

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