If you have been keeping up to date with our blogs, you will be aware that key legal changes are in force from today.
If you are currently in discussions with an employee about their leaving your employment with a settlement or are contemplating doing so, you need to be aware of the changes to Pre termination negotiations and Settlement Agreements.
Compromise Agreements are now called Settlement Agreements. There are also (more significantly) new rules on pre-termination negotiations relating to the settlement of unfair dismissal claims only. Acas have produced a Code of Practice on Settlement Agreements (under Section 111A Employment Rights Act 1996 to explain these new rules and when they are applicable. Some employers will be attracted by now being able to raise settlement in a protected conversation at any time with an employee. However we are advising employers to continue with their existing practice of holding without prejudice discussions. In these early days we anticipate some confusion as employers and employees grapple with these changes, in what is already likely to be a volatile situation and you may need advice on handling settlement discussions; particularly in the light of the new cap on compensatory awards set out below.
You may be concerned that an employee or ex employee is about to file a tribunal claim against you. Many claimants will have rushed through their claims last week so as to avoid Tribunal fees.
Claimants now have to pay tribunal fees unless eligible for remission. This is a major change. We set out the fees Claimants will have to pay in our 29 April blog. The issue fee is due when the ET1 is filed and the hearing fee a few weeks before any hearing. (In the Employment Appeal Tribunal the Appellant will be required to pay £400 to lodge the appeal and £1200 for a full hearing). If the parties agree to Judicial Mediation the Respondent will have to pay £600. The requirement to pay a fee is likely to dissuade some Claimants. There may be delays in the tribunal process particularly where the Claimant is eligible for remission as their application for remission will take time to process and so Respondents may not be aware a claim has been filed until after the normal tribunal deadline. Respondents may be ordered to repay the fees paid to successful Claimants or agree to do so as part of any settlement. On Friday we announced the new claim and response forms which Claimants and Respondents have to use from today. You may be anticipating a tribunal claim and want to discuss the new fees regime.
Whether you are negotiating settlement under a new settlement agreement or during tribunal proceedings you need to be aware of the New cap on unfair dismissal compensatory awards.
From today, the compensatory award in unfair dismissal cases will be limited to the lower of the claimant’s annual gross salary and the statutory cap which is currently £74,200. Few tribunal compensatory awards exceed Claimant’s annual earnings, but it is not unusual for an employee to seek this sum in negotiations or tribunal claims. This limit may assist employers in managing expectations so as to achieve a lower settlement. We reported on this in our previous blog.
For those involved in tribunal proceedings there are new tribunal rules.
The rules are aimed at “simplifying the procedures and costs of deciding tribunal cases“. Amongst other things, the new rules include the introduction of the “sift stage” which enables Tribunal Judges to strike out claims, in whole or part, if the Tribunal has no power to hear them, or if they are considered to have no reasonable prospect of success.
If you have any queries on any of these issues please contact your usual adviser or call us on 01737 854500 or email [email protected]