Employment tribunal claims – should employers still worry?

From 29 July 2013, all employees who wish to bring an employment tribunal claim must pay an issue fee and a hearing fee (unless they qualify financially for fee remission). According to the government, the introduction of fees in tribunal cases was designed to put the financial burden on users of the tribunal system and was not a direct attempt to reduce the number of claims. The upshot of this, according to recent tribunal statistics, has resulted in a 79% reduction in claims.

Can employers sit back and relax?

The introduction of fees and the consequential reduction in tribunal claims has been referred to as the “bad employer’s charter”. This may lead to employers choosing not to follow the Acas code of practice – disciplinary and grievance procedures (Code) and established HR good practice (HR procedures).

The Code and HR procedures have been the mantra of HR and employment law practitioners for years. However, some employers, believing the risk of tribunal claims has now been drastically reduced, may well be tempted to “sit back and relax” and to cut corners going forward. Employers who take this view may sleep-walk into trouble. What employers must appreciate is that the number of claims may well have reduced but if employees have car insurance, home contents or buildings insurance or a premier bank account they may well have the benefit of legal expenses insurance (LEI). LEI may fund the legal costs of an employee in pursuing a tribunal claim. Employees may well have the benefit of LEI without even knowing it!

What does this mean in practice?

The risk of tribunal claims may have reduced for now (as they are currently being challenged in the Court of Appal) but they have not been eliminated. Furthermore, if an employer fails to follow the Code a tribunal can increase any award of compensation to an employee by up to 25%. Therefore, employers should continue to follow the Code and HR procedures. However, this may be easier said than done! Some employers will not have the resources to comply with the Code and HR procedures. Consequently, it may come down to a balancing exercise, for example, the need to be seen as a caring and compassionate employer against the cost of management time in dealing with difficult and unproductive employees.

What should employers do?

There is an important tool available to employers who, faced with the need to dismiss employees, wish to cut through the Code and HR procedures whilst at the same time safeguarding themselves against possible tribunal claims. This tool is the ‘pre-termination discussion’, which can be either a protected conversation or a without prejudice conversation depending in each case on whether there is an existing dispute with the employee.

Protected conversation

This is a statutory creation (section 111A of the Employment Rights Act 1996), available since 29 July 2013, that allows employers to have a conversation with an employee “out of the blue” in circumstances where there is no existing dispute and in the knowledge that it cannot be referred to in any subsequent tribunal claim for ordinary unfair dismissal (including constructive dismissal claims). If, as a result of the protected conversation, a deal can be done between the employer and the employee then the terms would normally be set out in a settlement agreement.

The only way such conversations would lose their protected status would be if during the course of the conversation there had been improper behaviour by one of the parties (in practice, the employer), such as: harassment, bullying or intimidation; criminal behaviour; discrimination because of a protected characteristic; or undue pressure.

The downside of protected conversations is that they do not apply to, amongst others, automatic unfair dismissal claims, wrongful dismissal claims and/or discrimination claims.

Without prejudice conversation

This type of conversation is based on the common law principle which prevents statements (whether written or oral), which are made in a genuine attempt to settle an existing dispute, from being put before a tribunal or court, as evidence in subsequent legal proceedings between those parties about that dispute. In practice this means that the employee must have already brought, or must reasonably be expected to bring, a claim of some sort against the employer.

Unlike protected conversations, without prejudice conversations can apply to any type of tribunal or court claim provided there is no unambiguous impropriety (broadly the same as improper behaviour) in the conduct of either of the parties during the conversations.

If employers want to cut corners with minimal risk then pre-termination discussions are one way of doing it but they should take care because there are plenty of traps for the unwary and the unprepared.