Employment Law Reforms

There are three major changes to employment law which come into effect on 29 July 2013:

  1. Employment Tribunal fees are being introduced for the first time. Claims lodged from that date will need to be accompanied either by the requisite fee or an application under the remission scheme (for those on certain social security benefits or on a low income). There are two levels of fees, type A and type B claims. Type A are for simple claims such as unpaid wages or holiday pay. Type B claims are all other types e.g. unfair dismissal, discrimination or whistleblowing. Fees are paid in two stages, an issue fee at the start of the claim (£250 for Type B) and a hearing fee when the claim is listed for hearing (£950 for Type B). Although employers will broadly welcome this development, it should be noted that if a claimant succeeds with his claim then the Tribunal has discretion to make the employer pay the Tribunal fees on top of any compensation awarded.
  2. The compensatory award in unfair dismissals is being changed. This is currently £74,200 and is reviewed (usually upwards) each year in line with inflation. For unfair dismissals where the termination date is after 29 July 2013, the compensatory award will be capped at the lower of the current cap i.e. £74,200 or a year’s pay. Significantly, a year’s pay does not include any contractual benefits such as pension or a company car.
  3. Settlement agreements are being introduced. These replace compromise agreements but the significant change is that any offers of a settlement agreement by an employer or negotiations about them will be inadmissible in unfair dismissal proceedings. Previously, employers could seek to make offers of compromise agreements on a without prejudice basis. However, this carried some risk as the without prejudice rule generally would not apply to such offers. The change being made to the Employment Rights Act 1996 in this area will mean employers can make offers of settlement agreements to terminate employment with greater security that a claimant would not later try and rely on such an offer in evidence in an unfair dismissal claim. Significantly, the new rule only applies to unfair dismissal proceedings and does not, for example, apply to discrimination or other types of claim. Furthermore, where the Tribunal believes that there has been any improper conduct on the part of an employer, then it can vary the rule to the extent it considers reasonable. Thus there appears to be plenty of scope for disputes in future cases as to whether a particular offer made by an employer would be protected by the new provision.

If you require any advice on the new provisions or on any other employment law issues, please contact David Seals on 01306 502218 or at d.seals@downslaw.co.uk or your usual contact in our employment team.

David Seals

David Seals


Tel: +44 (0) 1306 502218

Office: Dorking Office

Email: d.seals@downslaw.co.uk