Unfair Dismissal Update

Author: Matthew Kilgannon

In 2013, we saw a number of changes to the rules relating to unfair dismissal, which includes:

  • Employers can now enter into “off the record” conversations with employees with a view to achieving a Settlement Agreement. There are limitations with this, as detailed in our earlier article, which you can access here.
  • On 6th April 2012, the qualifying period was increased so anyone employed after that date needs to be employed for two years in order to claim unfair dismissal.
  • Claimants now have to pay fees should they wish to issue an unfair dismissal claim in Tribunal. The issue fee is £250 and the hearing fee is £950.
  • There is a cap in the amount of compensation that can be claimed for unfair dismissal being the lesser of one year’s salary or £72,400.

The above changes are generally good news for employers, but with affect from 6th April 2014 they will be further changes that may not all be quite so welcome.


The first relates to penalties. If an employer loses a claim of unfair dismissal (or any other claim for that matter) you may be ordered to pay a penalty to the Employment Tribunal.

The penalty will be 50% of the amount of award, subject to a minimum amount of £100 and a maximum amount of £5,000. Your liability will reduce if you pay 50% of the penalty within 21 days.

The penalty is paid to the Secretary of State, not the claimant.

The penalty will not apply automatically, but only when ordered by the Tribunal.

Early Conciliation

The current pre-claim conciliation will expire and be replaced with “Early Conciliation”. Currently, parties who are about to embark in an Employment Tribunal dispute can request assistance from ACAS to try and settle it. From 6th April 2014 a new mandatory conciliation process is introduced, which takes effect from 6th May 2014. The early conciliation process will involve four steps:

  1. The Claimant will be required to send “prescribed information” in the “prescribed manner” to ACAS. Most would expect such information to include some detail about the claim, but all that needs to be provided is the contact details of the parties.
  2. Upon receipt, an Early Conciliation Support Officer (ESCO) will contact the claimant to confirm he/she wishes to enter into settlement discussions and to seek approval to send the information to you.
  3. Once the information has been passed to you, an ACAS Conciliator has one month (the “prescribed period”) to try and settle the claim. That time though can be extended by two weeks if both the parties agree.
  4. If no settlement is achieved within the prescribed period, ACAS will issue a certificate which will contain a unique reference number that the Claimant needs to issue his/her subsequent Tribunal claim.

It is important to note that time spent conciliating through this process effectively “stops the clock”, meaning the Claimant will have more than the three month time limit to issue proceedings.


On a practical level, it is not certain how many employers will want to engage in discussions about settlement before a claim has been issued. Further, where Claimants now have to pay fees to issue their claim (£1,200 in total for unfair dismissal) is trying to settle the claim beforehand the right time? Certainly the prospect of paying a penalty (and possibly having to pay the Claimant’s fees (£1,200) in addition to any award may mean Early Conciliation presents an opportunity to minimise risk.

If you would like to discuss any issues raised in this article then please contact the author, Matthew Kilgannon on 01483 411517 or m.kilgannon@downslaw.co.uk.