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Streamlined employment tribunal system will "weed out weak claims" says Government

The Government has set out plans to "streamline" the employment tribunal system, which will include a new power to 'strike out' claims with little chance of success before they proceed to a full hearing.18 Mar 2013

The proposals, which follow a review of the tribunal system by former Employment Appeal Tribunal (EAT) president Mr Justice Underhill, should reduce the time and cost associated with tribunal litigation, according to employment law expert Christopher Mordue of Pinsent Masons, the law firm behind Out-Law.com. They form part of a wider package of measures designed to promote the resolution of claims outside the tribunal process and to discourage weak claims, he said.

Mr Justice Underhill's new rules also include new guidance for tribunal presidents, intended to ensure that cases are dealt with more consistently, and a streamlined procedure for preliminary hearings. They are expected to come into force this summer, along with the introduction of tribunal fees.

The new rules come as part of ongoing reforms to the tribunal system, as well as the Government's wider-ranging employment law review. Last April, rules were introduced which made it standard for witness statements to be read in advance by the tribunal rather than having to be read aloud by each witness. Future changes will see the introduction of a mandatory 'pause' at the start of a case for pre-claim conciliation.

"One of the key problems with the existing tribunal system is that most cases are settled and even when cases proceed to a hearing and the claimant wins, the amount of compensation awarded is low - the median aware for unfair dismissal claims is below £5,000," Mordue said. "So the cost for the employer in defending the claim and the burden of cost and resources on the tribunal system is often disproportionate to the financial value of the claim if it succeeds."

"Anything that streamlines process, reduces time and cost and makes more efficient use of the tribunal's time – and that of the parties and their representatives – can only be a good thing," he said.

There were 186,000 cases heard by the employment tribunals between April 2011 and March 2012, according to figures from the Department for Business, Innovation and Skills (BIS). Each case costs the taxpayer £1,900, while the average cost to employers is £3,900. The new rules could save the taxpayer £420,000 and businesses £280,000, BIS said.

The new rules will see the introduction of an initial 'paper sift' stage once the claim and response have been received. A judge will review the case based on what it set out in these papers with a view to making directions or, if appropriate, considering whether a claim should be struck out due to it lacking a reasonable prospect of success. The existing case management discussion and pre-hearing review stages of a claim will be combined into one streamlined preliminary hearing, to cut the number of hearings which go before a tribunal.

Mordue described the new approach as a "sensible streamlining of existing practice".

"The current system of separate types of hearing causes delay and additional costs, and moving to a single preliminary hearing approach allows the tribunal to speed up the process and deal with cases more efficiently," he said. "It also has the benefit of allowing the real issues in the case to be refined and focused at an early stage, especially when combined with additional flexibility for making orders that claimants have to pay a financial deposit if they are to continue with specific claims which have no reasonable prospect of success."

"It is common for claims to be made on a scattergun basis alleging breach of a whole range of different employment rights – these 'kitchen sink' claims can result in very lengthy hearings, so giving the power to focus the complaint by striking out weak claims or requiring a separate deposit to be paid for each head of claim is a key tool in maintaining proportionality and avoiding unnecessary time and cost."

Employers would also welcome changes to the way tribunals dispose of cases after settlement, Mordue said. Under the current regime claimants must formally withdraw their claim, but the employer must still apply for a decision that the claim is dismissed. This "belt and braces" approach is intended to ensure definitively that the claim cannot be resurrected at a later date. Once the new rules take effect an employer will not need to make a dismissal application once a claim is withdrawn, but courts will have the discretion to reopen claims in exceptional circumstances such as where an employer does not pay an agreed settlement.

"The Government had proposed to impose a fee for these dismissal applications; basically turning a routine application into a 'tax' on employers who wanted to ensure that the claim was fully disposed of," Mordue said. "It is now proposing to change the tribunal rules so that there is no need in the vast majority of cases to make this dismissal application - giving the double benefit of avoiding a fee and simplifying the overall process."

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