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Employment Tribunals: Do you still need expensive legal insurance cover?

Disgruntled employees often use the threat of an employment tribunal claim to exert pressure on a practice and thereby negotiate more favourable exit terms. This has been a particular problem in GP practices, where there are often a significant number of part-time employees whose terms of employment are not comprehensively documented.

Employment tribunals are able to hear employee claims related to breaches of their employment rights, as well as cases from both partners and employees related to breaches of the Equality Act (discrimination claims). In our experience, the threat of a discrimination claim is often used in an acrimonious partnership dispute.

On 29 July 2013 new rules will come into force, the most significant of which is the introduction of fees for claimants bringing an employment tribunal claim. These rules are intended to significantly reduce the number of spurious claims.

There will be two categories of fees:

  • Type 1 claims are money related, such as unpaid redundancy and wages
  • Type 2 is everything else, including discrimination and unfair dismissal

Fees will need to be paid when the claim is issued and a second payment made 4 to 6 weeks before the tribunal hearing. If payment isn’t received in time the claim will be dismissed (although the claim can be reinstated at the tribunal’s discretion).

Type 1 claims will cost £160 to issue and a further £230 for the hearing. Type 2 claims will cost £250 to issue and a further £950 for the hearing. These fees can be reduced or waived for people with very low savings. Judges can then order the losing party to reimburse any fees paid by the other side.

At the moment a practice employee can lodge their own ET1 and represent themselves at the hearing, safe in the knowledge that their costs are likely to be minimal, whilst their employers are likely to have significant legal fees in addition to locum costs whilst attending the tribunal.

After the changes have come into effect, a claimant would forfeit the fees they had paid unless they won their case and were awarded costs by the judge. In addition, since the hearing fees are payable 4-6 weeks before the hearing date, a claimant might be encouraged to settle early enough for an employer to avoid the significant costs of preparing for and attending the hearing.

Other key changes include; an initial “paper sift” by the judge to determine whether the claim should proceed or be struck out (this decision can be appealed by either party), and; the combining of the case management discussion and the pre-hearing review into one preliminary hearing.

From April 2014 onwards, all claimants will also have to notify ACAS who will offer conciliation. Only if this process fails within a given timescale will the claim be able to proceed.

We anticipate that the combined effect of these changes will be a steep decline in the number of Employment Tribunal claims made against practices. For many well-run practices this could lead to a real financial saving, as they will be able to reassess the need for expensive insurance policies to defend themselves against a significantly reduced likelihood of a claim.

Posted on July 1st 2013 in News and Publications, Newsletters

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