Will Labour’s reforms lead to more tribunal claims?

This understandably caused concerns of raising costs, greater risks and increased bureaucracy for businesses. The language used fuelled fears that reforms would be one sided, benefitting employees at the expense of employers. 

 

The government estimates that the Bill could increase claims to the Employment Tribunal by around 15%, and estimates that the reforms will directly cost businesses in the “low billions” of pounds per year. This number will be affected by the details yet to be decided. 

 

How might the reforms lead to more claims? 

 

 

It’s estimated that around 9 million people currently have less than 2 years' service, so will gain the right to claim unfair dismissal. It seems likely this will lead to a rise in claims for unfair dismissal. 

 

The government estimates that an extra 30,000 fathers or parents will be entitled to paternity leave, and an extra 1.5 million will benefit from changes to unpaid parental leave. With more people entitled to these rights, there could also be an increase in disputes around the application of them. 

 

 

The Employment Rights Bill will also introduce some new rights and obligations. The government estimates that up to 2 million people a year could benefit from the right to bereavement leave, while employees will have greater rights to flexible working. This creates another potential ground for disputes. The problem may be worse to start with, as employers and employees take time to understand the impact of the changes without case law for guidance. 

 

The right to switch off is likely to be implemented via a code of practice. This means it will not be a standalone right, and employees will not be able to bring a claim based just on this. Instead it could be an aggravating factor in other claims, increasing compensation. This extra compensation could encourage people to bring claims they would otherwise drop – especially those who currently drop their claim because the potential damages will not cover the cost of the claim. 

 

 

In their Plan to Make Work Pay, Labour promised to increase the time limit for making a tribunal claim from three months to six months. This has been added to the Employment Rights Bill via an amendment. 

 

There are several reasons employees may struggle to bring a claim within three months, including financial resources, emotional capability, and the distraction of searching for a new role. This is a particular problem for women who have suffered pregnancy or maternity discrimination, as few wish to take on a legal claim when they have a young baby. The extended time limit will help to relieve these concerns, which could increase the number of claims brought. 

 

 

The Employment Rights Bill will establish the Fair Work Agency, bringing together existing enforcement functions. These functions will include the enforcement of minimum wage, statutory sick pay, the employment tribunal penalty scheme, labour exploitation and modern slavery. It would also bring holiday pay under state enforcement, which the government estimates could recover “hundreds of millions of pounds of arrears and penalties over time.” 

 

Currently, some employees may find it difficult to find out which body to make a complaint to, and the process to do so. Having one recognisable body is intended to make it easier for employees to make complaints and get advice. If more employees understand their rights this could lead to an increase in claims. Further, the body itself will have powers to bring civil proceedings to uphold employment rights. So employers could still face a claim, even where employees choose not to bring one. 

 

This move is also intended to offer better support to employers following the law. It will be easier for employers to find guidance, hopefully helping to avoid mistakes which could lead to claims. 

 

 

The government has promised to “enable employees to collectively raise grievances about conduct in their place of work, to ACAS.” In the 'Next Steps' plan, this is one of the reforms listed for “longer-term delivery.” So far, all we know is that the government will consult with Acas. No timescale has been given. 

 

 

The government hopes that the Act will improve employee wellbeing, job security and productivity. This may reduce the number of claims in related areas, such as sick leave or performance issues. 

 

The government hopes that changes to trade union laws and collective grievances will help resolve more disputes outside of the tribunal. 

 

Extending the time limit for making a claim will reduce the pressure to make a formal claim quickly, giving employers more time to try and resolve the issue outside of the tribunal. With a little less time pressure, both parties may approach negotiations with a calmer, more conciliatory mind set. 

 

 

The number of claims will be impacted by how willing employers are to engage with the reforms, and how willing employees are to bring claims. 

 

If you’re worried about an increase in claims, the best response is to ensure you are meeting your obligations. Seek legal advice to ensure your contracts, policies and practices are in line with the law. You should also seek advice when dealing with any issues that could lead to a dispute. This will help you feel confident handling the dispute and help defend your business against legal claims.