Will the Employment Rights Act 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 17%. The impact assessment estimates ACAS will receive an additional 21,000 matters for early conciliation, 6,900 more tribunal claims, and around 1,300 additional cases requiring preliminary or full hearings. 

 

It is estimated that, once it is fully implemented, the Act will cost businesses an extra £1 billion per year. Although this sounds a lot, it actually represents only a 0.1% increase on total employment costs. 

 

Of course, this might be affected by the details that are still to be decided. But how might the reforms lead to more claims? 

 

 

This policy “represents the largest expected impact on the existing system” according to the government’s impact assessment. An extra 6.3 million employees will be protected from unfair dismissal from January 2027, when the waiting period is reduced to 6 months. 

 

This will have less impact than the original plan to grant protection from day 1. The suggested probationary period could have created a lot of claims due to complexity, so this simpler solution may have reduced some of the risk. 

 

Removing the cap on compensatory awards may encourage more claims, with claimants tempted by higher awards. Some legal professionals have raised concerns that this could create unrealistic expectations that could make it more difficult to settle disputes. 

 

 

The government estimates that an extra 32,000 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 government estimates ACAS will deal with an additional 700 disputes, with more than 200 leading to tribunal claims. 

 

 

The Employment Rights Bill will also introduce some new rights and obligations. 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 government estimates that 2.7 million people a year could benefit from the right to bereavement leave. It is estimated that ACAS could deal with an additional 170 early conciliation notifications relating to employers taking all reasonable steps, and 100 notifications about third party harassment. 

 

Some other promises have been abandoned, including the right to switch off, which will reduce some pressure on employers. 

 

 

The time limit for bringing tribunal claims will be doubled from 3 months to 6 months. The government has said this will happen "no earlier than October 2026." 

 

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. 

 

According to impact assessments, this could lead to a 5% increase in case numbers – that amounts to additional 6250 early conciliation cases, 2100 which are likely to become formal tribunal claims. 

 

 

The Fair Work Agency will be established on 7th April 2026, 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. 

 

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

 

 

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.