Government announces employment tribunal reforms

In November 2000 the UK government unveiled a package of measures to limit the impact of regulation on businesses, including changes to employment tribunal procedures. The move is in response to employers' criticisms of the growth in "red tape" and rising tribunal caseloads.

On 27 November 2000, the Prime Minister and other leading members of the government announced a series of measures to limit the impact of regulation on business. In the area of employment relations, the key reforms proposed by the government centre on amending employment tribunal procedures to deter and penalise the pursuit of unreasonable cases by claimants. The initiative is designed to meet sustained criticism from employers' groups of the growing administrative burden imposed by regulation (UK0004165N) and of the emergence of a "compensation culture" reflected in record increases in employment tribunal claims against employers.

The proposed changes to employment tribunal rules include:

  • new powers for tribunals to strike out ill-founded claims which have no real prospect of success;
  • a major increase in the costs that can be awarded for unreasonable or vexatious behaviour from GBP 500 to GBP 10,000;
  • an increase in the deposit which may be imposed on pursuing a weak case or defence from GBP 150 to GBP 500; and
  • other amendments to help tribunals "improve case management, so that claims are dealt with expeditiously and fairly".

Employment tribunal caseloads have risen significantly over a number of years. Nearly 104,000 applicants submitted claims in the year 1999-2000, of which 25% went on to a tribunal hearing (UK0011199F). Commenting on the proposed new arrangements, which are due to come into force in spring 2001, trade and industry secretary Stephen Byers said in a statement: "I am concerned that there are too many weak cases in the system causing significant delays for those with genuine claims. They also place unacceptable burdens on business and the taxpayer. People pursuing a claim with no reasonable prospect of success, or who indulge in time-wasting tactics, must be prepared to face heavy financial penalties."

The government also confirmed that it will shortly be implementing proposals for a new arbitration scheme, drawn up by the Advisory, Conciliation and Arbitration Service (ACAS), which will provide a quicker and more informal alternative to employment tribunal hearings for resolving claims of unfair dismissal. (UK0011199F).

The Confederation of British Industry (CBI) welcomed the package of measures put forward by the government, describing them as "an important shift in the right direction". The CBI said that companies would be particularly pleased by the employment tribunal reforms, for which the CBI has been lobbying for some time. However, the CBI added that the package "will not ease concern about the relentless build-up of new regulations", from which businesses needed a "breathing space". Trade unions and their legal advisors were reported to be critical of the motivation and likely impact on employee interests of the changes to tribunal rules.

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