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What do tribunal changes mean for employers?

Changes to the tribunal system, including a cost to bring a claim against an employer, came into effect on 29th July 2013. Here we explain what the changes mean for small businesses and the implications for employers.

From 29th July 2013, employees have to pay at least £160 to lodge a claim and a further £250-£950 (depending on the nature of the claim) if their claim is accepted and given a hearing date.

This  fee is meant to present an element of financial risk for the employee, who will only get the amount back if they win their case. The aim of this is to reduce the volume of cases, especially low-value and vexatious claims, being brought to tribunal and therefore – in theory – saving employers from unnecessary cost in money, time and stress.

Cost to employers

Unfortunately this doesn't reduce the cost to businesses entirely. Potential costs to employers include:

  • The tribunal will have the power to order the unsuccessful party to reimburse the fees paid by the successful party, as well as any fines
  • A £160 fee will be charged to an employer who makes a counter claim
  • The fee for judicial mediation (£600) will be paid by the respondent, reflecting the practice where mediation is entered into privately to resolve employment disputes.

Different types of claim

The cost of bringing a claim will depend of which of two ‘levels' the claim falls into, reflecting the cost and resource it takes to deal with some claims. For example, a level 2 claim (costing the employee £250 to issue the claim and £950 to have it heard) would include matters like discrimination and dismissal.

Still a risk

Despite the changes, for those employers unfortunate enough to be taken to tribunal, the changes will not make much difference to the cost in time and resources it takes to defend and the upset to your business.

Therefore, it is important to try to avoid tribunals at all costs by following employment law and taking appropriate advice.

Alternatives

Part of the government's longer-term plan is to discourage employees from going down the tribunal route. Included in the Enterprise and Regulatory Reform Bill are plans to encourage a 'rapid resolution scheme', as well as other measures such as settlement agreements where employers and employees can mutually agree to end an employment contract. Information on this and other changes to the law can be found in our annually-updated practical employment guide.

To find out how the Forum can help you manage HR and employment law in your business and protect you from tribunal claims with comprehensive legal expenses insurance, call us on 0845 130 1722.

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