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Employment tribunal shake up will help business growth


BIS Department for Business Innovation and Skills - Expert Author

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04 April 2012 - BIS

Employment tribunal changes will come into effect on Friday that will make it easier for businesses to take on staff and improve the process when staff have to be let go.

These changes are part of a radical reform package that will ultimately deliver direct net savings to business of more than £10 million a year with wider benefits to employers estimated at more than £40 million a year.

The Government has streamlined employment tribunals to cut unnecessary demands on employers, and encourage growth, while safeguarding workers’ rights. From 6 April:

  • The qualifying period for claiming unfair dismissal will rise from one to two years
  • Judges will be able to sit alone in unfair dismissal cases
  • Witness statements can be provided in writing as opposed to the current rules where a witness reads their own statement out aloud
  • The maximum level for costs awarded to businesses winning a vexatious tribunal claim will rise from £10,000 to £20,000. Deposit orders required by claimants when a judge determines that a part of claim is unmerited will increase from £500 to £1,000.

Also from Friday, we will publish the average value of awards and time taken to reach a hearing. Included in the guidance for tribunal application and response forms, this information will provide all parties with a greater understanding about what to expect from the tribunal process before they enter the system.

Business Secretary Vince Cable said:

“For too long now the system in place for employment tribunals has been a bloated and bureaucratic obstacle for employers and the taxpayer. For employers they were finding that weak and vexatious cases were too much of the norm, too easy to bring forward, while for the taxpayer they were proving ever more expensive to run.

“We have seen claims drop in the last year and we want to see this continue as we introduce alternative measures in the coming months helping both parties resolve workplace disputes.”

The improvements to the tribunals system follow a steady stream of announcements and initiatives to reduce the burden of regulation on business.

The Budget on 20 March included commitments to scrap or improve 84 per cent of health and safety regulation; as well as introducing sector-based reviews to ensure that regulations are enforced in a way that results in the lowest possible cost to business.

The One-in, One-out rule – the first of its kind anywhere in the world – has begun to turn back the tide since it took effect in January 2011. Any minister who wants to introduce a new rule which generates costs for business must first identify a corresponding cut in regulation elsewhere with the same value.

On 28 February the Third Statement of New Regulation, which measures the success of the One-in, One-out rule, was published showing that around £4 million of regulatory burdens will be cut from British businesses between January and June 2012. It also demonstrated that there has been cumulative net reduction of regulation since January 2011.

Business and Enterprise Minister Mark Prisk said:

“The One-in, One-out process is one of the best tools we have to cut the costs and burden of regulation on our businesses. But we know that changing the culture of regulation in Whitehall is a long-term job, and all of us in Government have to, and will, continue to root out red tape which poses more of a hindrance than a help to UK businesses.”

Notes to editor

  1. Most new laws affecting businesses come into force on one of two common commencement dates (CCDs) each year - 6 April and 1 October. CCDs enable business to prepare for the introduction of new, amended or reduced requirements. Read more about CCDs and the changes due to be introduced here:
  2. There were 218,000 tribunal claims in 2010-11, a rise of 44% since 2008-09, with each business spending nearly £4,000 per claim on average defending itself. There is an additional average cost of a £1,900 to the taxpayer per claim.
  3. Previously, Employment Judges were required to sit with lay members in all unfair dismissal employment tribunal cases. Friday’s change means that such cases will automatically be heard by a judge sitting alone unless they consider that it is appropriate for the case to be heard by a full panel, for example, where there are significant disputes as to the facts of a case. In most other civil cases judges sit alone to determine complex and extremely sensitive factual issues.
  4. Under the previous rules, witnesses were generally required to read out the statement they had prepared to the court. Having them taken as read will help to increase the efficiency of the tribunal process; hearing times will be reduced and more claims can be heard.
  5. BIS is currently running the ‘Focus on Enforcement’ campaign which is asking business to tell us where enforcement can be improved, reduced or done differently and to discover and celebrate where it works well, so others can learn from it. The first three reviews were announced at Budget and will cover chemicals, small businesses in food manufacturing and volunteer events. More information is available at:
  6. One-in, One-Out (OIOO) means that any new Whitehall regulation that imposes a net cost to business must be offset by a reduction in regulatory costs elsewhere. The Third Statement of New Regulation, which measures the success of OIOO, can be found here:

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Article Published/Sorted/Amended on Scopulus 2012-04-05 11:26:05 in Legal Articles

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