The Law Commission’s recommendations that are set to shake up Employment Tribunals

In a world that has largely been focussing on the Covid-19 pandemic, the publication of the Law Commission’s report on “Employment Law Hearing Structures” may have passed you by. However, it is important to take note as the Law Commission has proposed some significant changes to the way Employment Tribunals may deal with claims in an attempt to rectify some apparent unsatisfactory gaps in its powers. We set out the key proposals below.

Giving Employment Tribunals greater jurisdiction to hear breach of contract claims

Currently, Employment Tribunals are only able to consider claims for breach of contract which arose or were outstanding on the termination of employment – usually a claim for notice pay where employment has been terminated without notice.

Employment Tribunals do not have jurisdiction to hear breach of contract claims that arise during employment and where employment is continuing. The Law Commission has recommended that Employment Tribunals’ jurisdiction should be extended to allow them to hear such claims.

This would be a very significant change, giving employees the right to bring a claim for breach of contract in the Employment Tribunal (for example, in relation to the provision of a contractual benefit or a change to working practices) without having to end their employment. At present, such claims can only be if the employee resigns (often combined with a constructive unfair dismissal claim) or as a standalone claim in the civil courts.

An increase to the cap on the award for damages in breach of contract claims

Currently, the Employment Tribunal only has jurisdiction to hear breach of contract claims with a maximum value of £25,000.

The current cap can cause problems for Claimants with high value breach of contract claims, for example high earners with a long notice period wishing to bring a claim in respect of the termination of their employment without notice i.e. a claim for wrongful dismissal (breach of contract). Or a claim for a sizeable bonus. The cap may preclude such Claimants from being able to bring these types of complaint in the Employment Tribunal and require them to seek redress in the civil courts, a route generally regarded as being more high-stakes and costly.

The Law Commission recommends that the financial cap on breach of contract claims be increased from £25,000 to £100,000 in order to deal with this potential challenge.

An increase to the time limit for bringing claims to six months

At present, the time limit for bringing a claim in the Employment Tribunal for most cases is three months (subject to the ability to “stop the clock” during ACAS early conciliation).

The three-month limit, which by comparison to the six-year limit of the civil courts is very short, dates back to a time when the purpose of an Employment Tribunal was to deal with employment complaints quickly and informally. Things have moved on since then and, as recognised by the Law Commission, claims today often require more time for resolution, are more complex and involve larger sums.

As such, the Law Commission has proposed that the limitation period should be extended from three months to six months.

In particular, it had sympathy with the argument that bringing a claim within three months may be difficult for some Claimants, particularly those that wish to pursue internal grievance procedures in the first instance or those that need to obtain legal advice. The pressure to bring a claim before the conclusion of a grievance or before proper advice is sought is likely to reduce the chance of an amicable resolution being obtained.

Undoubtedly, this change would help employees, particularly those that have been slow off the mark to submit a claim or who wish to bring more complex claims such as whistleblowing or discrimination. On the other hand, it would create greater uncertainty (and a longer period of nail-biting!) for employers that fear they may be facing a claim.

A change to the test for extending time limits

Currently, if a complaint that does not relate to discrimination is received by an Employment Tribunal after the limitation period, the Claimant must demonstrate that it was “not reasonably practicable” to submit it on time in order for the Tribunal to exercise its discretion to allow the complaint to proceed. This is often a high bar for Claimants to overcome. On the other hand, the test for extension of the time limit in relation to discrimination complaints is whether it is “just and equitable” to allow it to continue; a much lower burden and, arguably, a shift of the burden on to the employer to demonstrate why it would be unjust to allow the claim to proceed.

The Law Commission has proposed that Employment Tribunals should have the discretion to extend time limits in all cases when it considers it “just and equitable” to do so, not just in relation to discrimination.

This change would help to simplify matters, particularly in instances where a claim relates to complaints of both discrimination and non-discrimination, thereby potentially leading to only parts of a claim to proceed. However, if adopted, the change would likely be viewed by employers as providing Claimants with yet greater leeway, particularly if the limitation period is also extended to six months. 

Other proposals

Other recommendations made by the Law Commission include:

  • Giving the Employment Tribunal jurisdiction to hear complaints by employees that they are working hours in excess of the maximum working time limits. Currently, the only remedy available in the Employment Tribunal to an employee in this respect would be a claim for detriment or unfair dismissal if they are penalised or dismissed for refusing to work the excess hours or complaining about it.
  • The deployment of Employment Tribunal judges with experience of hearing discrimination claims to sit in the county court to hear discrimination cases outside the employment field.
  • The improvement of procedures for enforcing Employment Tribunal awards to ensure employees receive the compensation in a timely fashion.

What next?

It is expected that the Law Commission’s recommendations will be considered by the Government in due course. Whilst the Government has its mind on other matters at present, an agreed protocol requires it to provide an interim response to the report within six months and a full response within a year; we should have a clearer picture then as to which of the Law Commission’s recommendations are likely to become law. If the past is anything to go by, implementation of most, if not all, of the recommendations is likely.

Contact Emma Cousins if you have any questions relating to Employment Tribunal claims.

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