Early conciliation of Employment Tribunal claims: an Employer’s winning streak?


The Government appears to be succeeding in its aim of unclogging the Employment Tribunal system and converting its activities from sclerotic to superfast.  Many people think that it is doing so by promoting targets at the expense of justice (an old fashioned, but still important concept).  Whether this will actually be so will take a while to come out in the wash.  In the meantime, the hurdles for Claimants have become higher and the consequences for Respondent employers easier to avoid.

Take one example:  from 29 July 2013 the Government has required a party (usually the Claimant, rather than the Respondent) to pay a fee of between £160 and £250 before starting an Employment Tribunal claim, plus a further fee of between £230 and £950 before certain types of hearing can go ahead.  These fees are greater when there is more than one Claimant.  This has had the effect, possibly singlehandedly, of reducing by 79% the number of new claims presented to the Employment Tribunals during the last 3 months of 2013.  Unless that reduction in the number of claims goes hand in hand with a comparable reduction in the public funding of Employment Tribunals, everyone should look forward to a better and quicker service from the Tribunal clerks and judges.

Take another example:  from April 2014, Employment Tribunals can impose costs sanctions against an employer Respondent who has acted unreasonably.  But the maximum award is £5,000 and that penalty goes into the Government’s coffers, not the Claimant’s pocket, so doesn’t encourage genuine claims to be brought and continued unless there is an insurer backing them in the  first place; and it isn’t a big disincentive for employers who want to see a Claimant put their money on the table.

And now:  from 6 May 2014 the Government will require Claimants to notify ACAS before even starting an Employment Tribunal claim.  The process is known as Early Conciliation (or “EC”).  As this comes hot on the heels of the introduction of fees, many employers are thinking:  “it gets better and better”.  The objective is to use the services of ACAS to try to resolve a potential claim without converting it into an actual Employment Tribunal claim; and to settle it more quickly with an ACAS COT3 form (which is binding and does not require independent legal advice to be given to the employee, so does not involve an employer paying for that advice).  And unless ACAS issues an EC Certificate (which will be along the lines of “we tried, but failed” and states why, with details of the participants and relevant dates for limitation period calculation purposes), a claim can’t go ahead.

At one level, it’s correct for employers to feel relieved that steps have been taken to minimise the considerable number of “mischief” claims that had little merit, but which clogged up the Employment Tribunal system.  But there are several stings in the tail.

One sting is that, whereas employers were able to be sanguine about assuming that nothing would come of any dismissal that had taken place more than 3 months ago (because that was – and is – the normal time limit period for bringing claims) they cannot do so any longer.  In fact the time for breathing a sigh of relief (and transferring a potentially large sum of money back from a contingency budget to general budget) is potentially much longer; and also means that some operational decisions – such as recruiting a replacement member of staff, or reorganising a department – must be postponed.  Why?  The reason is that EC stops the clock for time limit purposes.  In other words, the normal 3 month time limit gets frozen while conciliation is considered.  But for how long?

  • initially for 1 month (to let conciliation happen); then
  • by up to a further 14 days (if both sides consent and ACAS thinks there is a reasonable prospect of doing a deal); and
  • (if conciliation fails) by the actual number of days take up by conciliation (if the 3 month time limit hasn’t yet been reached when this happens); or
  • (if conciliation fails) by up to a further 1 month from the date of the EC Certificate (if the 3 month time limit would have expired during the conciliation period).

From this it’s clear that there is no advantage to a Claimant in starting EC early.  And from an employer’s perspective, this has the potential to (almost) double the time when employers have to remain engaged in trying to settle a dispute.  This is likely to be niggling, even though it may cost less than having to respond to an Employment Tribunal claim which, these days, is often “front-loaded” (and causes more up-front time and expenses to be incurred) by making parties prepare their positions in a way that a judge regards as appropriate for the Employment Tribunals Service (but which isn’t necessarily the same as what is strategic and convenient for Respondents).

The second sting is that employers will have to develop their conciliation skills or engage third parties to do so on their behalf.  It’s a myth that conciliations are easy and that Employment Tribunals claims are relatively straightforward.  The reason is that Employment Tribunals have rules that are known to lawyers and many HR professionals; whereas conciliations are less prescribed and involve a change of mind-set:  instead of fighting their respective corners, the parties have to concede that there is, perhaps, a way of looking at things other than than their own.  It will be interesting to see how this develops – while official data are not yet available, several enquiries about voluntary EC notifications have been made since it went live on 6 April 2014 (it doesn’t become compulsory until 7 May 2014).

As to the mechanics of EC, they’re by no means straightforward, but will operate broadly like this:

  1. Claimant phones ACAS, who complete a prescribed Form; or Claimant emails or posts the Form to ACAS, who check it contains the relevant information and may then either reject it for not being properly completed, or contact the Claimant in order to complete it properly.  The Form requires contact details and dates of employment and is at https://ec.acas.org.uk/Submission/Create
  2. Completed Form is passed to the EC Support Officer (the “ECSO” – a new acronym for those who like such things), who makes reasonable attempts to contact the Claimant.
  3. If the ECSO fails to contact the Claimant, the ECSO must conclude that settlement isn’t possible and issue an EC Certificate.  This will be sent to the Claimant, who may then bring a formal claim in the Employment Tribunals.
  4. If the ECSO does contact the Claimant and the Claimant does not wish to conciliate, the ECSO must conclude that settlement isn’t possible and issue an EC Certificate (see item 3).  But if the Claimant does wish to conciliate, the ECSO passes the file to a Conciliation Officer, who checks that the Claimant does wish to conciliate and is happy that ACAS contacts the Respondent.
  5. If the Conciliator fails to contact the Respondent, the Conciliator must conclude that settlement isn’t possible and issue an EC Certificate.  Not being able to contact the appropriate person is a risk, but ACAS now has a National Contacts List of nominated persons and employers can volunteer to be included on this by emailing ACAS at ECcontactslist@acas.org.uk.
  6. If the Conciliator does contact the Respondent and the Respondent does not wish to conciliate, the Conciliator must conclude that settlement isn’t possible and issue an EC Certificate.  But if the Respondent does wish to conciliate, there will be a period of conciliation for settlement purposes.
  7. If EC succeeds, there will be a COT3 agreement and no Employment Tribunal claim is necessary.
  8. If EC fails, ACAS will issue an EC Certificate and the Claimant can then bring a claim in the Employment Tribunals (stating the Certificate number on the Claim Form).

You will see that this process will involve at least 3 ACAS personnel, which is a nice job creation scheme and has the potential for a request to fall between several stools.  There’s also some doubt (given our experience of the lack of speed with which some ACAS officers have handled matters in the past) about how long will it take for an ECSO or a Conciliation Officer to contact a party, because although this is expected to be within 2 working days, nobody knows how this will work in practice.

On the other hand, there is a potential silver lining, given that Respondents can also use this system to their own advantage, because a Respondent can apply for EC as well, which will not extend the 3 month time limit during which a Claimant must bring a claim.  This may wrong-foot a Claimant who fails to notice this, who (if the normal 3 month time limit has passed without a deal having struck) will then have to fall back on old case law that determines whether they can still go ahead by reference to whether it was reasonably practicable to have done so during the 3 month time limit and/or whether it would be just and equitable to extend that limit anyway.

By the way:  the voluntary Pre-Claim Conciliation that had been available from 2009 ceased to be available as at 6 April 2014.

Welcome to the new world of conciliating, facilitating, mediating and other dialogue-focused employee relations.  Of course we’re here already, so can help you.  Happy conciliating!

Guest Briefing Note – Rm2 on Share Schemes: Back To Basics

Guest Author

We are delighted that Rm2 have contributed a Briefing Note this month. Rm2 has been helping companies set up and run employee share plans since 1998. Their service and expertise covers everything from the overall initial design strategy through to the legal, tax and regulatory details of share schemes.

Rm2 have prepared a briefing note on their specialist subject share schemes exploring the fundamental benefits, potential pitfalls, and overall reasoning behind establishing an employment share scheme.

The note sets out what makes share schemes attractive to employers and staff, exploring ideas of reward structures, sustainable growth and employee retention.

A must-read for any business considering putting in place a share scheme to incentivise and reward staff.


Changes to watch out for in April


Below is a round up of the changes in employment law we can expect in the next few weeks:

Employment tribunals and compensatory awards – The maximum compensatory award will increase from £74,200 to £76,574 (subject to the limit of one year’s pay which has existed since July 2013) in respect of dismissals that take place on or after 6th April 2014.

Employment tribunals and a week’s pay – The maximum of a week’s pay increases from £450 to £464 in respect of dismissals and other entitlements on and from 6th April 2014. A week’s pay is used to calculate, amongst other things, the basic award for an unfair dismissal and the statutory redundancy payment.

It is worth bearing in mind that if an employer is about to commence a redundancy process, there will be a saving to the business if the redundancies are completed before 6th April 2014.

Employment tribunals and discrimination questionnaires – Discrimination questionnaires will be abolished from 6th April 2014. Although some employers found questionnaires cumbersome as collating the information could be onerous and they saw little value in them, others found them useful to prompt a quick resolution, either through early settlement or showing that no discrimination took place, and so preventing unnecessary proceedings.

Instead of questionnaires, there will now be a new ‘informal’ approach. The government considers that this non-legislative approach, which is set out in Acas guidance, will be “fairer for all” and that this will enable businesses to better challenge any unreasonable requests for information. The guidance has now been issued by Acas and includes advice on how individuals can ask questions and why employers and service providers should respond. http://www.acas.org.uk/media/pdf/m/p/Asking-and-responding-to-questions-of-discrimination-in-the-workplace.pdf

Therefore, repealing the statutory questionnaire procedure does not prevent individuals who believe that they have been discriminated against from using other means of obtaining information. It will simply remove the statutory mechanism, not the scope for establishing facts about whether discrimination has occurred. There is no legal obligation to answer any questions. However, a Tribunal may look at whether a business has responded and, if so, how they have responded as a factor when considering their decision on a discrimination claim. Also the Tribunal can actually order a business to provide answers as part of the process in any event. These are issues a business would need to weigh up when considering whether to reply and what to say.

Employment tribunals and Acas conciliation – the early conciliation scheme will start on 6th April 2014 and there will be a transitional period between 6th April and 5th May 2014 during which time prospective claimants can participate in early conciliation which will become mandatory in respect of claims presented on or after 6th May 2014. The intention behind the introduction of conciliation periods is to give the parties an opportunity to settle any claims before a claim is submitted, thereby reducing claims and making the tribunal system more effective.

Before lodging a claim, a prospective claimant must send Acas information of the claim in the prescribed manner and then Acas will forward this information to a conciliation officer. The officer must try to promote settlement within one month and if settlement is not reached, either because settlement is not possible in the conciliation officer’s view or the period expires, the officer must issue a certificate to that effect. A claimant may not submit a claim in tribunal without this certificate.

The introduction of fees in the employment tribunal on 29th July 2013 and the effect they have had on the number of employment tribunal claims (please see our earlier blog on this topic) may have a significant effect on the parties’ willingness to settle.

Individuals may be more willing to settle (and may therefore settle for a lower amount) in order to save the issue fee. Employers, on the other hand, may show an increased tendency to “wait and see” whether the claimant is serious, and may therefore be less likely to settle (or less likely to offer anything other than a derisory sum in settlement) until after the fee has been paid.

Only time will tell.

Can a small employer use an independent panel on an internal appeal, and ignore their decision? The answer is sometimes.


Often a small employer faces the dilemma that having investigated an issue of misconduct and carried out a disciplinary hearing, there is no senior manager who was not previously involved in the case available to deal with any appeal. The employer will be concerned that a dismissal will be unfair if it cannot provide an independent appeal process. Equally, the employer is loath to lose control of the process and have someone outside the organisation hear the appeal when they do not understand the culture and standards of the employer and the personalities involved.

The employer’s worst nightmare is to find its decision to dismiss overturned by a third party. This is what had happened in a recent Employment Appeal Court (EAT) case, in which the Tribunal allowed the employer’s decision to ignore the successful appeal and proceed to a dismissal. The dismissal was nonetheless fair in all the circumstances which included:

  1. The employer is a nursery whose first concern was for the children in its care.
  2. The appeal panel were only asked to review the decision made, and did not have authority to bind the nursery with its decisions.
  3. Further information came to light as a result of the appeal process which was later investigated.

In the particular circumstances, it was not unreasonable for the nursery not to follow the decision of the review panel, and the failure to do so did not of itself render the process unfair. In fact the EAT helpfully confirmed that the nursery would not necessarily have been in breach of the Acas Code if the nursery had decided that it should deal with the appeal internally even without an independent manager. A judge always has to take into account the size and resources of the employer, and cannot just say that a failure to set up an independent appeal, or follow a third party assessment necessarily makes a decision to dismiss unfair.

This a triumph for common sense and allows for each case to be decided on its own facts, but it is by no means safe to ignore an appeal panel, or proceed with an appeal internally where there is likely to be bias (whether actual or perceived). The point is that tick box law may well not produce the right outcome and if a small employer has real concerns about the appeal being dealt with externally, there are often good reasons for this, and if properly articulated the reasons may well be accepted by a tribunal as being valid and reasonable.

Kisoka v Ratnpinyotip (t/a Rydevale Day Nursery) (Unfair Dismissal : Reasonableness of dismissal) [2013] UKEAT/0311/13 (11 December 2013)

Employment Tribunal statistics: the introduction of fees in tribunals is resulting in a staggering reduction of claims. Is it all good news?


Many of us predicted that the introduction of fees in July 2013 for claims in Employment Tribunals would reduce the number of claims being brought. However, none of us anticipated a staggering 79% drop in the number of applications lodged in the last quarter of 2013 (compared with the same period in 2012).

Is it good news for employers? Generally it is because troublesome claimants with weak claims who were clogging up the system and wasting management time and cost seem, for the moment at least, to be a thing of the past. However, there is a sting in the tail because successful claimants can generally expect to recover their fees from employers, and the Employment Appeal Tribunal has recently confirmed that this applies to appeals as well. And as from 6 April 2014, tribunals will also be able to impose financial penalties on employers where it is decided that an employer has acted unreasonably, for example where there has been malice or negligence involved in an employee’s treatment. Penalties will be 50% of the award made to a claimant and subject to a cap of £5,000.

Is it good news for employees? Not really because any penalty awarded goes to the government’s Consolidated Fund and not to them.

Is the new system serving the interests of justice? The government would say it is because it is increasingly taking a utilitarian view of access to justice, namely that a tribunal system which is not bogged down with bad claims and pays for itself must be good for the majority of legitimate claimants because it produces an efficient and sustainable system of justice.

We, and most employment lawyers, feel instead that it is a travesty because the tribunal system no longer serves the people it was set up to protect; individual justice has been lost. True enough, many of the time wasters will be among the 79% of claims not brought, but so too are the majority of the bread and butter claims by employees who have not been paid their salary or who have been summarily dismissed without justification.

Even without being a cynic, it is easy to see that the tribunal system no longer serves the majority of its constituency: for those who can actually afford to pay lawyers (a shrinking minority), the new cap of £76,574 as from April 2014 on normal awards and the inability to recover costs (rather than tribunal fees) even if successful make most claims uneconomic. For the low paid, the lack of a costs regime puts them in the hands of ‘no win, no fee’ lawyers who need a quick solution in order to make claims pay, and who are reluctant to front any fees. The government and employers are happy, as they can report that claims are reducing as are the costs of a bloated system.

I feel that the balance is wrong and there is likely to be a market solution found with both employers and employees having to insure themselves against the possibility of claims, and the insurers acting as gatekeepers, only allowing legitimate claims with good prospects of success to proceed and managing the costs in any claim or defence they support.