INTRODUCTION
Lord Sugar’s recent high profile case in the East London Employment Tribunal brought by former apprentice winner Stella English attracted much media comment. Ms English lost her case for constructive dismissal but successfully resisted a subsequent claim by Lord Sugar to try to recover his legal costs.
Lord Sugar was particularly critical of what he felt was an unmeritorious claim and spent thousands of pounds defending the action. The Judge agreed. In a written judgment, Judge John Warren said: "This was a claim which should never have been brought."
The situation highlighted a wider perception that there needed to be stronger control exercised by the Tribunals to review claims and responses at an earlier juncture which would reduce costs and also to promote alternative dispute resolution or ADR more vigorously than was currently the situation.
THE NEW RULES
The new Employment Tribunal rules of procedure came into force on 29 July 2013, alongside the new Tribunal fees. The new rules apply to all claims, including those which were presented before 29 July (subject to a few specific exceptions, for example relating to counterclaims).
The rules include changes of both style and substance. The stylistic changes are intended to make the rules shorter and less technical, making the Tribunal process more accessible to all.
The substantive changes aim to provide flexibility in the procedure, increase the scope for removing unmeritorious claims before a full hearing and encourage settlement. They also aim to deter unmeritorious claims.
SUMMARY OF CHANGES
The key changes introduced by the new rules are:
- new ET1 and ET3 forms;
- separate case management discussions and pre-hearing reviews have been combined into one "preliminary hearing"; an initial paper sift has been introduced, which seeks to ensure that weak cases are identified and dealt with more effectively at an early stage;
- a more flexible regime of applying for an extension of time to put in a response and applications can be made even after the deadline for submitting a response has passed;
- claims which have been withdrawn should be dismissed automatically, without the need for an application from the respondent;
- there is now a clear legal structure for combining multiple cases, to be headed up by a lead case mechanism;
- alternative dispute resolution or ADR is to be encouraged throughout the tribunal process;
- it is no longer necessary for cost orders of over £20,000 to be referred to the county court for assessment; and
- there is a greater degree of flexibility in the issuing of deposit orders, so that a deposit order can be made in relation to a specific allegation or argument which has little reasonable prospect of success, rather than the claim as a whole.
WHAT EFFECT WILL CHANGES HAVE?
The new rules have introduced a new "sift" stage into Tribunal proceedings, with the aim of weeding out unmeritorious claims.
Once the claim and response are accepted, an Employment Judge will conduct an initial sift of all documents to confirm whether there are "arguable complaints and defences within the jurisdiction of the Tribunal". The Judge must consider "all of the documents held by the Tribunal in relation to the claim" and may order the claimant or respondent to provide further information for this purpose.
A similar process applies to the response, so that if the Judge considers the response has no reasonable prospect of success he/she must notify the parties and order that the response (or part of it) should be dismissed unless representations are received by a specified date.
It should certainly encourage the parties to undertake an assessment of the merits of their cases at the outset, and if Judges take a pro-active approach it could reduce the need to request further information.
A Tribunal will still only be able to make costs orders in limited circumstances where a party has acted "vexatiously, abusively, disruptively or otherwise unreasonably" in either bringing the proceedings or in the conduct of them.
The new rules reflect the government's commitment to alternative dispute resolution (ADR). In addition to the mandatory pre-claim early conciliation coming into force in April 2014, the rules set a framework to encourage early settlement.
CONCLUSION
The new procedural rules are to be welcomed particularly by employers who find themselves on the receiving end of an unmeritorious claim by a former disgruntled employee and perceive that their claim is effectively a threat of blackmail forcing them to make the unpalatable decision of settling or wasting valuable management time and incurring legal fees defending the claim. Even if successful, they still will find it very difficult to recover their costs as the recent Lord Sugar case demonstrates.
Lord Sugar commented after his victory - "There was never a case for us to answer but her need for money and fame meant that the whole system was subjected to this charade. I have been cleared of a derisory attempt to smear my name and extract money from me. The allegations were without substance, and I believe this case was brought with one intention in mind - the presumption that I would not attend the tribunal, that I would not testify and that I would settle out of court, sending Ms English on her way with a tidy settlement."
Mediation which is synonymous with ADR will play an increasingly important role in resolving employment disputes quickly and cheaply. Mediation can be employed at an appropriate time and with both parties’ consent using the services of an accredited and experienced mediator. Businesses can then move away from the ´all or nothing´ outcome of a Tribunal hearing with all the attendant pressure and stress to a facilitated and commercial resolution of the dispute, leading to a binding settlement agreement.
So less of a sugar-coated pill and more a recipe for a robust and fairer process.
This article contains general advice and comments only and therefore specific legal advice should be taken before reliance is placed upon it in any particular circumstances.
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