Miscellaneous
Summary and Background
119.The Employment Tribunal Rules of Procedure are set out in Schedule 1 to the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2004. These regulations are made under various powers contained in the ETA 1996.
120.As part of his review of the Employment Tribunal Rules of Procedure, Mr. Justice Underhill recommended certain changes that would require amendments to the existing powers in primary legislation.
121.In certain claims, the amount able to be awarded by an employment tribunal is subject to a statutory limit. These limits are subject to annual adjustment in line with the Retail Prices Index. However, the rounding mechanism currently applicable has led to increases in the limits far greater than the rate of inflation. Section 22 will allow the rounding mechanism to be adjusted so that all limits are rounded up or down to the nearest pound, thereby ensuring that the changes closely reflect the rate of inflation.
122.Compromise agreements are being renamed as “settlement agreements”. This is the term more generally used for civil claims and is therefore more widely understood than compromise agreement. It also more accurately reflects their use and content.
Section 21: Tribunal Procedure: Miscellaneous
123.This section amends existing powers in sections 9 and 13 of the ETA 1996 to make employment tribunal procedure regulations and introduces a new definition to section 42 of that Act.
124.Subsection (2) amends section 9(2) of the ETA 1996, which provides a power to make regulations on the payment of a deposit if a party wishes to continue to participate in proceedings. The amendment has the effect of enabling employment tribunal procedure regulations also to provide for tribunal deposit orders if a party wishes to pursue a specific allegation or argument within proceedings. This will enable the Secretary of State to make tribunal regulations which will allow tribunals to be more targeted with their case management.
125.Section 13(1)(a) of the ETA 1996 authorises employment tribunal procedure regulations to provide for the award of costs or expenses (costs are known in Scotland as expenses); witness expenses are recoverable as part of such a costs or expenses order. At present, section 13A(3) of the ETA 1996 prevents employment tribunal procedure regulations from allowing for costs orders and preparation time orders in favour of the same person in the same proceedings. This could prevent litigants in person from recovering witness expenses and therefore is unfair to such unrepresented parties. Subsection (3) amends section 13A of the ETA 1996 so that employment tribunal regulations can be made which allow for a costs order in respect of witness expenses and a preparation time order to be made in favour of the same person in the same proceedings.
126.It is possible to make employment tribunal procedure regulations under section 13(1)(a) of the ETA 1996 to permit costs orders in respect of the costs of lay representatives. However, the Government considers that the scope of this power could be clearer. Subsection (4) amends section 42 of the ETA 1996, introducing a definition of the meaning of the word “representative”, so that it is clearer that costs of representation by a non-lawyer are covered by the terminology in section 13(1)(a) of the ETA 1996.
Section 22: Indexation of amounts: timing and rounding
127.This section amends section 34(3) of the ERe1A 1999 by introducing a time that orders made under that section are to come into force and amending the calculation which is to be used to increase or decrease the relevant limits.
128.The section means that future changes to the relevant limits would be made on 6 April each year. All limits remain linked to the Retail Prices Index. However, the section changes the rounding calculation so that all limits are rounded up or down to the nearest pound.
129.Section 34(2) of the ERelA 1999 provides that, if the Retail Prices Index for September of a year is higher or lower than the Retail Prices Index for the previous September, the Secretary of State is required to make an order to increase or decrease the limits which apply to certain awards of employment tribunals and other amounts payable under employment legislation.
130.The list of sums to be increased or decreased as a result of a change in the Retail Prices Index is set out in section 34(1) of the ERelA 1999. These include the amount of a week’s pay used for statutory redundancy payments and the basic award and compensatory award for unfair dismissal. The sums for the relevant payments and awards were revised by order under the ERelA 1999 for the first time in February 2000 (Employment Rights (Increase of Limits) Order 1999 (S.I. 1999/3375)) and a total of 12 orders have been made.
131.In applying the relevant percentage increase or decrease, the Secretary of State has been required to round up the new sums to the nearest 10 pence, £10 or £100 (as applicable) in accordance with section 34(3) of the ERelA 1999, with the result that variations in the percentage change can occur.
132.In recent years the calculation has led to increases in limits which were significantly above the Retail Prices Index rate of inflation. The most significant impact on business has been the rate at which the limit used for calculating statutory redundancy payments has increased, sometimes by 6-7% more than average earnings or the Retail Prices Index in the applicable period.
Section 23: Renaming of “compromise agreements”, “compromise contracts” and “compromises”
133.This section provides for the terms “compromise agreement” and “compromise contract” to be replaced with “settlement agreement” where they appear in specified legislation relating to employment matters.
134.Compromise agreements are a recognised way of dealing with an employment dispute, so that the matter is resolved in accordance with terms agreed by both parties. Provided that the applicable statutory requirements are met, the agreement is legally-binding and the issues covered by it cannot be the subject of a claim to an employment tribunal. Compromise agreements are referred to as compromise contracts in the context of the Equality Act 2010, but they operate in the same way as compromise agreements.
