Employment Tribunal Statistics for 1st April 2011 to 31st March 2012

Details of claims brought before the Employment Tribunals for the year to 31st March 2012 were published recently and show the following trends:

1. Generally, claims to Employment Tribunals have reduced year on year and continue to do so, down from 218,100 in 2010-11 to 186,300 in the last year. This is a reduction of some 15%.

2. It is noticeable that there has been a decline in unfair dismissal claims over the same period. This is only a 3% reduction, though, indicating that unfair dismissal is still a live issue for many dismissed employees. It will be interesting to see how the recently introduced increase in the qualifying period for unfair dismissal claims from one year to two years will affect these figures in the future.

3. Of the unfair dismissal claims brought which proceeded to a final hearing, 55% were dismissed and a further 23% led to no award of compensation. Remedy was an issue in only 22% of cases.

4. The average award of compensation in an unfair dismissal claim was £9,133.

5. The highest award of compensation in a tribunal case was £4.5m, which was in a race discrimination claim.

6. Whilst Employment Tribunals are increasingly ordering costs against claimants, this is still a rarity.

Interestingly, representation of Claimants by trade unions and lawyers continues to drop. The upshot of this for Respondents is that they are forced to defend a claim brought by unrepresented Claimants who are unlikely to be as familiar with the rules and procedures of Employment Tribunals, nor with the need to set out full details of their claim and coincide to comply with Employment Tribunal directions. This has an impact on Respondents’ fees and will make matters more unpredictable.

Social Media Guidelines

Recent cases which we have highlighted in previous e-bulletins have shown the importance of having a clear policy setting out exactly what employees can and cannot do on social media. Individuals are spending an increasing amount of time on social media sites, both during and outside of working hours and for work related as well as purely social purposes.

As with all matters of policy, it is strongly advisable to put written policies in place, setting out a clear framework within which employees are expected to conduct themselves. It is possible to seek to control to some extent what employees do outside of working hours by setting out prohibitions on matters such as taking steps to bring the employer into disrepute; referencing the employer’s name, business, customers or other staff in social media interactions; and prohibiting use of the company’s name, product or branding.

Clear policies are imperative not just from an employment point of view. It is surprising how many Facebook groups have been set up by employees of a wide variety of businesses, many of which use the employer’s name and branding. This serves to “legitimise” the Facebook group as being something connected with the employer. Any negative or derogatory comments posted on that Facebook group’s wall can often be seen by anyone searching for the company name (such as a prospective customer) and this can impact negatively on the company’s reputation. Equally, candidates for jobs within the company will often search online to gather information about the individuals who will be interviewing them as well as the company itself. This is particularly the case at graduate level as well as those in “generation X” and “generation Y” who are most in the habit of using social media in all aspects of their lives.

In the absence of a clear written policy setting out the rules for the use of social media, it can be extremely difficult to discipline employees for their actions. Employers will find it much easier to take action where they can point to a policy; gather evidence that the employee has breached it; and show that the employee was aware of the consequences of such a breach. Without a clear written policy, there is no option but to seek to extract evidence from conversation between managers and the staff member in question, email correspondence and so on.

A recent case involving Apple is a clear example of the use of a social media policy. Apple’s policy prohibited any negative comments about Apple as a business or any of its products. An employee from an Apple store was dismissed for making negative comments about one of its products on a social media site. The dismissal was held to be fair, because the employee had been on notice that his actions were prohibited and the policy also set out clearly what the result would be if such conduct was committed.

It is also worth building in provisions to a social media policy (as well as into contracts of employment) regarding what happens at the end of the employment relationship. In addition to “standard” restrictive covenants prohibiting contact with clients or suppliers, prohibition against recruitment of former colleagues and so on, provision should be made for what happens to an employee’s contacts on Linked-In or other social media sites and dealing with other “electronic” matters.

If you would like further information about the issues discussed in this article, please feel free to contact us.

Employment Law Reform Update

The Government is proposing a number of reforms to Employment Law, aimed at reducing red tape. The Enterprise and Regulatory Reform Bill (“the Bill”) currently before Parliament is the source of the various proposals. The Government’s stated intention is to encourage recruitment and boost employer confidence to speed up economic recovery. The latest announcement by Vince Cable, the Business Secretary, on 14th September, introduced two more consultations which are to run until 23rd November.

The first consultation relates to the proposals for new Employment Tribunal rules put forward by Mr Justice Underhill in his recent review. The second consultation, which we shall concentrate on here, relates to unfair dismissal compensation and the use of “settlement agreements”

Unfair dismissal compensation

Under the proposals, the Secretary of State would have the ability to vary the amount of the compensatory award for unfair dismissal. The maximum award is currently £72,300 for dismissals on or after 1st February 2012. However, it is proposed that the Government will have wide powers to vary this maximum award – including decreasing it.

Further, there are several proposed methods for setting the maximum award. One option is that it could be set at an amount calculated by reference to the median annual earnings level. This would set the maximum at anywhere between £25,882 and £77,646 on current figures. Alternatively, it could be calculated on a number of weeks’ pay in excess of 52 weeks’ pay. The maximum could alternatively be the lower of these two figures. It could even be different for different types of employer.

It is perhaps comforting to know in light of the above potential options that there are no proposals to change the formula used to calculate the basic award for unfair dismissal. However, it seems most likely from the consultation paper that the preferred option is to cap compensation at the lower of a year’s pay or a fixed overall cap. The consultation intends to obtain views on the above and the level of the overall cap that should be introduced.

Settlement Agreements

There has been much talk recently about ways of persuading employers and employees to settle employment disputes rather then proceed to Employment Tribunal hearings. Part of this is to encourage greater use of compromise agreements that set out the exact terms on which a settlement is reached. The Bill proposes to rename compromise agreements “settlement agreements”.

A particularly interesting aspect of the proposals is the suggestion that employers should have more freedom to discuss a proposed termination deal with an employee without there being an existing dispute, such as disciplinary proceedings or a grievance. The difficulty at present with such conversations is that there is a significant risk that they would not be protected by the “without prejudice” rule. That means an employee could disclose the conversation in their Employment Tribunal claim as evidence that the employer failed to follow a fair procedure before dismissing them. Such conversations are tantamount to a dismissal. However, conversations that are properly “without prejudice” cannot be disclosed to Employment Tribunals.

If this proposal goes ahead, it would mark at least a partial return to the old ability to have a quiet “man to man chat.” Employers may thus be better able to have a frank conversation with an employee to propose a deal regarding their departure without being exposed to significant risk of a procedurally (if not substantively) unfair dismissal.

The consultation will also seek views on a new statutory ACAS code of practice on settlement agreements. It is possible that an ACAS code would include a model settlement agreement that parties would be persuaded to use. There would also be model letters for employers to use to propose settlement terms.

The difficulty with such “model” documents is that one size does not fit all, particularly with employment matters. Each situation is unique and it is always extremely difficult to provide for every eventuality or individual employee’s situation.

Summary

No doubt the Government’s thoughts will be fleshed out over time. Although any steps that seek to encourage an early resolution to claims are welcome, given that settlement offers under the proposed regime are proposed only to be inadmissible as evidence in unfair dismissal claims, this is not a “fix all” solution. Employees would still be able to refer to such offers in discrimination claims

As with the statutory disciplinary and dismissal procedures that were withdrawn after the Government finally accepted that they were not a success, the need for settlement offers under the proposed regime to be in writing, may in fact serve to put distance between employer and employee, rather then encourage reasoned negotiations. It is likely that extreme care would be required to ensure that employers stay within the new framework and are thus covered by the protections that it will introduce, As such, detailed legal advice would most likely still be required, thus defeating the stated aim of reducing the formalities.

We would welcome your thoughts and opinions on the new proposals in order that we can incorporate them into our response to the consultation.