Mandatory ACAS Pre-Claim Conciliation

By James Davies & Tarun Tawakley

Posted: 25th April 2014 12:54

Since coming into power in 2010, employment law, and specifically its reform, has been a hot topic for the UK’s coalition Government – with most changes aimed at boosting business by cutting red tape.  Having made no fewer than 59 legislative changes to employment law to date (each with varying degrees of controversy, and arguably success), this trend looks set to continue as the Government continues to review employment laws in the UK throughout 2014.  
 
One of the most controversial changes introduced in 2013, was the requirement on potential claimants to pay fees in order to issue employment tribunal claims and take their claim against their employer as far as a hearing. 
 
Previously, employment tribunals were free to use and, unlike claims in the County Courts and High Court, there were generally no cost consequences for a claimant if their claim was unsuccessful.  This made employment tribunal litigation a cheap, and relatively risk free, means of seeking redress for a disgruntled employee.  Although we have limited data on which to assess the consequences of the introduction of fees in employment tribunals, the initial impact appears to have been significant with statistics showing a 79 per cent drop in employment tribunal claims in the period between October and December 2013.
 
A new scheme of early conciliation (EC), introduced on 6 April 2014, looks set to result in a further reduction in employment tribunal claims – by encouraging the resolution of workplace disputes, through the conciliation service Acas, before they escalate to an employment tribunal claim.  EC will become mandatory for claims presented from 6 May 2014 onwards.
 
How will early conciliation work?
 
EC is designed to be a relatively simple process.  In outline, the main features of the EC scheme are as follows:
 
·         Before presenting a claim for “relevant proceedings” (which includes almost all mainstream employment tribunal claims), the potential claimant must give his or her name and address, together with the name and address of all prospective respondents, to Acas, who will then seek to conciliate the dispute. 
·         As long as the conciliation officer at Acas considers that there is a reasonable prospect of settlement, Acas will attempt to conciliate for the period of one month (which can be extended by up to 14 days, if the parties and Acas agree). 
·         If no settlement is reached at the end of this time, or if for any other reason the conciliation officer considers that there is no reasonable possibility of settlement, Acas will issue a conciliation certificate to the potential claimant.
·         The EC process has the effect of “stopping the clock” on the time limit for presenting a claim to the employment tribunal.  The clock effectively stops for the period starting with the day after the prospective claimant contacted Acas and ending on the date on which the conciliation certificate is issued by email.  If the certificate is sent by post, the clock restarts on the earlier of the date on which it is actually received or two days after posting.  In addition, the claimant’s deadline for bringing a claim will be further extended, if necessary, to ensure that they have a minimum of at least one month from the issue of the conciliation certificate to submit their claim. 
·         The respondent will not always receive a conciliation certificate, so it may be very difficult for employers to calculate with any certainty whether an employment tribunal claim they receive is in time. 
 
What can businesses do to prepare?
 
The EC regime is likely to have teething problems in its initial stages.  One possibility is that potential claimants will give an incorrect or inappropriate name for Acas to use to contact the respondent (for example, their line manager or the chief executive).  In light of this, Acas has suggested that it will keep a register of appropriate contact details (such as for an organisation’s HR department) if employers proactively provide these.  Large employers or those who tend to receive tribunal claims regularly may wish to consider giving appropriate contact details to Acas.
 
EC does not require potential claimants to give any details about their claim.  To enable the conciliation period to be as useful as possible, respondents who wish to engage with the process should be prepared to engage with Acas to find out more details about the complaint. 
 
Given the new rules regarding extension of time limits, respondents should also be aware that employees will in future have longer than the currently typical “three months less one day” limitation period to bring a claim.  This makes it all the more important to keep contemporaneous notes of any potential disputes and to ensure that relevant records are kept for longer after a dismissal or other incident (for example, at least six months).
 
What will be the practical implications for businesses?
 
EC builds upon the apparent success of Acas’s voluntary pre-claim conciliation service, but it remains to be seen how effective it will be in helping resolve disputes and further stem the flow of employment claims.  Following the introduction of fees in tribunals, as referred to above, it may be that potential claimants will be more inclined to settle disputes early in order to save the cost of issuing a claim.
 
However, it is important to recognise that EC imposes no obligation actually to engage in conciliation and there are no consequences for failing to do so.  As such, it is questionable how far potential parties to litigation will be willing to enter into discussions over a settlement before a claim has been issued.  It may be that employers will want to test the resolve of the potential claimant, by refusing to engage and waiting to see whether the individual feels sufficiently aggrieved to “put their money where their mouth is” and pay the issue fee to commence formal proceedings.  The downside for employers of adopting this tactic is that any subsequent settlement is likely to be at a higher level – as the claimant is likely to wish to recover any incurred fees (including any employment tribunal fees on issue and legal fees incurred in preparing their claim). 
 
In addition, if there is a risk of the employer losing the potential claim, it should bear in mind the new power, from 6 April 2014, of an employment tribunal to impose a financial penalty, of up to £5,000 (payable to the Secretary of State, and in addition to any compensation awarded to the claimant), if the breach of the employee’s rights had one of more “aggravating factors” – which remains undefined by legislation – but covers cases where the employer’s actions were deliberate, committed with malice or repeatedly.  The notes suggest that a penalty is more likely where the employer has a dedicated HR team. 
 
Aspects of the legislation underpinning EC are arguably quite complex (e.g. the “stop the clock” time limit rules) and this may provoke satellite litigation, contrary to the Government’s primary objective.
 
However, ultimately, a further means to avoid potential employment tribunal litigation is to be welcomed by employers and may, if EC works as planned, result in a further reduction in overall employment tribunal claims.
 
James Daviesis a partner and Joint Head of Lewis Silkin’s Employment, Reward and Immigration department. His particular interests include discrimination law, the role of new technologies in the workplace and international employment law. He is a member of the UK Employment Lawyers' Association's Legislative and Policy committee as well as chairing a number of its working groups. James is also a member of the European Employment Lawyers’ Association.
 
James writes regularly in the national, legal and personnel press and is recognised as one of the leading employment lawyers both nationally and internationally by a range of independent guides including Chambers Guide to The Legal Profession, Legal 500, Legal Business, Legal Experts and The International Who’s Who of Business Lawyers.
 
Tarun Tawakleyis a senior associate in Lewis Silkin’s Employment, Reward and Immigration department. His practice spans all aspects of employment law – with a particular focus on clients in the financial services and technology sectors.  Tarun has completed secondments to two international investment banks to develop his knowledge of the sector.
 
In addition to his particular interest in High Court litigation (including team moves) and collective employment law, Tarun regularly advises on discrimination claims, bonus disputes, the Remuneration Code and incentive plans and on the hiring and firing of employees worldwide. 
 
Tarun is a regular commentator on employment law issues, speaking at a range of public conferences and having appeared on both BBC Radio and LBC Radio. 

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