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Chelsea Brooke-Ward and Nathan Davis comment upon the Law Commission’s recommendations for the Employment Tribunal Structure and Jurisdiction

Yesterday the Law Commission released its Recommendations following The Law Commission’s 13th Programme of Law Reform which included a review of the employment law hearing structures.

On 26th September 2018, the Law Commission published a consultation paper and sought responses from the profession to the proposed implementations. The consultation period closed on 31 January 2019. The report outlines the responses to the provisional proposals that were made and the questions asked and sets out recommendations for reform as to how to improve how employment disputes are decided within its report ‘Employment Law Hearing Structures: Report’.

This comment intends to summarise and remark upon some of, but not all, the key issues and recommendations raised. The report itself is a hefty 212 pages long but does contain very interesting commentary on the arguments raised by employment litigators and professionals alike on the different aspects of the consultation.  The full report can be found here.

Scope of the Consultation:

The Consultation was raised to deal with the potential conflicts of jurisdiction between the employment tribunal and the civil courts, and the way in which some of the elements of the Employment Tribunal are currently being implemented.

The main matters of concern to litigators which find comment in this summary are the following recommendations within the report which can briefly be summarised as follows:

  1. Employment Tribunal time limits
  2. The test for extending time limits in the Employment Tribunal
  3. Extensions on the types of breach of contract claims that can be heard by an Employment Tribunal and the financial limit of the same
  4. Cross Ticketing of Employment Judges to the County Courts
  5. An informal list in the QBD for all employment & discrimination work e.g. restraint of trade, confidential information, equal pay and industrial action injunctions.

The report specifically noted and endorsed the key differences and difficulties produced between the two jurisdictions i.e. employment tribunals and the civil courts, such as that in Employment Tribunals it is: the employee who is often the Claimant;  it is generally a no-costs jurisdiction; and the proceedings tend to be less formal, but with some types of claims there was inevitably cross jurisdictional issues which created uncertainty, confusion and made no logical sense. The aim of the Consultation was to seek views on proposals to remove some of those inconsistencies and impracticalities between the two jurisdictions.

We will seek to deal with each recommendation in turn.

  1. Time limits for bringing an employment tribunal claim

The Report noted that the current 3-month time limit for some cases (not all employment tribunal matters have the same time limit) is short and the test for extending the same is different depending on the type of claim one is pursuing (i.e. that it was not reasonably practicable to bring the claim earlier or it is just and equitable to extend time) the former knowingly being more strict than the latter, and often viewed as bringing about injustice. The Report noted that the complexity and value of cases dealt with by the tribunal had significantly increased since its implementation and as such the 3-month time limit appeared to restrict access to justice rather than promote it.

In particular there was a common agreement found in the consultation responses that noted women bringing pregnancy and maternity discrimination, and various types of harassment cases more generally, were particularly prejudiced and disadvantaged by the current time limits due to the significant issues and circumstances that these particular groups of people faced at that time. For example women were at their most vulnerable after giving birth, or towards the end of their pregnancy and were expected to take legal advice, consider the same and then act within a short period of time, whilst caring for young children or preparing for having a child (which as some mothers may know is a daunting experience in itself without the added extra burden of litigation, as litigators will know is by no means an easy task either) that made them even more vulnerable and there was a consensus that this did not seem just.

The Law Commission considered that the prejudice brought about by the short time limits was broader and applicable to more than specific groups, specifically having regard to: people wanting to pursue resolution though internal grievance processes; the increased complexity and value of claims; obtaining legal advice and representation; different types of claim having different time limits, all of which over stretch the small time frame currently afforded and created confusion.

An increase in our view allows Claimants a reasonable amount of time in which to pursue internal processes and grievance procedures which are often not finalised within the 3 months, which has in the past led to Claimants missing the time limits after being mistaken as to when the time started to run from and completing the internal process. Issuing halfway through a process has an ability to create resilience to settle and the potential to destroy the employment relationship.  It appears quite sensible to try and resolve the issues the parties have informally than to pursue litigation before an outcome has been reached. It is almost like trying to appeal a decision before you have been given the judgement, so we very much welcome this proposal.

Arguments were submitted that an extension to the time limits would cause injustice to respondents given staff turnovers, and fading of memories were but a few of those concerns, but in light of the current format of listing tribunal cases some being listed 1-2 years after issue (even longer sometimes) that argument is almost redundant in of itself. The report concluded that the jurisdictional time limits of the Employment Tribunal should be increased to 6 months and apply the same to all claims.

Although a matter not directly proposed in the consultation, but one that was quite rightly highlighted in the consultation period, was the effect of ACAS Early Conciliation if time limits were to be increased.  ACAS at present as the effect of “stopping the clock”, or “extending time” on the running of time limits and creates its own complexities with calculation of the same. Nevertheless, concerns were raised that a longer time limit, and an extension of time with ACAS would then create a larger period of time in which Claimants could pursue claims which defeated the object of the Tribunal being informal quick access to resolutions (“speedy justice”). However, the report failed to make any recommendation as to the effects of ACAS Early Conciliation and left the matter open for the legislature.

  1. The test for extending time limits

Regarding the Court’s discretion to extend time limits, the Law Commission considered the current tests risked producing arbitrary and unjust outcomes in which deserving cases were stopped from proceeding despite a good reason and the absence of prejudice.  One consultee raised an example of such injustice brought about by the “reasonably practicable test” in the case of Consignia (formerly the Post Office) v Sealy, where the Claimant posted a letter using a first-class stamp, but the letter was not delivered the next day and the Claimant subsequently missed the time limit by a day. The test of “reasonably practicable” meant that the court was bound by the draconian manner in which it created, and had to find that it would have reasonably practicable to issue in time and therefore the Claimant’s claim was dismissed. The test of whether it is just and equitable allows the Tribunal to look at further external factors such as the circumstances of the Claimant, the prejudice to both parties and gives the judge a wider discretion in which to allow a claim to proceed out of time. Some of the consultees suggested that given the implementation of a longer time limit a more rigid test should be adopted, but favour was found with the wider test.

However, the wording adopted by the report appears to us to create further confusion as the exact words used are “We recommend that in types of claim where the time limit for bringing the claim can at present be extended where it was “not reasonably practicable´ to bring the complaint in time, employment tribunals should have discretion to extend the time limit where they consider it just and equitable to do so.” – This seems to suggest that the recommendation is that where the reasonably practicable test applies currently, often used in cases for unfair dismissal, will still apply but the judges will have a discretion as to which test to use. This will surely create further inconsistencies with different judges applying different tests, but the implementation of the recommendation may be something different, so this is something to watch.

  1. Extensions on the types of breach of contract claims that can be heard by an Employment Tribunal and the financial limit of the same

Temporal Restrictions on the jurisdiction of employment tribunals:

It was noted that Employment Tribunal did not have jurisdiction to hear claims for breach of contract, where the employee was still employed by the employer (except for those concerning unlawful deductions), and such claims must be issued through the civil courts. The Commission considered there was no basis for this distinction, and that it raised an anomaly and was illogical that the employment tribunal could not hear a claim which arises from an employment context – where they could hear the exact same claim if the employment had terminated. Concerns were raised that a change in the current format would encourage litigation and destroy the relationship between employer and employee, however, the proposal is not to give the employee an entirely new basis of claim but simply change the jurisdiction in which some claims are heard. Further, given that a Claimant in an Employment Tribunal case is bound to obtain an ACAS EC certificate before issuing, this gives parties a further informal opportunity to settle matters before litigation and option that is not available in the Civil Courts. Whilst there is small claims mediation there is no obligation to take part and the uptake of such is limited.  Much of the worry came from the “cost free” litigation of the Tribunal as oppose to the County Court, the Law Commission however felt that there was also a “cost free” way to litigate in the County Court under the Small Claims Track which is often the track allocated to these types of claims and therefore the arguments for the change outweighed those concerns and recommended that Employment Tribunals should hear such contract claims.

It was further noted that the Employment Tribunal does not have jurisdiction to hear claims for sums that become due post-termination.  The Commission considered this anomaly was unjustified and that there was a risk that Claimants would be unaware of this particular limitation and again was confusing and illogical given the Employment Tribunal was more than experienced and equipped to deal with such claims. This often meant that a Claimant who was bringing claims of unfair dismissal for example and wrongful dismissal would need to pursue a claim in the Tribunal and then in the County Court for any money owed to them after their termination and led two proceedings out of one set of facts (satellite litigation), which in turn could mean that an employee could win or lose in one jurisdiction and have a completely different outcome in another. Having the matters heard together would in our view promote consistency in resolution of such claims and the Law Commission recommend that the Employment Tribunal should have jurisdiction to hear such claims.

Financial Restrictions on the jurisdiction of employment tribunals:

Currently the limit of a contractual damages claim in an Employment Tribunal is capped at £25,000.00. An employer can currently only claim a breach of contract by way of a counterclaim and cannot bring a contractual claim of its own right. The counterclaim of which is also capped at £25,000.00. An individual seeking a higher financial remedy must pursue their claim in the civil courts. The Commission considered this to be arbitrary particularly in light of rising salaries, and this cap in fact being lower than when this particular legislation was implemented it. It was also noted by a consultation response that this feature can give rise to a potential estoppel argument after proceedings have to be withdrawn and reissued in the civil courts and that the limit increases the risk of a multiplicity of proceedings. The recommendation was therefore to increase the cap from £25,000.00 to £100,000.00 to maintain parity with the financial limit upon bringing a contractual claim in the County Court.

 

  1. Cross Ticketing of Employment Judges to the County Courts

The Law Commission raised concern as to expertise in relation to discrimination cases which can arise in either the employment or civil jurisdiction. The current format is that employment judges deal with discrimination claims under the Equality Act 2010 arising out of employment, and District and Circuit Judges deal with non-employment discrimination claims arising from the same Act in the County Court. The worry was that the County Court hears much less of these complex cases and therefore may not be best equipped to adjudicate the same. They considered that there was a danger that the majority of judges in civil courts were ‘generalists’ and, therefore, lacked the level of expertise of employment judges in discrimination cases. The consultation sought the views on how best to use the resources and expertise of the Employment Judges who were best equipped to deal with such claims.

One of the major concerns in relation to this particular aspect was the resources of Employment Judges being consumed by taking on more work when the Tribunal Resources were already struggling and over stretched to deal with the matters they had (not even taking into account the longer time limits and greater jurisdiction proposed that would also increase an Employment Judges’ workload).

In summary, the Law Commission recommended that the County Court should retain jurisdiction of non-employment discrimination claims, and it would be best placed to “cross ticket” Employment Judges to sit in the County Court to hear appropriate claims. How this will happen in practice however may have some practical difficulties particularly given the fact that the Employment Tribunals are not generally located in or near the Civil Courts so geographically and physically it would mean that Employment Judges need to be at the Civil Courts. This may create an issue where cases need to be case managed, as one matter highlighted for the want of expertise of the Employment Judges was their ability to case manage such claims. This will mean that these types of claims need to be allocated very early on in the litigation. How and who is going to be allocating the claims is also another issue,  as on the evidence it would be appropriate for an Employment Judge to highlight which cases can be heard by Civil Judges and which need expertise of Employment Judges, otherwise where claims are wrongly allocated, this would have the potential to  slow down litigation, waste costs, waste time and make the process redundant. No suggestion was given as to how these types of cases would be allocated and this is certainly one to watch out for. Further, given case management in the round is done in a short period of time this will either require listing the Employment Judge at the County Court for the full day and listing non-employment discrimination cases to their schedule which may lead to delays in such cases or asking parties to attend the ET for Case Management, this doesn’t then even consider the event of Preliminary Applications and how and when they will be heard. These are however mostly logistically issues which may with good management be overcome.

  1. An informal list in the QBD for all employment & discrimination work: ‘Employment and Equalities List’

The Law Commission raised a concern that currently an employment-related claim may be issued either in the QBD or Chancery Division of the High Court and could come before any of their permanent or deputy judges, whose experience of employment matters may vary considerably. Therefore, the Commission considered that there was a need to ensure that cases concerning employment and/or discrimination law in the High Court are heard by those with relevant specialist experience.

The Commission proposed and recommended that an informal specialist list of cases should be created within a Division of the High Court administratively. The list would be supervised by a High Court Judge who is a recognised specialist in this area and judges presiding over these cases would be nominated by the President of the QBD. The proposal was broadly supported on the basis that it would allow for judges with the relevant expertise and experience to hear these cases and promote consistency within the law. An informal list was considered preferable on the basis that this would provide flexibility, especially in relation to injunction applications.

The recommendation is not intended to include bringing appeals from employment tribunals into the new list: it would not create a new avenue of appeal or diminish the EAT’s role. It is recommended that judges who should sit on the list include all EAT judges who are High Court or section 9 judges. The name recommended for the list is the Employment and Equalities List.

The Commission recommended that both employment-related and discrimination appeals in non-employment cases should be included because at High Court level judges with expertise in employment law would be sufficiently well equipped to hear other discrimination cases. It was also considered that claims concerning equal pay (to the extent they are litigated in the High Court) and any cases arising in employee connection cases should also be included.

The matters recommended to be included within the list are:

  1. employees’ claims for wrongful dismissal or other breach of contract where the sum claimed exceeds the limit on tribunals’ jurisdiction under the Extension of Jurisdiction Order;
  2. employees’ equal pay claims;
  3. employers’ claims to enforce covenants in restraint of trade;
  4. employers’ claims for breach of confidence or misuse of trade secrets;
  5. employers’ claims against trade unions for injunctions to prevent industrial action or for damages following what is alleged to be unlawful industrial action;
  6. claims arising in “employee competition” cases such as team moves and garden leave;
  7. appeals from the county court in claims for discrimination in goods and services; and
  8. appeals from the county court in employment-related cases.

 

Key Recommendations made:

  • Increasing the time limit for brining all types of employment claims to 6 months – with a discretion to extend time limits where it is ‘just and equitable’ to do so;
  • Increasing the maximum amount of damages employment tribunals can award for breach of contract up to £100,000;
  • Employment tribunals should be given jurisdiction to decide claims of breach of contract brought by employees and workers whilst they are still employed;
  • Employment judges with experience of hearing discrimination claims to be deployed to sit in the county court to hear discrimination cases outside the employment field.
  • An informal list in the QBD for all employment & discrimination work: ‘Employment and Equalities List’