Employment Law: Three Major Changes

With several changes to employment law in place or in the pipeline, it’s a good time for practice principals to get up to date.

Employment tribunal fees

In order to reduce the number of weak or nuisance claims at Employment Tribunals, the Government has decided to introduce a fee system. Taking effect from summer 2013, discontented employees will have to pay up to £1,200 to make a claim. This may be reimbursed by the employer, if the tribunal agrees with the employee’s claim, in addition to any other recompense the employer is ordered to pay.

There are two fee brackets, £390 and £1,200. The lower amount is for simple cases, such as non-payment of wages, while the upper fee would be triggered for the majority of cases, for example unfair dismissal claims.

How about low income earners?

A large number of people will be exempt from paying the fee, or qualify for a discount, due to being low income earners. In fact, figures from the Government suggest that a quarter of claimants won’t have to pay at all. With so many individuals avoiding the full brunt of the fee, there are fears that weak cases will still make it to tribunal.

Compensation for dismissal

Employers may be able to dismiss ‘problem’ employees in exchange for a one-off compensation payment, according to plans by Business Secretary Vince Cable. Businesses will be able to remove members of staff with behavioural issues, or who are consistently underperforming, without the risk of being taken to an Employment Tribunal.

Employees are given the choice whether or not to accept the proposal. If they take the pay-off, they must sign a binding agreement. If they refuse, they will remain in employment, but must face the business’s disciplinary/performance management procedures.

Currently there is a loophole in the plans, as they do not allow for discrimination claims. An employee could potentially agree to a pay-off from the company and then take the employer to an Employment Tribunal for unlawful discrimination.

The plans are part of a collection of reforms that were announced by the Government on 14th September 2012 with a view to simplifying employment law, and may be introduced as early as 2013.

Unfair Dismissals

In a similar vein, Unfair Dismissals payouts are to fall by two thirds, with the maximum amount dropping from £72,300 to around £25,000 next year. The reasoning is the Government wishes employees to have more accurate expectations – the average Unfair Dismissal payment is £5,000, after all – and to prevent employers from experiencing undue panic.

National Minimum Wage

Nominal changes to the National Minimum Wage came into effect from 1st October 2012, as the ‘adult’ rate of over 21 year-olds increased from £6.08 to £6.19 (less than two per cent). The younger rates stayed the same for those not on apprenticeship schemes with 18 to 20 year-olds still on £4.98 and 16 to 17 year-olds staying at £3.68.

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