What is an employment tribunal?

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1 What is an employment tribunal? Employment tribunals are designed to deal with many claims that may be brought against employers by employees relating to their employment or its termination. The employment relationship is in large part governed by the law of contract and contractual disputes can be dealt with by the ordinary civil courts (usually the High or County Court in England, Wales and Northern Ireland and the Sheriff Court in Scotland). Many other employment rights are contained in statute law and the majority of these statutory rights can only be enforced by employment tribunals (called 'industrial tribunals' in Northern Ireland). Tribunals also have jurisdiction to consider some contractual aspects as well. Examples of disputes heard by employment tribunals are: unfair dismissal claims wrongful dismissal claims discrimination claims (race, sex, disability, religion or belief; sexual orientation, age) equal pay claims claims relating to deductions from wages. Examples of disputes heard by the 'ordinary' civil court system include: accidents at work restrictive covenants contractual breaches relating to non payment of wages and benefits owing or pay in lieu of notice wrongful dismissal claims and other contractual claims for damages arising out of termination of employment. In Northern Ireland, there is a separate tribunal, the 'Fair Employment Tribunal', specifically to deal with religious discrimination and political belief claims the work of this tribunal is outside the scope of this factsheet, but see the Useful contacts section below for more information. Depending upon the type of claim, an employment tribunal may consist of an Employment Judge, who is legally-qualified, sitting alone or sitting as part of a panel of three including two lay members one from an employee background and one from an employer background.

2 Starting and responding to a claim To start a claim, an employee (who is known as the 'claimant') must take the following steps: Check that they are within the strict time limits for bringing a claim, although in certain circumstances extensions of time can be granted. Check that they have followed the employers own procedures and the revised Acas Code of Practice on discipline and grievance procedures 1 If the claim refers to a dismissal, ensure that they have exercised the right of appeal in accordance with their employer s internal procedures. Consider any other forms of dispute resolution, such as pre-claim conciliation. Complete a Form ET1 and submit it to the employment tribunal. Upon receipt of the ET1, the tribunal: logs the claim sends a copy to Acas sends a copy to the employer (known as the 'respondent'), along with a form for the employer to respond to the claim (Form ET3). The respondent then has 28 days to complete and return the ET3 to the tribunal. It is very important that employers deal with any ET3 forms as a matter of priority taking legal advice if necessary. If the respondent does not return the claim form in time, it may have a default judgment entered against it and will not be permitted to defend the claim. Although the respondent can apply to the tribunal for an extension of time, there is no guarantee that this will be granted. The ET3 should set out the main points of the employer s argument. Holding back important information with the intention of springing it on the claimant at the hearing is not a good idea, as this information could be refused by the tribunal. On receipt of the ET3 the case will be listed for a hearing. With the letter giving the date of the hearing it is usual for directions to be given. These will set out the preparation that is required and any deadlines for this. Time limits In general, an employee must submit their claim to a tribunal within three months of the date of termination of employment, or the act (for example, harassment)

3 complained of. Certain claims, such as for a redundancy payment, have a six month time limit. The role of Acas Acas, the independent conciliation service, also provides a free pre-claim conciliation service for workplace disputes that cannot be resolved internally and are likely to become tribunal claims. Acas also conciliates once claims have been started: the Acas officer contacts both parties in the dispute and explores whether the claim could be settled without proceeding to a full tribunal hearing. If the parties reach an agreement, the claimant may withdraw the claim from the tribunal see below. The tribunal hearing All matters that are accepted by the tribunal, but are not settled or withdrawn, are brought before the tribunal at a formal hearing. Types of hearing There are three main types of hearing: Case management discussion. This is a short hearing to address any issues so that the case can proceed smoothly when it gets to a full hearing. For example, it might identify the areas under contention or papers that need to be produced. Pre-hearing review. This is held when there are issues that need to be determined prior to a full hearing. For example, there might be a disagreement over whether or not the claimant was an employee and hence whether or not s/he was entitled to bring the claim. Full hearing. This is the full hearing of the case. There is also a fourth, though rare, type of hearing, known as an interim relief hearing, which may arise where the principal reason for a dismissal was for a protected reason, for example whistleblowing or because of trade union membership or activities. Preparation In preparation for a hearing both the claimant and the respondent (known as the parties ) will need to get witness statements from all witnesses that will give evidence at the hearing. The witness statements must be written, and each

4 paragraph should be numbered. In the directions the tribunal will have given a date by which the witness statements should be exchanged. The parties will also be required to produce documents relevant to the claim (for example, contract of employment, letters, s, notes of meetings and any other paper or computer generated records). These should be presented in one bundle agreed by both sides. It is usual for the respondent to offer to collate the bundle. All pages in the bundle must be numbered, and it is good practice to have a contents page at the start. Although copies of these documents have to be produced for the hearing, such relevant documents must have been disclosed by both parties, to each other, at a much earlier stage. Representatives There is no requirement for either party to have a representative (solicitor, HR Manager or anyone else). An increasing number of claimants and respondents do have representatives due to the increased complexity of the law. The hearing It is important to ensure that all witnesses attend at the tribunal by the allocated time. All those who are taking part in the hearing must register with the Duty Clerk, and then go to the relevant waiting room. At the hearing it will be usual for the Employment Judge to start by setting out the key issues and checking whether there are any preliminary issues to address. In most cases the previously submitted witness statements will be taken as read which means that they are the witnesses' chief evidence unless the tribunal directs otherwise. In some cases the judge may insist on hearing the witness read their statement out in full or perhaps the witness will be asked to clarify some crucial passages. Each witness will have to take an oath or swear on a holy book, before reading their statement or being asked questions about it. The main questioning will be by the other side (this is known as cross-examination). The tribunal may then ask questions. Finally the representative for the witness s side can ask any further questions. If there is no legal representative, the employer or employee will be able to ask further questions of their own witnesses. Once all witnesses for one party have given evidence, the process starts again for the other side s witnesses. At the end, the representatives of both sides will be able to sum up their case, and then the tribunal may adjourn. Outcomes

5 When the tribunal reaches a decision (called a 'judgment'), it is almost always the decision of the tribunal as a whole. Depending on the type of claim, the tribunal can award: reinstatement (the employee gets the job back) re-engagement (the employee returns to the organisation in a new role) compensation payment of wages or monies due to the employee. Reinstatement and re-engagement are very rare. Depending on time available, the judgment is not always given on the day of the hearing. Compromise and settlement of claims When faced with an employment dispute, employers and employees may attempt to resolve matters either: between themselves directly by using the pre-claim conciliation service offered by Acas, or by the use of a private mediator or arbitrator by the use of a compromise agreement (possibly soon to be renamed 'settlement' agreements). Our Mediation: an employers guide, produced jointly with Acas, provides practical help to enable organisations to decide if mediation could work for them. Go to our Mediation guide Once employment tribunal proceedings commence, employers may wish to settle the matter without going through a full hearing, and two main avenues are available to 'compromise' claims in this way: through a compromise agreement through an agreement achieved through Acas conciliation (a 'COT3'). This factsheet provides a brief overview of these methods of dealing with employee claims. CIPD members can see more detail in our law FAQs covering tribunals, settlements and compromise.

6 Compromise agreements Compromise agreements currently have the following key features: They can only settle certain specific claims. They must be in writing. The employee must take legal advice on the contents of the agreement from a solicitor or qualified independent adviser with appropriate insurance cover. The adviser must certify in writing that advice has been taken by the employee. Compromise agreements do have some attractions, not least the perception by employers that employment may be terminated without following time-consuming procedures, and ensuring, through a confidentiality clause, that the dispute between the employer and employee does not become public. Clearly, however, such ease comes at a price and appropriate compensation must be paid to the employee. There have been numerous cases where former employees have challenged the validity of compromise agreements, and this means that each agreement must be carefully drafted. The entire concept of compromise agreements is under consideration by the government and is likely to change. Acas and COT3 agreements As previously stated, Acas must conciliate in most claims brought in employment tribunals. This involves an Acas officer contacting both parties or their legal representatives, usually by telephone, and exploring the possibility of reaching an agreement. In fact, Acas is remarkably successful in this. The main advantages of the COT3 form of settlement drawn up by Acas are: it is free of charge it can easily settle all claims between the parties, including ruling out future claims no legal advice is required. Future developments In March 2012 the Department for Business Innovation and Skills published the annual update of its Employment law review 2. This update follows a previous public

7 consultation on employment tribunal reform. The proposals being considered include: A scale of fees to lodge employment tribunal claims. Financial penalties to be paid to the government by employers who persistently breach employment law, in addition to any compensation paid to successful claimants. A fundamental review of the tribunal rules of procedure. Mr Justice Underhill is also undertaking a fundamental review of these rules. Civil and criminal courts In the UK most employment law is categorised as 'civil law' or 'private law', meaning that it is enforced as a result of one party (the claimant) suing another (the respondent) either for compensation or some other remedy in a civil court. The claimant, who is normally a former employee or worker, an existing employee or worker, or a failed job applicant, therefore uses the court system to allege that the respondent (their employer or former employer) has: caused them some kind of detriment, and has done so in contravention of the law. The purpose of this section is to explain the key principles according to which the civil court system operates when handling employment cases. However, it is important to remember that in one or two areas of employment law, cases are brought before the criminal courts. This can happen, for example, when an employer is accused of failing to comply with health and safety regulations, or when it is alleged that an employer has breached immigration regulations by unlawfully employing someone from outside the European Union. Such matters are usually decided in the Crown Court, the case being heard by a judge and jury. In criminal cases the burden of proof nearly always lies entirely with the prosecution, the standard of proof being 'beyond reasonable doubt'. In other words, a jury is instructed not to convict unless it is certain that that the defendant is guilty of the offence of which they are accused. Criminal cases are brought on the instructions of state agencies such as the Health and Safety Executive or the Crown Prosecution Service. If there is a guilty verdict, some kind of punishment is exacted on behalf of the State which is nearly always a fine when a corporation is the defendant.

8 The civil courts operate under different rules. Here the standard of proof that is applied is 'on the balance of probabilities', making cases a great deal easier to prove than when the standard of proof is 'beyond reasonable doubt'. Moreover, the burden of proof varies depending on the type of claim that is being brought. As a rule it is the claimants' task to prove their case on the balance of probabilities, but in the field of employment law this is often not so. Sometimes it is reversed, the respondent being assumed to have acted unlawfully and being required to persuade the court otherwise. When an unfair dismissal case comes before a tribunal, it is possible for the burden of proof to switch twice during the course of proceedings. It is for the claimant to prove that they have the right to pursue the claim and for the respondent to prove that the reason for the dismissal was one which is lawful. On the question of whether or not the respondent acted reasonably in the way that it handled the dismissal, neither side has a burden of proof. The tribunal simply listens to the evidence presented and makes its decision 'on the balance of probabilities'. In discrimination cases, once a claimant has satisfied the tribunal that they have a 'prima facie case' by presenting facts from which it can be assumed that an unlawful act of discrimination has occurred, the burden of proof switches to the respondent. The civil court system is hierarchical which enables a losing party to appeal their case to a higher court when there are grounds for arguing that a lower court has either misapplied the law or misinterpreted it in some way. Importantly, when a higher court makes a ruling on a point of legal principle, that then becomes a binding precedent which all the lower courts then have to observe when similar cases are subsequently brought before them. Unlike the criminal courts, except when a decision is either perverse or biased, it is only possible to appeal a case up to a higher civil court on a question of law. Questions of fact cannot form the basis of appeals. So, once a court has made its mind up about which party it thinks is telling the truth about events, that decision stands and can't be appealed. Only when there is a question mark over the way the court has interpreted or applied the law, can an appeal proceed. Bringing a claim Employment cases start in one of three courts: the employment tribunal the county court the High Court To which court a case is taken depends in part on what legal matter has to be decided and partly on the level of compensation that the claimant is seeking.

9 As a general rule, matters that relate to the alleged breach of an employment statute (that is an Act of Parliament or a set of regulations issued under an Act of Parliament) are heard in an employment tribunal. Matters that relate to alleged breaches of the common law such as a breach of contract or an act of negligence go to the county court. The High Court also hears common law claims, but normally only does so when the level of damages being sought by the claimant is in excess of 50,000. There are, however, some significant exceptions to these general rules. Employment tribunals can, for example, consider claims that relate to breaches of contract when: the case has been brought by a former employee, and compensation being sought is less than 25,000. By contrast, there are some statutory matters that can be considered in the county court or in the High Court. This can occur, for example, when a claimant wishes to pursue an equal pay claim. Normally such a matter is dealt with by the employment tribunal, but it can only do so if the claimant submits their claim form within six months of a date at which the employer is alleged to have been acting unlawfully. As the time limit observed in the county court is six years and because the right to equal pay for equal work is a contractual as well as a statutory right, those who miss the tribunal's six month deadline have an alternative potential avenue open to them. Employment tribunals Employment tribunals date from 1998 and from 2007 have been presided over by employment judges. They used to be called industrial tribunals and were previously presided over by chairmen. In Northern Ireland the term industrial tribunal continues to be used. The industrial tribunal system was established in the 1960s to hear specialised cases relating to training levies (long-since abandoned). Over time, as employment law developed, their remit started to grow steadily. They can now hear over 80 different types of claim1. These include disputes relating to all the principal employment rights that have been established by statute over recent decades: unfair dismissal unlawful discrimination unauthorised deductions from wages redundancy payments Working Time Regulations

10 equal pay National Minimum Wage whistleblowing (that is breaches of the Public Interest Disclosure Act) family-friendly employment regulations (for example maternity/ paternity leave, right to request flexible working etc). In recent years the number of claims being submitted to employment tribunals has grown very substantially. In 2009/10 the total reached 236,000, reducing only slightly to 218,000 in 2010/11. This compares with figures of around 80,000 in the 1990s and 35,000 in the 1980s. In many respects this growth is not surprising as after all, employees have gained a good deal of new legal rights in this period, but it also reflects a greater willingness on the part of workers to take legal action in order to resolve a dispute. The major growth area in recent years has been in cases that concern alleged breaches of working time rights. There has also has been an increased tendency for groups of employees to bring multiple claims all relating to the same alleged breach2. It is the norm for employment tribunal cases to be heard by panels of three people. The panel consists of the employment judge, who tends in practice to dominate proceedings and is an experienced lawyer and two lay members. The lay members are experienced practitioners who are able to bring their knowledge of practical management to the proceedings. One is appointed from the 'employers' list' and is often an experienced HR manager, the other comes from the 'employees' list' and is often someone with extensive experience as a trade union representative. When a three person panel hears a claim, their decision is almost always unanimous, but occasionally a majority decision is reached. It would be highly unusual for the two lay panel members to out-vote the employment judge, but it can theoretically happen. However, for several years the number of cases heard by an employment judge 'sitting alone' has been increasing. Preliminary hearings and case management discussions (CMDs) have long been presided over by judges, but more recently the practice has been extended to full hearings concerning disputes about annual leave under the Working Time Regulations and to one or two other areas of litigation. The Government announced in November 2011 that it intended to extend this practice to all unfair dismissal cases in April The aim is to reduce costs and to speed up the process whereby claims are heard and cases completed efficiently. When they were originally established the intention was that industrial tribunals should dispense justice in a much more informal manner than is usual in the UK court system. In particular it was envisaged that the parties to a dispute would

11 represent themselves, or that trade union representatives would typically represent claimants. This does still happen in many cases, but increasingly the parties are represented by lawyers. Moreover,it is from this group of specialist employment lawyers that employment judges are selected. The result has been an increasing formalisation of many proceedings, as well as an increase in the costs associated with litigation. That said, it is still the case that many claimants in particular either represent themselves or bring a non-professional representative along with them. In such cases employment judges take great care to ensure fairness, avoiding the use of obscure legal language and taking a more active role in the questioning of witnesses. Employment tribunals currently operate in 26 locations across the UK. It is to these offices that claim forms (ET1s) are sent and logged before copies are sent out to respondents. They in turn are obliged to complete response forms (ET3s) and to return them within 28 days. The role of Acas Acas plays a significant role in the employment tribunal system and is likely soon to play an even greater role. Currently, copies of all ET1 and ET3 forms are sent to Acas who decide which cases seem to them to present the best opportunities for settlement ahead of a full employment tribunal hearing. Conciliation officers are then appointed to look after each case. They contact the parties by telephone and try, where they can, to broker a settlement. In many cases they are successful, leading to the withdrawal of the claim. Acas also operate an Alternative Dispute Resolution procedure which can be used in cases that concern unfair dismissal or flexible working requests. Under this procedure, if both parties agree, the case is considered and decided by an Acas arbitrator rather than an employment tribunal. The aim is to provide an alternative means of settling disputes which is speedier and cheaper for all concerned as well as being less formal and private. However, in practice the scheme is rarely used with only sixty cases being disposed of in this way between 2001 and Recent Government proposals suggest that in the near future a new system will be introduced under which potential claims will be submitted to Acas before they are sent to the Employment Tribunal Service. Acas will offer to conciliate over a period of a month or so, the aim being to provide greater opportunities for cases to be settled ahead of full tribunal proceedings.

12 Deposits and costs In the vast majority of cases the parties pursue employment tribunal cases without paying any fees and without risking having to pay their opponent's costs if they lose the case. This is very different to the established situation in most other types of civil court where it is usual for costs to be awarded against the losing side. It is for this reason that it is usually preferable, where there is a choice, for claimants to pursue cases here rather than in the county court or in the High Court. The major exception occurs when one of the parties has a very weak case which is judged at a pre-hearing review to have little prospect of success. In such circumstances the employment judge may require this party to pay a deposit of up to 500 ( 1000 from April 2012) which is only refundable if the claim is: withdrawn ahead of a full hearing, or ultimately won, or ultimately lost, but the employment judge decides that the losing party did not persist with the case unreasonably. Cost orders are only made very rarely by employment tribunals at present, although it is often argued that they should make them more frequently. The maximum is 10,000 ( 20,000 from April 2012). The most common situations in which the losing side is required to pay the costs of the winning side is when it (or its representative) is judged either to have acted 'vexatiously, abusively, disruptively or otherwise unreasonably', or to have knowingly pursued a 'misconceived' case (that is one that has no chance of succeeding). Cost orders can also be made when a party fails to comply with an order of the tribunal or unreasonably causes a hearing to be adjourned or postponed. In November 2011 the Government announced its intention to introduce new rules which will allow employment judges to fine respondents a figure equivalent to half the award made when a claimant wins a case (up to a maximum of 5000). These rules are likely to come into force in 2012, but it is not yet clear whether or not fining employers who are found to have breached statutory employment rights will become common or standard practice. Appeals from employment tribunals are taken to the Employment Appeals Tribunal (EAT) and then to the Court of Appeal, or in Scotland, to the Court of Session. Appeals from the Northern Ireland industrial tribunals go directly to the Court of Appeal. County courts and the High Court

13 Not all employment-related cases are heard in an employment tribunal. When a dispute relates to the common law, as is the case when a matter relates to an alleged breach of contract, or to negligence or defamation, it will be heard either in the county court or in the High Court. Importantly these categories include personal injury claims of the kind that people bring against their employers when they suffer a work-related injury or mental breakdown. The High Court will only ever hear cases in which more than 15,000 in damages is being sought and or 50,000 in the case of personal injury cases. In either court, however, cases are heard by judges sitting alone, except in very rare circumstances. There are 220 county courts across the UK and 27 centres at which High Court claims are heard. In either case the parties must either represent themselves or be represented by a lawyer. In the case of the High Court, representation is restricted to barristers and a relatively small number of solicitors who have applied successfully for rights of audience. This means that litigation can be very expensive, particularly for the losing side against whom an order to pay their opponent's legal costs is usually made. Appeals from county courts or the High Court are taken directly to the Court of Appeal, or in Scotland, to the Court of Session. Employment Appeals Tribunal The Employment Appeals Tribunal (EAT) sits in London and in Edinburgh where it deals with appeals from Employment Tribunals. The losing party in an Employment Tribunal case has 42 days to appeal the decision should they wish to, setting out in writing the grounds for appeal. Around 2000 appeals are made each year, but over half of these are typically rejected, either because they are out of time or because they are judged by the EAT on a preliminary reading of the paperwork to have no reasonable chance of success. A few hundred more are typically withdrawn for other reasons or dismissed by the EAT at a preliminary hearing. As a result only around 350 cases each year ever proceed to a full hearing. However, while their numbers are relatively small, they are very important. This is because EAT judgments set out how the law should be interpreted and applied in the future by all Employment Tribunals. In the past it has been the norm for EAT cases to be presented to a panel of three consisting of a High Court Judge and two lay members. However, from April 2012 it is likely that new arrangements will be introduced which will mean that Judges will sit alone unless there is a need for lay members to be present.

14 When an appeal is heard by the EAT there are four possible outcomes: the appeal may be dismissed the appeal may be allowed the appeal may be allowed and remitted back to the original employment tribunal panel to make a final decision, or the appeal may be allowed and remitted to a differently constituted employment tribunal panel to rehear the evidence and make a final decision. Cases often need to be remitted back to the employment tribunal so that a final judgment can be made because it is the EAT's primary job to make decisions about how the law should be interpreted as a matter of general principle. How a case should be decided in the light of particular facts, or what is the appropriate level of compensation should be are matters for employment tribunals to determine. All EAT decisions are published on its website. Decisions that have the most legal significance are reported in journals such as the Industrial Relations Law Reports (IRLR) or Industrial Cases Reports (ICR). Court of Appeal, Court of Session and Supreme Court Employment Appeal Tribunal rulings can be appealed to the Court of Appeal or, in Scotland, to the Court of Session. This happens relatively rarely because once litigation reaches this level in the court hierarchy the losing side is usually required to pay the winning side's costs. Moreover, because senior barristers are typically employed to argue the case, costs can be extensive. Nonetheless, the Court of Appeal and the Court of Session are typically called upon to judge a number of employment related cases each year and they do from time to time overturn a judgment of the Employment Appeal Tribunal and sometimes reinstate an original employment tribunal decision. Court of Appeal cases are heard in London by panels of three Lords Justices of Appeal, sometimes including the Master of the Rolls (the most senior Appeal Court judge). In the Court of Session in Edinburgh panels of three or five judges hear cases. A further appeal to the Supreme Court (formerly the House of Lords) is only possible where a point of law that has 'general public importance' is disputed. In other words the principles must be sufficiently significant to have implications for many employers and employees and not just the particular parties to the case. The number of employment-related cases that are heard by the Supreme Court each year

15 fluctuates, but it is rarely more than six or seven. The Supreme Court has the final say in any matter which exclusively concerns UK law. European Court of Justice When questions that relate to the application or interpretation of European law have to be determined, it is possible for one of the parties to make a further appeal beyond the Supreme Court to the European Court of Justice (ECJ). The ECJ sits in Luxemburg and is comprised of twenty-six judges (soon to be twenty-seven), one representing each member state of the European Union. The ECJ only ever rules on the correct interpretation of EU law. It does not hear all the evidence in a case. Once it has reached a decision, the matter is referred back to the national courts so that a final judgement can be reached given the facts of a particular case in the light of the ECJ s ruling. A decision can be made to halt proceedings in an employment tribunal, the Employment Appeal Tribunal or the Court of Appeal pending the referral of a question on a point of EU law directly to the ECJ. This takes several months or even years to obtain, but it means that the parties are not required to go through the even longer process of appealing the case right up the court hierarchy.

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