A busy summer in the Employment appellate courts has led to some notable decisions which impact upon the payments due to employees during their employment, on termination and if they bring a Tribunal claim – and the likelihood of such claims being brought.
The headline issue from the summer was the abolition of Employment Tribunal fees which had been introduced in 2013. No fee is now payable for lodging or pursuing an Employment Tribunal claim. Whilst the Government works on arrangements for the refund of all fees paid to date by claimants, we expect to see at least a small spike in new claims from those recently dismissed and those seeking to persuade a Tribunal that the fees regime prevented them from bringing a claim before and therefore, whilst outside of the limitation period (in some cases significantly so), this is the earliest opportunity they have had to bring a claim. However, claims should not go back to their pre-2013 level because of the ACAS Early Conciliation process which will still apply.
So the number of Employment Tribunal claims is likely to rise once more, at the same time as some of the most common compensation awards also increase because of decisions in some other cases.
Firstly, the Court of Appeal has said that the amounts payable for injury to feelings in discrimination claims are out of date and thereafter the Tribunal Service consulted on a proposal to increase the bands as follows:
|Lower||£600 – £6,000||£1,000 – £8,000|
|Middle||£6,000 – £18,000||£8,000 – £25,000|
|Upper||£18,000 – £30,000||£25,000 – £42,000|
Following closure of the consultation, Presidential Guidance has now been issued which, for claims issued on or after 11 September 2017, sets the bands as:
|Band||Range of award|
|Lower||£800 – £8,400|
|Middle||£8,400 – £25,200|
|Upper||£25,200 – £42,000|
This reflects increases in RPI inflation over the years and a 10% uplift applicable to all civil claims. The banding will now be renewed annually.
Unfair dismissal awards will also increase as a result of a separate judicial decision that employer pension contributions should count for the purposes of calculating weekly pay. This will impact on the calculation of both the Basic Award and the calculation of the Compensatory Award. The Basic Award is calculated the same way as statutory redundancy pay so lower earners will see an increase as a result of employer pension contributions being added to salary, however the current statutory cap of £489 remains unchanged which will limit the impact of this for anyone earning anything above £25,500. The Compensatory Award is subject to a cap of the lower of 52 weeks’ pay or £80,541 which is where this change will have a much broader impact in terms of the number of former employees who could benefit and how much they will benefit by. Where an employee is in a Defined Benefit pension scheme then this could mean a significant increase in what they receive – for example, employer contribution rates to the LGPS can exceed 20% of pensionable pay.
The weekly pay calculation case will also have wider implications outside of just unfair dismissal awards. It will affect Statutory Redundancy payments in the same way as Basic Award calculations because the two apply the same formula. Employers should also check their enhanced redundancy pay terms to see if it could have an impact on the amounts payable – if a policy states that enhanced payments reflect the statutory formula but “with the weekly cap disapplied” (or similar wording) then that could mean that employer pension contributions have to be counted for that too.
The arena where employers have been getting most familiar with the concept of “weekly pay” recently is in the calculation of holiday pay. We now have the expected confirmation that voluntary overtime and/or voluntary standby/call-out payments should be reflected in the amount of holiday pay (for the first 4 weeks of annual leave in any year) if worked sufficiently regularly. Employers who didn’t change their practices before should now do so and may be faced with grievances or claims for holidays previously taken but underpaid. Of some solace, will be the 2 year limitation cap introduced after Bear Scotland, and the confirmation that a gap of more than 3 months between underpayments will break a series and disallow an individual from going back any further.