The Employment Rights Bill (the “Employment Rights Bill”), published on 10 October 2024, has been making its way through Parliament and is currently going through the Commons Committee Stage, where a detailed examination of its provisions has been taking place. During Committee Stage, amendments can be put forward by both the Government and by opposition MPs. Notably, a lengthy “Notices of Amendments” paper tabling numerous changes to the Bill was published at the end of November.
The most significant of the Government’s proposed amendments is the amendment which will double the length of existing time limits in which claims can be brought in the Employment Tribunal in Great Britain (and, in certain cases, industrial tribunals in Northern Ireland).
What does this mean?
Currently, British workers have three months from the date of the act complained of to issue the majority of claims in the Employment Tribunal, for example claims such as unfair dismissal and discrimination claims. The Government is now proposing to amend the Bill and extend the current time limits to six months.
The extended time limit was not mentioned during the King’s Speech, however the proposal is in line with commitments made in Labour’s ‘Plan to Make Work Pay’. In the Plan to Make Work Pay, the Labour Party said that this increase to time limits “will particularly support those who are seeking to make claims for pregnancy discrimination, as evidence suggests women struggle to make funds available to lodge claims within the time limit. It will also allow more time for internal procedures to be completed, potentially decreasing the number of claims.” This proposal is also in line with the Law Commission’s recommendation made back in April 2020.
What are the potential impacts of this proposed change?
It is clear that the Government hopes this change will decrease the number of claims by encouraging settlement. However, in our experience it seems much more likely that there will be an increase in the overall number of claims, particularly given the expansion of employment rights elsewhere in the Bill. It is not clear why an additional three months would incentivise an employee to settle, and with both ACAS and the Employment Tribunal system already overburdened, there is not much spare capacity in the system to deal with an influx of new claims. The Government has not announced any new funding for either ACAS or the Employment Tribunal so there is a real risk that the system will struggle.
The Government’s economic impact assessment on the Bill notes that in 2023/24, there were around 35,000 new claims issued in the Employment Tribunal, and this is expected to increase by 15% with the changes in the Bill (not including the proposed amendments). The Government estimates that the introduction of 'day 1' unfair dismissal will result in 10,500 new unfair dismissal complaints to ACAS for early conciliation, with 3,350 of those progressing to a Tribunal claim. Doubling the amount of time to bring an unfair dismissal claim from 3 to 6 months will surely result in even more new claims.
But are those Government estimates accurate? They certainly seem to be optimistic. Making unfair dismissal rights 'day 1' will give around 9 million employees the right to claim unfair dismissal. It doesn’t seem entirely plausible that such a huge expansion would result in just 3,350 new claims – i.e. 0.037% of those who are gaining the right to not be unfairly dismissed. Similarly, the introduction of employer liability for third party harassment is expected to result in just 30 new claims a year, with only 6 needing judicial resource – that just doesn’t seem plausible.
We have previously discussed the enormous backlog of cases that the Employment Tribunal is currently dealing with, and the lack of apparent planning to deal with the “additional surge in employment disputes” that changes under the Bill are likely to create. At the moment, it can take as much as 18 months for even a relatively simple case to get to a final hearing. As Ben Smith (Senior Associate) and Stephanie Compson (Professional Support Lawyer) recently noted in HR News: “[The] changes in the Employment Rights Bill will only worsen the backlog without additional funding to the Tribunal.” More delay in the system is in the interests of neither employers nor employees.
As the expansion of the limitation period is just a proposed amendment at this stage, its impact hasn’t been addressed in any impact assessment, so it remains to be seen if the Government will grapple with the challenges this change seems likely to create and allocate more resources to ACAS and the Tribunal. Without this, we may well see employers coming under increasing pressure to reach a commercial settlement on claims they would rather contest in the face of a huge surge in complaints from employees who both have longer to mull over their disagreements, and a greater range of complaints to make from 'day 1'.
Yet one advantage that we might see from this proposed extension is if Employment Tribunals begin to take a stricter approach to claims that are submitted out of time and applications to amend claims after they have been filed. For example, the rules on time limits on equal pay claims (which do already have a six-month limitation period) are much more strict, and it may be that this is carried across to Tribunal claims more broadly, with an expectation that claimants have sufficient time to consider their claim in full and to file it, in complete form, on time.
Next steps
The Employment Rights Bill still needs to complete the Committee stage, which is currently due to conclude by 21 January 2025, before moving to the Report stage for further consideration. As the amendments discussed above are proposed by the Government (rather than by opposition MPs), they are more likely to be passed. We will keep you updated on the progression of the Employment Rights Bill – please refer to our Policy Hub.