Are Employment Tribunals getting more expensive?

Employers and the taxpayer were promised savings following the introduction of tribunal fees but has that been the case? Despite an initial fall in the volume of Tribunal applications since fees were introduced last July, the complexity of cases and therefore duration and costs are eroding anticipated cost savings.

Whilst many tenuous, malicious or spurious claims are deterred by up-front fees the remainder are being up-scaled to ensure awards will cover costs. The latest tribunal statistics show a 40% increase in complaints per application from an average of 1.8 to 2.5 (during 2013). This is the unintended result of introducing fees that can run to several thousand pounds for something like an unfair dismissal case that goes all the way to an appeal hearing.

As a result employers are facing complex and aggravated complaints which expose them to inescapable legal fees and potentially unlimited compensation awards that have the potential to damage their business.

Recent reports highlighting extended and complex cases concerning whistle-blowing, sexual harassment and equal pay show how time consuming and damaging these kinds of cases can be to the business. Resulting bad publicity has added to the problems for the organisations concerned.

If your commercial customers have our commercial legal protection policy they will be cushioned against such awards, legal costs as well as any tribunal fees awarded against them. With a successful defence, all their costs would be indemnified and a stressful situation averted.

David Haynes

Head of Underwriting & Marketing

To find out more: http://www.arag.co.uk/index.asp?m=95&s=0&month=4&year=2014&c=1671

ACAS Early Conciliation introduced

The ACAS Early Conciliation rules come into force next week, on 6th April. Early conciliation will be optional for the first month, and become mandatory on 6th May 2014. ACAS advise that it is always best for employers and employees to resolve disputes as early as possible, saving the time and anxiety of appearing at a tribunal.

Early Conciliation gives both parties up to a calendar month initially in which to explorer resolving their dispute using the services of an ACAS conciliator. ARAG policyholders are provided with access to a lawyer throughout this process and beyond if an agreement cannot be reached and the dispute escalates to tribunal for resolution.

Monday, 31 March 2014

Leading the way

New Commercial Cover

We have completely remodelled our suite of commercial legal protection policies with innovative new cover and fewer restrictions and all excesses removed. Our aim is to clearly highlight the market leading cover and provide clarity.

Improved cover now includes fees payable at Employment Tribunals and Appeals plus loss of earnings cover, while additional cover differentiates the policies from those of competitors.

Cover now extends to disputes arising from TUPE (Transfer of Undertakings laws) and over breaches of restrictive covenants by employees or ex-employees, with counselling services now extending to family members of employees. In addition a unique Crisis Communications service has been incorporated into all three policies

There is also increased personal cover for business directors and partners, such as ID theft and motor defence, as well as access to a new redundancy approval service, to ensure fair selection procedures are followed.

New covers at a glance

1.         TUPE cover as standard

2.          Restrictive Covenants

3.          Employment Tribunal fees

4.          Crisis Communications support

5.          Identity Theft for directors & partners of the business

ARAG Legal Services - Online Legal Updates

The legal documents and law guide available to ARAG policyholders who have registered to access our Legal Services Website is constantly reviewed and refreshed.  Registered subscribers can opt to receive monthly lists of all revisions. As the latest round of updates affects some of the most popular documents we thought it was worth drawing your attention to selected changes. We hope this will encourage you to recommend the site to your clients when arranging or renewing ARAG policies. 

Tenancy
Assured shorthold tenancy. This document has been chosen to trial new postcode look-up functionality. When the user needs to enter an address during the questionnaire, they can now enter the postcode, search and the select the correct address to be inserted as their answer. If the trial proves successful we will begin to introduce this across all documents. The formatting of this document has also been generally reviewed, including an improved table in the inventory section.
Notice under Section 21 of the Housing Act 1988. The following changes were made: i. Simplified notice text, in particular to comply with current case law concerning periodic tenancies. ii. Added questions and logic to assist user to specify the correct date in the notice after which possession will be required in the case of a periodic tenancy. iii. Added information screen in questionnaire to explain the concept of service of the document. iv. Added guidance note regarding methods of, and time remaining available for, service, and on steps that can be taken to prove service. v. Added user warnings (validators): a. to ensure that notice is not given under s.21(1)(b) where the fixed term has already expired or where the end of the notice period is before the end of the fixed term; b. to warn about the service of a notice within 6 months of the tenancy commencing; c. to ensure that sufficient notice is given. vi. Added questions and validator to ensure that where a deposit has been taken, the notice cannot be used if the deposit has not been protected or the appropriate information has not given about the protection scheme. vii. Enabled notice to be signed by agent on behalf of landlord, or by one landlord on behalf of multiple landlords. viii. Amended Guidance to clarify difference between a fixed term and periodic tenancy.

 

Consumer goods & services
Reject a seller's denial of responsibility for faulty goods. This document was reviewed to make it more user friendly. A provision was added for the user to reclaim the costs incurred in returning the goods
Complaint to a dry-cleaning company about garment damage This document was reviewed to make it more user friendly. The scope of the document was also increased to include an option for the user to request that the garment be repaired or replaced.
Complaint to a telephone company about a high bill and Complaint to a water company about failure to meet standards These documents have been generally reviewed to bring them into line with house style and to make them more user friendly.
Employment Employment agreement, Employment statement,  Fixed-term employment agreement, Job offer letter and Executive director's service agreement The national minimum wage (NMW), apprentice and accommodation offset rates in the guidance have been updated for October 2013. Amendments also reflect changes to agricultural wages.
Employee handbook Amendments were made to the following policies due to changes in law: i. Basic holiday entitlement - limiting the amount of holiday leave that can be carried over into the next holiday year to 20 days for employees on long-term sick leave. ii. Harassment policy - amended the definition of harassment for England, Wales and Scotland, following the repeal of the third party harassment provisions in the Equality Act 2010.
Grievance letter to employer, Interview checklist, Job application form and Staff appraisal form Amendments were made to the Guidance deleting references to third party harassment, following the repeal of these provisions in the Equality Act 2010
Health & Safety compliance review and policy creator Changes made to the section in the Guidance on the 'Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDDOR)' as a result of changes to the legislation. The changes include amending the list of 'major injuries' and renaming it 'specified injuries' and replacing the list of reportable work-related diseases from 47 conditions to 8 conditions. Changes do not affect Northern Ireland.
	Settlement agreement   This document has been amended and renamed as a result of the Enterprise and Regulatory Reform Act 2013, which has changed the name of compromise agreements to settlement agreements. References to third party harassment have been removed, following the repeal of these provisions in the Equality Act 2010.   The questionnaire and Guidance have been overhauled to improve the user experience. A page has been added to the document, detailing what the user needs to do when they have finished.

ARAG UK Policyholders are guaranteed fair treatment when they have the right to choose a lawyer to represent them in proceedings.

 The European Court published its decision on 7th November in the case reported on as “The Sneller Case”. This concerned the “free choice of lawyer” in legal protection insurance.

 While some commentators have given the impression that the outcome of the Sneller case is somehow controversial and likely to cause UK insurers to change their position with regard to freedom of choice that isn’t the case for ARAG policyholders who have long since been permitted and always will be able to exercise their legal right to choose. In case you need a refresher here is the back ground to the case.

 Background to Sneller

 The case was referred to the EU Court consequent to a request by the Dutch Supreme Court in proceedings between Mr Sneller and DAS Nederlandse Rechtsbijstand Verzekeringsmaatschappij NV (‘DAS’), seeking clarification on how the EU Directive 87/344 (which regulates freedom of choice in legal expenses contracts and is transposed into national law in the UK by the Insurance Companies (Legal Expenses Insurance Regulations) 1990) should be interpreted.

Mr Sneller was a policyholder of DAS in the Netherlands who wished to use his own lawyer for an employment claim. DAS required Mr Sneller to use its own in-house lawyer on the basis that it is not mandatory to engage a registered lawyer to represent claimants in employment disputes in the Netherlands and the insurance contract limited freedom of choice to cases where a claim must be delegated to external counsel or where in DAS’s opinion it was necessary to instruct an external lawyer.

Mr Sneller argued that if judicial or administrative proceedings are brought, the contract terms must always offer the insured person the right freely to choose his legal representative.

The EU Court judgment

The first two rounds went to DAS, but the European Court agreed with Mr Sneller and ruled that EU law on freedom of choice prevents a legal expenses insurer, which stipulates in its insurance contracts that legal assistance will be provided by its employees, from also providing that the costs of legal assistance provided by a lawyer or legal representative chosen freely by the insured person will be covered only if the insurer takes the view that the handling of the case must be subcontracted to an external lawyer.

 Secondly the EU Court said that this limitation on the rights of legal expenses insurers would apply irrespective of whether or not legal assistance is compulsory under national law in the inquiry or proceedings concerned.

According to this judgment, DAS had restricted the insured’s freedom to choose a lawyer for legal assistance in a non-acceptable way, by reserving the right to decide whether an external lawyer is necessary or not to handle the particular case.

 Regarding the cost impact of this decision (particularly for those legal protection insurers who provide a large part of their legal assistance through their employees) the European Court has explained that the premium might be adjusted or costs payable by the insurer may be limited. In order to guarantee a free choice of lawyer it is not necessary to cover all costs borne by the insured, as long as that freedom is not rendered meaningless.

For detailed information here is a link to the EU judgment.
 http://curia.europa.eu/juris/document/document.jsf?text=&docid=144208&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=509849

 ARAG UK’s position
ARAG UK does not use in-house lawyers to represent claimants. We work with a nation-wide panel of firms that consistently deliver superior levels of customer service that we insist on and have appropriate expertise in the areas of law covered by our policies.

When it becomes necessary to issue proceedings our policyholders can choose their own solicitor if they wish but will be responsible for excessive costs where a firm will not agree to work according to our terms of business which allow for reasonable and proportionate costs. This is also true for applicant employment tribunal cases despite the fact that in common with the Netherlands it is not compulsory for representation to be provided by a qualified lawyer. Freedom of choice does not engage where an insurer covers damages or compensation – as in the case of employment compensation awards cover. 93% of ARAG claimants benefit by having their claim handled by a panel firm

If in the future we were to engage in-house lawyers we recognise that freedom of choice is triggered at the point it becomes necessary to issue proceedings and any such developments would be implemented on that basis.