Labour Research June 2015


What is the impact of early conciliation?

New rules introduced last year mean that workers can no longer take a claim to tribunal without first considering conciliation. So what have these changes meant? Sonia Mckay explains.

The election of a Conservative government will lead to another major attack on workers’ rights.

But even before this, a combination of other changes — including rules obliging workers to seek conciliation before taking a tribunal claim — was already adding to workers’ difficulties by making it much harder for them to get redress through tribunals.

In April 2014, the then coalition government introduced a requirement for workers to seek conciliation in advance of taking tribunal claims.

A previous voluntary pre-claim conciliation service has been abandoned. Instead, under “early conciliation”, potential tribunal claimants must contact the Acas advisory, conciliation and arbitration service and begin the process for conciliation involving their employer — even if they know their employer will not offer a settlement. If prospective claimants do not do this, they cannot subsequently lodge their claim in a tribunal.

This feature looks at what the changes mean in terms of the time taken to pursue claims and their outcomes. It finds that the obligation to seek conciliation may have contributed to the further fall in the number of claims going to tribunals and that, while the average size of the tribunal awards has not fallen, the number of workers who receive tribunal awards has collapsed.

There is little doubt that fewer workers are going to tribunals. A combination of the penalising fees introduced in 2013, the changes in the qualifying periods for unfair dismissal claims and lack of access to good representation (see Labour Research, May 2015, pages 9-11), have been factors in the reduction of claims going forward — something highlighted in Acas’s 2014 annual report.

And the fact that it is difficult to separate out the impact of the various changes means that in reviewing the impact of the requirement for early conciliation, other changes, including the introduction of tribunal fees, have to be taken into account. This was indicated by the High Court in the case of R (UNISON) v Lord Chancellor and another (No. 2) [2014] EWHC 4198 (Admin), where public services union UNISON challenged the new tribunal fee system on the grounds that workers would be deterred from taking claims.

Here, the High Court asserted that the fall in the number of claims was the result of a number of government initiatives which included the requirement for early conciliation.

Usage of early conciliation

Pointing out that the aim of its pre-claim conciliation service “is to resolve issues without the need for a tribunal claim to be made”, Acas’s 2014 annual report says that in 2012-13, the service made a positive impact in 77% of cases with only 23% going on to become an employment tribunal (ET) claim.

In 2013-14, the proportion going on to become a claim was even lower at 17%, “but it seems likely that this reduced claim rate reflects the generally lower likelihood of ET claims following the introduction of fees from August”.

While Acas believes that early conciliation can result in more efficient resolution of individual disputes, it makes it clear that, in practice, the new system remains voluntary. This is because “neither party is obliged to take part in conciliation and can stop whenever they wish”.

However, while there is no obligation to continue with conciliation, Acas says that less than one in 10 workers actually rejects conciliation, although a slightly higher proportion of employers do.

The most recent statistics from Acas (April-December 2014) show that nearly 59,000 workers have used early conciliation, compared to just under 2,000 employers (see table below) and that the number of applications has risen from around 1,000 a week when conciliation was not mandatory to 1,800 a week in recent months.

Table 1: EC notifications 6 April 2014-31 December 2014

EC Notifications Apr May Jun Jul Aug Sep Oct Nov Dec Total
Employee Notifications 3,708 6,314 6,599 6,708 6,107 7,264 7,617 7,384 7,253 58,954
Employer Notifications 127 225 187 209 122 370 260 235 166 1,901
Total 3,835 6,539 6,786 6,917 6,229 7,634 7,877 7,619 7,419 60,855

Source: Acas Early Conciliation update, March 2015

Outcomes of early conciliation process

Only one in four cases at conciliation goes on to a tribunal hearing, according to Acas. And only one in eight reaches a settlement agreement — a COT3 settlement.

This means that for the majority of claims, there is no way of knowing what workers settled for. And in many cases they will have walked away with nothing, particularly where they were not represented by a trade union.

Table 2: Status of Cases Notified April-September 2014 at end January 2015

Number Proportion
COT3 Settlement 6,173 16.3%
Did not progress to tribunal claim 22,957 60.5%
Dispute progressed to tribunal claim 8,810 23.2%
Total 37,940 100%

Source: Acas Early Conciliation update, March 2015

As there is no mechanism for recording what settlements are worth when they do not go to a tribunal, the assumption is that workers generally will end up with less than they would get through the tribunals where, in an unfair dismissal case, for example, the average award in 2013-14 was £11,813 and the median was £5,016. Not many conciliation claims will be reaching this level of settlement.

Why early conciliation was introduced

Some have argued that the new system better reflects what workers want. Writing last September in People Management, a magazine for the HR industry, Claire Churchyard reported that an examination of the first Acas data on early conciliation suggested that most workers “prefer” it to taking a case to a tribunal. According to Churchyard, “the majority of employees are open to settling disputes via the Acas Early Conciliation (EC) scheme rather than going through costly employment tribunals”.

However, in reality, workers have few other options. If pursuing a tribunal claim is going to cost a lot of money, take many months to resolve and gives no guarantee of success, then it may well be that workers “prefer” to go to conciliation. This is simply a reflection of the barriers that are in place — making taking tribunal claims problematic — rather than proof that workers do not want to go to tribunals.

The early conciliation system was introduced by the previous coalition government under the Enterprise and Regulatory Reform Act 2013 (ERRA) on the basis that change was needed because:

• employers were “worried about the prospect of employment tribunal claims being brought against them” because of the costs of preparing and attending tribunals;

• claimants faced “significant cost and stress” in pursuing claims; and

• the costs to the Exchequer of administering the scheme “and funding Acas’s conciliation work were high”.

Concerns about conciliation

In its July 2013 response to a consultation on proposals for the scheme, the government argued that the evidence “demonstrates that if disputes are resolved in the workplace this is far less costly to both parties” and stated that its aim was to encourage individuals not to take claims to tribunals.

The TUC’s position has been one of support for the principle of extending Acas’s pre-claim conciliation services. But it has also expressed concerns that there is a “serious risk” that the proposals for early conciliation “could damage the impartiality of Acas by requiring conciliators to advise on the merits of a claim and on complex jurisdictional issues including employment status”. And, as the TUC response to the consultation made clear, “such an outcome would demonstrate a serious failing in the early conciliation processes”.

Australia’s alternative dispute resolution system has a similar obligation on conciliation and Australian academic, Therese MacDermott, has criticised the “gatekeeping role” of such systems. She argues that in the resolution of employment discrimination complaints, the key lies in the engagement of human rights and other agencies, and the advice and assistance they can make available to workers. Unfortunately, the UK’s early conciliation obligation has no such requirement for this kind of support for workers. Without it, alternative dispute resolution systems are less likely to deliver justice.

Justice denied

While applications to tribunals have been in decline for several years, this trend has increased in the months after the increase in tribunal fees.

The latest employment tribunal statistics, Tribunal statistics quarterly: October to December 2014, show that total claims accepted fell by 73% and that this “coincided with the introduction of Employment Tribunal fees on 29 July 2013”. The main losers have been those pursuing redundancy claims, where the number of claims going to tribunals now represents less than one in five of those in the quarter before the increase in employment tribunal fees was introduced.

It might be assumed that with so many cases not going through the tribunal system, those that did would be dealt with speedily. But the statistical data shows this not to be the case with the mean age of a single claim being 53 weeks — 22 weeks longer than the same period in 2013. Indeed, one of the main concerns about early conciliation expressed by the TUC was that the time taken to pursue employment tribunal claims was already too long and that “the Tribunal System is under-resourced to deal with its current workload and there is a shortage of Tribunal Chairs who are specialists in employment law”.

It seems clear that the government has been motivated by two considerations — a desire to make it more difficult for workers to take employment claims on the one hand, and a desire to save money on the other.

The changes therefore represent one small strand of the government’s overall spending reductions. Indeed, Acas has already calculated that the percentage of tribunal hearing days “saved” as a consequence of the changes has been as high as 80%.

Of course, the best way to resolve disputes in the workplace is to make it easier for unions to be recognised. But neither the previous coalition government nor the new Conservative one would ever come to that conclusion.

Importance of getting it right

Two recent Employment Appeal Tribunal rulings illustrate the importance of getting it right, as mistakes with Acas Early Conciliation are likely to be fatal to a tribunal claim.

The requirement to submit an Acas Early Conciliation Notification Form by the claim deadline is mandatory. Unless this step is complied with, the claim will be rejected by the tribunal office and must be dismissed.

Two recent cases have underlined the immovability of this rule and its potential to cause injustice.

In Cranwell v Cullen [2015], a claimant issued a tribunal claim for sexual harassment against her employer. She alleged appalling abuse, so bad that she had obtained a court order banning him from contacting her.

Cranwell could not imagine “conciliating” with him and, perhaps unsurprisingly, she wrongly assumed that Acas Early Conciliation would not apply to her. So when she completed her online Form ET1, she ticked the box stating that her claim was exempt. This was a mistake.

Acas Early Conciliation applies to all cases (except applications for interim relief). The EAT said it had no choice but to dismiss her claim. Her only option was to start again, and to ask the tribunal for permission to bring any new claim as the claim deadline had now passed.

In Sterling v United Learning Trust [2015], Sterling made a mistake with two digits of her Acas Early Conciliation Reference Number when she filled in her ET1 Claim Form. As a result, her claim was rejected.

However, when sending the claim back to her, the tribunal office made a mistake of its own, typing out her address wrongly, so her rejected Claim Form went to a neighbour instead of her. As soon as the neighbour brought it around, Sterling immediately lodged another claim in person, but by this stage the claim deadline had passed. Her claim was dismissed.

Under the tribunal rules, the tribunal had no choice but to reject her ET1 Form because of her mistake with the reference number.

Sterling was refused a request to extend time to bring her unfair dismissal claim because it was “reasonably practicable” for her to write the correct reference number of the ET1 Form, even though she only missed the deadline because of the tribunal’s error in getting her address wrong.

Sonia Mckay is Visiting Professor in the Faculty of Business and Law at the University of the West of England


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Early Conciliation Update 3: April - December 2014

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