As of today (6 May), it will be mandatory for employers and prospective claimants to consider settlement of potential employment claims. The requirement to consider conciliation will be triggered before the claim is even lodged at an Employment Tribunal or the payment of any Tribunal fees.
Will this mandatory requirement to consider settlement at such an early stage fuel an increase in settlement pay-outs?
Under the early conciliation process, the prospective claimant will be required to contact ACAS before lodging a claim and the ACAS officer will have one calendar month from the date that they have been notified by the Claimant to promote settlement between the parties. The conciliation period may be extended by ACAS by up to 14 days where the ACAS officer considers there is a reasonable prospect of both parties achieving settlement by the end of the extended period.
What does this mean in practice?
The Government’s aim when introducing early conciliation was to reduce the amount of claims and bring both parties to the negotiating table at the start of a dispute in order that matters could be resolved. The benefit of early conciliation is that it provides employers with an early indication of any potential claims and provides them with an opportunity to resolve disputes at an early stage, in particular those low value claims which do not necessitate a lengthy Tribunal process in order to resolve issues. However, early conciliation will only be useful if both parties are willing to engage in the process. In the event that any party is not willing to consider settlement, then there is no duty on ACAS to promote conciliation.
The real concern however for employers is that this could be an alternative for some individuals to obtain a monetary settlement, who may have originally been deterred from lodging claims as a result of the introduction of Employment Tribunal fees. The requirement for employers to consider settlement at such an early stage could lead to employers paying a sum of money to get rid of nuisance claims, which could in itself result in an increase of individuals utilising this service to get a pay-out with no real intention to bring a claim.
Employers may consider whether to engage in the early conciliation process as by testing the resolve of those prospective claimants you will identify those individuals who are serious about bringing a claim and are willing and/or able to pay the Employment Tribunal fees. If a claim is lodged, employers can then consider settlement if that is their preferred outcome.
It has been reported that there has been a 79% reduction in the amount of Tribunal claims since the introduction of the fees. However, whether early conciliation becomes an alternative avenue for claimants to achieve the desired result through the back door, without having to engage in a lengthy Employment Tribunal process remains to be seen…