New time limits: Are employers headed for more litigation or more resolution?

One of the key themes of the new UK Employment Rights Bill (the 'Bill'), which is currently making its way through the Parliamentary process, is 'day one' employment rights, including in relation to making unfair dismissal claims.  

On 26 November 2024, the Government amended the Bill to extend the time limit for bringing all tribunal claims (including unfair dismissal and discrimination claims) from three months to six months.  It is unclear when the new time limits will apply, but it seems likely to be no earlier than 2026, in line with the other changes proposed in the Bill.    

Some view this amendment as a welcome move.  While ACAS early conciliation is already a pre-requisite for most cases, because of the very short current time limit, individuals who wish to resolve their concerns rather than bring a claim against their employer often find themselves having to issue a claim before they have concluded an internal grievance or appeal process and/or before they have had a proper opportunity to negotiate with their employer.  This inevitably places the dispute on a more acrimonious footing, rather than allowing breathing space and encouraging resolution.  

In contrast, others fear that the changes will increase uncertainty for employers, who will suffer a prolonged risk of claims being brought.  It may also mean an increase in claims overall, with individuals - bolstered by enhanced rights and the absence of an issue fee  for bringing an employment tribunal claim - having a longer period to formulate and bring their cases.  

An increase in claims would place further pressure on employment tribunals, which are already struggling with an increased caseload.  In April to June 2024, His Majesty's Courts & Tribunals Service recorded an increase in the receipt and disposal of employment tribunal claims compared to the same quarter in 2023 (up 13% and 15% respectively), with the total number of receipts exceeding disposals, resulting in a 4% increase in caseload over the same period.  There is already a backlog of cases and it can take over two years to conclude litigation.  A further increase in cases does not bode well for a system under strain.  

If claims increase, so will delays.  This in turn will affect the preservation of evidence, for example, witnesses may leave the employer by the time a claim is issued / heard or may struggle to recall events by the time they come to give evidence.  With this in mind, some employers are seeking to mitigate these risks by preparing witness statements at an early stage.  Delays will also increase cost, both in terms of loss of management time and increased legal fees.

Given the above, some commentators consider that we may see an increase in the use of alternatives to the employment tribunal system.  There could be an increase in the parties actively engaging in ACAS early conciliation – as well as other forms of alternative dispute resolution, such as judicial mediation, judicial assessment and non-consensual dispute resolution appointments.  It has long been established that early resolution saves costs, time, stress and reputational damage, but now it also saves wrangling with an increasingly burdened  tribunal system.

It remains to be seen whether another creation of the Bill – the Fair Work Agency – will relieve some of the employment tribunals' workload.  The Agency will be a new state enforcement agency for certain employment rights, such as holiday pay, with the potential for additional enforcement powers to be added.  Like the rest of the Bill, it is likely to be operational no earlier than 2026.