Employees currently have to abide by a strict three-month deadline for most claims to be brought in the Employment Tribunal. This means that if an employee waits too long to bring a claim, they will lose their opportunity to obtain compensation. This includes claims for:

• unfair dismissal,
• discrimination, and
• unlawful deduction of wages.

ACAS early conciliation is capable of “stopping the clock” while conciliation takes place. Otherwise, the time limits are strict. This has historically filtered out individuals who are slow, indecisive, or ignorant of the law. It has been a strong defence for employers defending claims which are out of time.

However, employers will not be able to enjoy this protection for much longer. Section 149 of the Employment Rights Bill (“the Bill”), which is currently at committee stage in the House of Lords, extends the limitation date for most employment claims to 6 months.

Schedule 12 of the Bill sets out which items of primary and secondary legislation the change will apply to; including:

It is clear that the changes are widespread and leave few stones unturned. Redundancy claims are not included in the list, however, these already have a six-month time limit and so will be unaffected.

Notably, the extended time limits in the Bill do not apply to the Employment Tribunals (Extension of Jurisdiction) (England and Wales) Order 1994, which governs breach of contract claims after employment has ended. These claims will still have a three-month time limit. It is vital that Claimant legal advisors are aware of this exception to avoid claims becoming statute barred.

What does this mean for employers?

Risks

Clearly, this means a risk of more claims, more threats of claims, and a higher pressure to resolve matters due to the ongoing litigation risk. Claims will likely be better prepared and harder to defend, and more claimants will be able to bring claims in cases where their non-action would have otherwise caused their claim to lapse.

All of this means more paperwork, higher costs, higher litigation risk and more legal fees. More pressure will be placed on Tribunals, which will lead to slower case progression and later deadlines.

It must be noted that the six-month time limit will not be a hard time limit. Employees still get additional time to bring a claim where ACAS Early Conciliation has “stopped the clock”. In discrimination and unfair dismissal cases, the Tribunal can extend the time limit in certain scenarios. It follows that time limits in practice might go far beyond six months.

Benefits

Despite the clear risks, there are some benefits to the increased time limits. There will be more time to negotiate with Claimants and pursue internal grievance and appeal processes. This may lead to a higher number of claims resolving pre-issue, rather than Claimants protectively pursuing costly legal proceedings.

There will be more time for Subject Access Requests. Given that there is a one-month time limit for employers to comply with SARs, which can be extended if the request is particularly complex, the new six-month Tribunal time limits mean that there is a higher chance of employees receiving this information before issuing proceedings. This will lead to fewer employees rushing to make a claim with incomplete information. Indeed, after receiving the documents in question, it might become clear that there are low prospects of success and so employees do not proceed to make a claim at all. 

The fact that claims will be better prepared may also avoid confusion in cases which would have otherwise been rushed and allow employers to respond appropriately at an earlier stage in Tribunal proceedings, which will avoid adjournments and other delays.

What could employers do now to prepare?

Employers would benefit from reviewing their document retention and archiving policies. Records will need to be retained for at least nine months following any incident, and perhaps longer if litigation is contemplated.

It would be useful to reassess and increase insurance cover for legal claims. If the number of claims increases, this is likely to raise insurance premiums.

Employers should also consider reviewing and strengthening their internal grievance and appeal processes, as well as increasing the HR budget. Employees will have more time to raise and resolve issues, and so early resolution will be key to avoid an increase in claims.