Settlement agreements and Mandatory early conciliation

From 6 April 2014, anyone wishing to issue an Employment Tribunal claim must first contact the Advisory, Conciliation and Arbitration Service (ACAS) to consider conciliation of their potential claim. If claimants do not contact ACAS to consider conciliation their Tribunal claim will be rejected; these are mandatory requirements for most types of Employment Tribunal claims. Early conciliation came into force on 6 April 2014. There is an initial transitional period between 6 April and 5 May 2014 whereby the service will be available to prospective claimants but it is not mandatory. It will be mandatory for claims presented on or after 6 May 2014.

Before issuing a claim or ‘relevant proceedings’ in the Employment Tribunal, a prospective claimant must provide ACAS with prescribed information either by presenting an early conciliation form or by telephoning ACAS.

Then to lodge a claim the claimant will be required to provide the Tribunal with an early conciliation number (or an exemption category) before the claim can be considered presented. After presentation of the claim the Tribunal will carry out a verification of any certificate number provided. If the prospective claimant does not contact ACAS then ACAS will not issue an early conciliation certificate and the prospective claimant will not be able to bring a claim because the Tribunal will not accept the claim without the certificate number.

This is the only compulsory step on the part of prospective claimants and there is no obligation on either party to actually engage in settlement discussions. Participation in the actual conciliation is entirely voluntary.

ACAS will make reasonable attempts to contact the prospective claimant. If it cannot contact him/her then ACAS is likely to conclude that settlement has not been possible and issue the early conciliation certificate.

The period for early conciliation is up to one month from receipt of the early conciliation form. The conciliation officer must endeavour to promote a settlement during this period. The conciliation can be conducted by legal representatives if the parties have representatives. The conciliation period can be extended by up to a further 14 days providing that both parties consent and the conciliation officer considers that there is a reasonable prospect of achieving a settlement before the extended period expires.

If settlement is unsuccessful, either party withdraws or the conciliator believes settlement is not possible, the conciliation period will be closed early and the early conciliation certificate issued. If the early conciliation period expires without settlement, the case will be closed and the conciliation certificate issued. In cases in which settlement is achieved within the early conciliation period, the parties will enter into a COT3 or a settlement agreement.

The early conciliation certificate will be important for two reasons. Firstly because it will contain a unique early conciliation reference number that the claimant will need to include on the form ET1. Without the reference number, the Tribunal will not accept the claim. Secondly, the certificate is important as it is integral to the claimant’s time limits for submitting a claim. Submission of the early conciliation form will ‘stop the clock’ on the time period for a prospective claimant to submit their claim.

Time will only start to run again one day after the day the early conciliation certificate is deemed to have been received.

This could lead to a situation where the claimant puts in an early conciliation form just before the expiry of the normal time limit for bringing a claim (in most cases three months) as a tactic to buy more time as the limitation period for issuing a claim is then suspended during the conciliation period.

Commentary


The new scheme is free and it is hoped that it will lead to successful resolution of disputes earlier than otherwise would have been the case saving time and money. Recent statistics have shown a 79% reduction in Tribunal claims in autumn 2013 compared to the same period in 2012 and this is since the new Tribunal fee regime was introduced in July 2013. If this reduction is due to claimants being unwilling or unable to pay fees then claimants may be keen to engage with a scheme that promotes early settlement without them needing to incur an issue fee and/or a hearing fee.

The fact that the pre-claim conciliation procedure is mandatory may serve to focus the parties earlier than usual on settlement or resolution as an alternative to litigation. However it is only initiating the procedure that is mandatory, there is no duty to engage with it in good faith or otherwise so the extent to which this becomes a “rubber stamping” exercise remains to be seen. It is likely that entrenched parties to litigation with no appetite for settlement or conciliation will continue to bring or defend claims undeterred by these new measures.

Another potential implication of the extension of time limit provisions is that claims which do not settle are likely to take longer to be heard than before taking into account the later deadline for submitting the ET1 and the knock on effect this has on the date for lodging the ET3. Parties may be advised to front load their tribunal preparation, for example, by looking at the relevant issues, documents and taking witness statements at a much earlier date than previously the case before memories fade.

What is certain is that compulsory early conciliation will bring an added layer of complexity for claimants who have to be mindful of the usual time limits for bringing a claim but will also have to remember to lodge the ACAS form before the expiry of the usual deadline. This is likely to lead to more claims being submitted out of time and additional applications to extend time and jurisdictional challenges on out of time points from respondents.

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