A number of significant legal changes will come into force today, which will apply to all companies.  These are:

1. Compromise agreements renamed settlement agreements

To facilitate new rules in relation to pre-termination negotiations.

2. Pre-termination negotiations become inadmissible in unfair dismissal proceedings

Evidence of “pre-termination negotiations” between an employer and employee will be inadmissible in ordinary unfair dismissal claims. This goes further than the “without prejudice” principle as it will apply even where no formal dispute has yet arisen. The legislation applies to negotiations held with a view to terminating employment under a settlement agreement.

3. Claimants required to pay a fee to submit a claim to an employment tribunal

The fees will be paid in two stages, an ‘issue fee’ payable on submitting the claim (or appeal) and a ‘hearing fee’ payable prior to the full hearing.

The level of the fee will depend on whether the claim is Level 1 or Level 2. Level 1 claims will comprise straightforward, lower value claims such as sums due on termination of employment (unpaid wages, redundancy payments and payments in lieu of notice). Level 2 claims will comprise all other claims, including unfair dismissal, discrimination, equal pay and whistleblowing.

The fees will be as follows:

Fee typeLevel 1 claimsLevel 2 claims
Issue fee£160£250
Hearing fee£230£950


Tribunals will have the power (but not an obligation) to order an unsuccessful party to reimburse fees paid by the successful party.

4. New employment tribunal rules

Changes to employment tribunal rules include combining pre-hearing reviews and case management discussions into a preliminary hearing, revised powers for tribunal judges to strike out weak cases and a requirement that an employment tribunal must, where appropriate, encourage parties to use alternative dispute resolution.

5. Reduced cap on the compensatory award for unfair dismissal introduced

An individual cap of 12 months’ pay in relation to the compensatory award for unfair dismissal is introduced. The individual cap will apply where this amount is less than the overall cap, currently £74,200.


By Bruce Ramshaw

Principal Consultant



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