New employment rights bill could put even more pressure on tribunal system, sector warns

Concerns about the “creaking” employment tribunal system have been highlighted in responses to the Government’s new Employment Rights Bill, which includes sweeping reforms to employment law.

The bill, which the Prime Minister said will deliver "the biggest upgrade to rights at work for a generation", was unveiled on Thursday (10 October) and includes provisions to end "exploitative" zero-hour contracts and "unscrupulous" fire and rehire practices.

It will also remove the two-year qualifying period for protections from unfair dismissal and introduce a day-one right for paternity, parental, and bereavement leave for millions of workers.

In addition, statutory sick pay will be strengthened, removing the lower earnings limit for all workers and cutting out the waiting period before sick pay kicks in.

New measures to make flexible working made the default where practical will also be introduced, along with requirements for large employers to create action plans on addressing gender pay gaps.

Alongside this, the Government has also said it will consult on a new statutory probation period for companies’ new hires.

A new Fair Work Agency bringing together existing enforcement bodies will also be established to enforce rights such as holiday pay and support employers looking for guidance on how to comply with the law. 

However, ARAG, which provides legal expenses insurance for brokers, insurers, and solicitors, warned that the employment tribunal system "simply isn't in a fit state to cope with any more claims".

ARAG’s Claims Director, Chris Millward, said: "Backlogs have been growing for some time already, leaving both businesses and employees waiting years to resolve disputes.

"The latest data show that the issues have gone from bad to worse. The number of claims is increasing but capacity to deal with them seems to be diminishing."

The insurer pointed to HMCTS data that show the open caseload of single claims was 18% higher in the first quarter of 2024 than in the same period last year.

The total number of single claims and lead cases in multiple claims was just under 44,000, also 18% higher than 2023.

"It’s hard to argue that access to justice in an employment tribunal is a right that should only be earned after two years of service, but such a significant change will inevitably result in thousands of additional claims," Millward said.

Anna Dabek, partner in the employment and pensions team at Anthony Collins, also raised concerns about the tribunal system.

She said: “Not surprisingly, day one rights to unfair dismissal have been confirmed. Whilst this may be good news for employees, this is not going to be good news for an already creaking tribunal system. 

"We would hope that the promised statutory probationary period would go some way to alleviating further pressure on the system."

Other commentary from the sector urged stakeholders to take part in the consultation.

Elaine Huttley, Head of Employment at Irwin Mitchell, said: “It is crucial that organisations engage with the consultation process, as many of these changes will have a significant impact on their relationship with their staff and will affect the legal duties that flow from this.

“These changes won’t come into effect immediately and we expect there will be a two year lead in for the most significant ones – such as the ‘day one’ right for workers to claim unfair dismissal.”

Adam Carey