1. The employment law system

Employment rights in the UK come from two main sources. The first is legislation enacted by Parliament in the form of Acts of Parliament or Regulations; this is referred to as statutory law (from "statute", which is another word for a piece of legislation). The second is common law (also referred to as case law), which has developed over the years from decisions made by judges in specific cases.

The system of legal precedent means that lower courts are bound by the decisions of higher courts. This means that employment tribunals must follow decisions that have been made by the Employment Appeal Tribunal (EAT), which must follow those of the Court of Appeal (or Court of Session in Scotland).

In Northern Ireland, appeals from industrial tribunals go straight to the Court of Appeal. However, judgments of the EAT are strongly persuasive on the tribunals, which mean they can still be used to support a claim. The Supreme Court (formerly the House of Lords) is the highest court in the UK, so the principles decided here will apply to all courts and tribunals.

The UK must also comply with European law, and its legislation must be interpreted so as to comply with European law as far as possible. The European Court of Justice deals with the interpretation of European law, and its decisions are binding on all courts and tribunals in the UK.

Most employment claims are dealt with by employment tribunals but there are cases that have to be brought in the ordinary courts (the County Court or High Court) - principally breach of contract claims (while the contract is on-going) and applications for injunctions (see Chapter 3: Contracts - Other remedies).

Employment tribunals

Employment tribunals (industrial tribunals in Northern Ireland) were set up under the Industrial Training Act 1964 as an informal, accessible, quick and inexpensive way of resolving employment disputes, although they have become increasingly legalistic. It is more likely than not that the parties in a case, particularly the employer, will have legal representation at a tribunal.

Employment tribunals have their own rules of procedure. These are set out in the amended Employment Tribunals Act 1996 and the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004. In November 2011, the government commissioned Lord Justice Underhill to carry out a review of the current rules with a view to streamlining them. The outcome of this review has not yet been published as Law at work 2012 goes to press.

In April 2011, the Employment Tribunal Service merged with HM Court Service to become part of the Ministry of Justice HM Courts and Tribunals Service. Information about bringing a tribunal claim can now be found on the website on the Ministry of Justice at: www.justice.gov.uk/tribunals/employment

A full tribunal consists of a legally qualified chairperson (now called an employment judge) and two lay members, one drawn from a panel of employer representatives and one from a panel of employee representatives. Certain types of claim, as well as case management discussions, are normally heard by an employment judge sitting alone. As of 6 April 2012, these include unfair dismissal cases and EAT appeals.

Tribunals, like all other judicial bodies, must where possible, interpret the law to give effect to the European Convention on Human Rights which was implemented in the UK by the Human Rights Act 1998. This includes the right to a fair trial. Tribunals have to demonstrate an absence of bias and give both parties the right to state their case and respond to any allegations made against them.

The EAT has held that a tribunal which excluded relevant witness evidence acted unfairly (Kilduff v MIND in Bradford EAT/0568/04), and that if a member of the panel becomes unavailable part way through a hearing, the parties are entitled to know whether that member was drawn from the employers' or employees' panel (Rabahallah v BT plc EAT 0382/04 ([2005] IRLR 184)).

Most claims that can be heard by an employment tribunal are statutory claims, meaning that they involve rights given by employment legislation rather than the employment contract. These include claims for unfair dismissal, unlawful deduction from wages, redundancy pay, discrimination, equal pay, claims relating to parental rights, claims arising from the Working Time Regulations, and most trade union rights.

An employment tribunal can also hear a claim for breach of contract (see Chapter 3: Contract changes) but only where the breach arises or is outstanding on dismissal. This means that a worker who wants to pursue a breach of contract claim while still employed will usually have to do this in the County Court or High Court. In any event, the maximum amount that a tribunal can award in a breach of contract claim is £25,000. Anyone who has been declared bankrupt can only take a claim if approved by the trustee in bankruptcy.

Bringing a tribunal claim

To pursue a tribunal claim, you must submit the claim on the specified claim form (ET1) and complete all the required information on the form. If the claim is not submitted on the correct form, or if some of the required information is missing, the claim will not be admitted.

The claim form can be obtained from Jobcentres, most advice agencies and benefit offices, or can be downloaded, together with guidance, from the Employment page of the Ministry of Justice at: www.justice.gov.uk/forms/hmcts/employment

You should specify on the form all the claims that you wish to bring. For example, if you think that you were unfairly dismissed and that your dismissal was discriminatory on grounds of your sex, you should state that you are claiming both unfair dismissal and sex discrimination as these are separate claims.

The form must be sent to the correct employment tribunal office, which is determined by the postcode of your normal workplace and can be found on the Employment page of the Ministry of Justice website or by phoning its enquiry line on: 0845 795 9775 (minicom 0845 757 3722).

When the tribunal receives your claim form, it will send a copy to your employer and invite the employer to respond by completing the response form (ET3). At the same time, it will normally send a copy to the Advisory and Conciliation Service (Acas) who will make contact with you (and with your employer) using the details you have put on the form, to see whether you want to discuss settlement.

Some tribunals expect claimants to complete a Schedule of Losses early in the process and they often supply a template showing the form it should take. The government plans to make this step compulsory for all claims. In practice, providing early, clear information about the value of a claim can help secure an early settlement. It is very important to be accurate and to keep all payslips and other documentary evidence that help prove the claim's value, including evidence on job-hunting (see Chapter 10: Dismissal compensation). The schedule can be updated as the claim progresses.

Time limits

The application must be submitted within the time limits laid down for each piece of employment legislation. Time generally runs from the date of the act complained of (for example, the date of dismissal in an unfair dismissal claim). Although there are exceptions, the time limit for most employment claims is three months.

Please note that, where an individual's employment was terminated without notice (i.e. taking immediate effect) on 10 January, the time limit for lodging a claim will be 9 April and not 10 April. Union reps should be aware that the time limit for an application for interim relief is only seven days (see Chapter 5: Victimisation).

If a claim is issued out of time, the tribunal normally has no jurisdiction to hear it and it will therefore almost certainly be dismissed. A tribunal does have discretion to extend these time limits in some circumstances, but these are very specific and the power is rarely exercised.

In unfair dismissal cases, the tribunal has a discretion to extend the time limit if it was not reasonably practicable for the claimant to present the claim in time (section 111(2) ERA 96).(See Chapter 10: Dismissal - Extending time to bring an unfair dismissal claim). In discrimination cases, time can be extended if it is just and equitable to do so (section 123(1) (b) Equality Act 2010) - see Chapter 6:Discrimination - Bringing a discrimination claim). In both cases extensions are rare, but it is generally easier to extend time in a claim for discrimination (where the tribunal is allowed to exercise a broad discretion based on fairness and equity) than in a claim for unfair dismissal, where the discretion is far more limited.

Try to avoid issuing a claim very close to the deadline. In particular, the failure of electronic equipment will not be considered a valid excuse for missing the deadline. If you have not received an acknowledgement of your claim or if you submit it very close to the deadline, contact the tribunal office to make sure it has been received.

Pre-hearings and deposits

Before the claim reaches a full hearing, an employment judge may hold a case management discussion to deal with matters relating to the procedure and management of the proceedings, such as clarification of the issues in dispute and the provision of additional information or documents that are relevant to the claim. A tribunal can also call for a pre-hearing review (PHR), which deals with more fundamental issues, such as whether the tribunal has jurisdiction to hear the claim (including whether the claim has been submitted in time) or whether an amendment to the form should be allowed.

At a PHR an employment judge also has the power to order a party to pay a deposit if the judge believes that the case has little prospect of success but is still arguable. The deposit can be for a sum of up to £1,000 (£500 prior to 6 April 2012). If a tribunal indicates that you should pay a deposit, you should think very carefully before continuing with your claim, as in practice, it is a good sign that you are unlikely to win and also that you may be ordered to pay some of the employer's costs (see below).

A tribunal can strike out a claim, or an employer's response, that is "scandalous, vexatious or has no reasonable prospect of success" or which has been conducted in a "scandalous, unreasonable or vexatious manner". Claimants who fail to actively pursue their claims - for example, by failing to comply with directions or orders given by the tribunal - are also at risk of having their claims struck out.

A "strike out" is an extreme remedy, as it results in a party (usually the claimant) being deprived of a proper hearing, so in practice, it is quite rare. It is especially rare in discrimination cases, where cross-examination of the employer's witnesses is usually needed to decide how strong the case is (Ezsias v North Glamorgan NHS Trust [2007] EWCA Civ 330). The government is keen to expand the range of circumstances in which cases can be struck out, even, in some cases, without hearing from either side.

An employment judge can issue a default judgment if the respondent has not issued a valid response form in time or does not intend to oppose the claim. This is a judgment made without a hearing.

Alternatively a tribunal may make an "unless order" - a requirement for one or both of the parties to do something (normally provide a document) by a certain date. Failure to comply with an unless order will almost always have serious implications - although there are occasional exceptions. The sorts of factors a tribunal is unlikely to take into account include the reason for the default, and in particular whether it is deliberate; the seriousness of the default; the prejudice to the other party; and whether a fair trial remains possible (Thind v Salvesen Logistics Ltd UKEAT/0487/09).

If either party wants documents from the other side that are necessary to support their claim but has been refused access to them, it can ask the tribunal for an order to provide the documents. This is known as discovery or disclosure. "Privileged" documents, which are primarily communications between legal representatives or between lawyers and their clients, do not have to be disclosed.

However, if a party has waived their right to privilege (meaning they have shown that they are prepared for the information to be made public), the documents can be referred to in the case (Brunel University v Webster & Vaseghi [2007] EWCA Civ 482). Please note that disclosing part of a document will normally result in waiver of the whole of the document - this is because parties are not allowed to cherry pick what they choose to show.

Legal professional privilege does not extend to communications to and from a firm of employment consultants (New Victoria Hospital v Ryan [1993] IRLR 202, Walter Lilly & Co Limited v Mackay [2012] EWHC 649).

The hearing

Once any preliminary issues have been resolved, the claim proceeds to a full hearing. This usually takes place in public, although there are exceptional cases where a hearing can be conducted in private - for example, if there is an issue of national security. In cases involving allegations of sexual misconduct or disability cases involving evidence of a personal nature, the tribunal may issue a restricted reporting order; depending on the nature of the allegations, this may apply permanently or just until the date of the judgment.

It is important to present all of the case law that could be relevant to your case, as well as focusing on the words of the legislation. If the tribunal is aware of a relevant case that it wants to take into account, it must ask both parties to make representations on it. If it fails to do so, the hearing will be unfair (Albion Hotel (Freshwater) Ltd v Maia e Silva EAT/375/00 [2002] IRLR 200).

You have the right to be represented by an individual of your choice (Bache v Essex CC [2000] IRLR 251), or to represent yourself. If the tribunal disapproves of the behaviour of your representative, it can warn you that it believes the representative's behaviour is inappropriate and that you risk rejection of your claim. On the basis of this, you can decide whether you want to keep or change your representative.

You can call witnesses in support of your claim, and if necessary you can ask the tribunal to issue a witness order compelling them to attend. This might be necessary, for example, if an employer is unwilling to give a witness time off work to attend the hearing.

Once an order has been issued, an employer has to allow the time off. The tribunal has discretion over whether to grant a witness order, and can take into account the relevance of the witness's evidence (Noorani v Merseyside TEC [1999] IRLR 184).

Adjournments

If you need to request an adjournment, you must make an application to the tribunal, and you should provide any necessary evidence in support of your application. If the application for an adjournment is on medical grounds, the tribunal must consider the medical evidence provided and not jump to its own conclusions:

Witness statements

In England and Wales each side prepares witness statements, setting out the facts relating to the claim. As of 6 April 2012 witness statements will normally no longer be read out. Instead, it will be assumed that the tribunal and other side have already read them. In Scotland, witness statements are not used, instead witnesses are prompted to give their evidence verbally.

Once the case has been heard, the tribunal will issue its judgment with reasons. Either it will do this at the end of the hearing or, if there is no time or the tribunal wishes to consider the case further, it can reserve its judgment and issue it at a later date. If the judgment is reserved, the tribunal must put its reasons in writing. If it gives its reasons verbally at the end of the hearing, the parties can request that they are provided in writing at the time, or in writing within 14 days.

Costs orders

As a rule, each party has to meet its own legal costs, but there are limited circumstances in which costs may be awarded.

Either party may be directed to pay the travel expenses, accommodation costs, loss of earnings and child or adult care costs of a witness attending the employment tribunal.

In limited circumstances, a tribunal has the power to issue an order for costs against a party (in Scotland they are called expenses). The power can be exercised where that party or its representative has acted "vexatiously, abusively, disruptively or otherwise unreasonably", or where the proceedings were "misconceived" (interpreted as having no reasonable prospect of success).

An employer should always give advance warning if it plans to ask for an order that the claimant be made to contribute to its costs (Rogers v Dorothy Barley School [2012] UKEAT0013/12/1403).

A tribunal should take into account the "nature, gravity and effect" of conduct (such as lying, for example) when deciding the size of any costs order (Yerrakalva v Barnsley MBC [2010] UKEAT0231).

Failure to accept an offer of settlement by an employer, which - following judgment as to remedy - turns out to be at least as much as the sum awarded may lead to an order to contribute towards the other side's costs:

A tribunal is obliged to consider whether or not to take an individual's means into account before making a costs order and if the tribunal decides to disregard someone's ability to pay, it must explain why (Doyle v North West London Hospitals NHS Trust UKEAT/0271/11/RN). Where an individual is shown to have lied about their means, a tribunal may decide to disregard all information about means when fixing the amount of costs to be paid (Shields Automotive Limited v Grieg UKEATS/0024/10/B1).

A wasted costs order can be made against a legal or any other representative who has caused another party, including their own client, to incur costs through their "improper, unreasonable or negligent act or omission". This only applies where costs have actually been incurred, and will not therefore apply to voluntary or not-for-profit sector representatives or trade unions.

Preparation time orders can be awarded in favour of a party who has not incurred any legal costs. This means that unrepresented parties or those presented by voluntary or not-for-profit sector representatives can recover costs for their time spent preparing. These are made in the same circumstances as other costs orders.

As of 6 April 2012 the amount of costs that can be ordered (as well as through preparation time orders) is:

• sum fixed by the tribunal which can be up to £20,000;

• a sum agreed by the parties; or

• the whole or a specific part of the costs incurred.

The government also proposes giving tribunals the power to levy an additional financial penalty on employers where it is showed that they are in breach of employment rights. These proposals appear in the draft Enterprise and Regulatory Reform Bill.

Note that since the enactment of the Legal Aid Sentencing and Punishment of Offenders Act 2012, there is no longer legal aid available for any type of employment dispute.

Employment Appeal Tribunal

Either side can appeal against a tribunal decision, but only if there has been an error of law or the decision was perverse (meaning that no reasonable tribunal could have come to that decision).

If the conduct of the hearing is such that a party was deprived of the right to a fair trial (for example, because the tribunal showed bias or there was an unreasonable delay in coming to its decision), this will amount to an error of law (Bangs v Connex South Eastern [2005] EWCA Civ 14 ([2005] IRLR 389)).

Appeals from employment tribunals go to the EAT in England, Wales and Scotland (which has a separate EAT); in Northern Ireland, appeals from industrial tribunals go to the Court of Appeal.

The appeal must be lodged within 42 days of the tribunal sending out its decision, not the date when you received it (Gdynia American Shipping Lines v Chelminski [2004] EWCA Civ 871 [2004] IRLR 725).

The EAT has discretion to extend the time limit but this is exercised only in rare and exceptional cases (Aziz v Bethnal Green City Challenge [2000] IRLR 111). If you have submitted an appeal and not had it acknowledged it is important to check that it has been received. You should contact the EAT office to make sure.

EAT procedure is governed by the Employment Appeal Tribunal Rules 1993 (as amended) and the Employment Appeal Tribunal Practice Direction 2004, which came into force on 1 December 2004. It is not the function of the EAT to conduct a rehearing of the facts. New evidence and new points of law cannot be raised on appeal if they were not raised at the tribunal hearing, unless there are exceptional circumstances.

The EAT can order costs (expenses in Scotland) against a party if its appeal proceedings were unnecessary, improper, vexatious or misconceived, or if there is unreasonable conduct. It can also order costs for a failure to comply with an order. It is recommended that you get legal advice before contemplating an appeal.

The government is proposing that judges sit alone in the EAT (i.e. without lay members).

Other courts

Some cases go to the ordinary courts rather than to the tribunals. For example, police prosecutions for offences to do with picketing (see Chapter 9) go to either the Magistrates' Court or the Crown Court, depending on the severity of the charge. Claims for breach of contract if the employee is still employed go to the County Court or the High Court. There is a general legal principle that, if you bring a claim in one court, you cannot then take the same claim to another.

Compromise agreements

Legally binding settlements, in which the parties refrain from issuing or continuing proceedings, can be agreed before a case reaches a tribunal. This can happen through the services of an Acas conciliation officer (see below), in which case the agreement will usually be put in writing on a form COT3, or through a compromise agreement reached following advice from a relevant independent advisor, such as a lawyer, a certified union official or advice worker. If an advice centre worker is providing the advice, there must have been no payment for it.

By signing a compromise agreement, the employee is barred from bringing or continuing with a claim in relation to the issues specified. Compromised claims can include present and future claims if these are, or could have been, contemplated at the time of the agreement (Byrnell v BT EAT/0383/04).

However, in Hinton v University of East London ([2005] IRLR 552), the Court of Appeal said it was not enough for an agreement to refer to "all claims" in order to compromise any claim the employee might have. The agreement must clearly indicate the particular proceedings it is compromising. Dr Hinton's claim for whistleblowing was not compromised because there was no mention of public interest disclosure or description of those facts. He could therefore pursue his claim.

If a representative enters into an agreement on an individual's behalf, that individual must have given them authority to do so. In Gloystarne & Co Ltd v Martin ([2001] IRLR 15), Mr Martin was not bound by a settlement agreement made by a union official through Acas because he had not given his consent. However, if the appropriate authority has been given, it is virtually impossible to unravel a compromise agreement (Gibb v Maidstone & Tunbridge Wells NHS Trust [2010] EWCA Civ.678).

Individuals who secure compensation under the terms of a compromise agreement would be well advised to observe any confidentiality clause - a breach of which is one of the easiest ways in which employers can avoid making payments.

Also, watch out for clauses within a compromise agreement that involve an employee warranting that s/he has not breached any term of his or her employment contract:

The government wants to encourage the use of compromise agreements. It proposes simplifying the procedure for using them, and providing model versions available for download together with accompanying guidance, renaming them "settlement agreements".

Settlements through Acas

The Advisory, Conciliation and Arbitration Service (Acas) has a general duty to promote good industrial relations. It provides advice and guidance on employment issues (particularly through its Codes of Practice), runs training events and provides arbitration in collective and individual disputes.

Acas also offers a conciliation service in employment tribunal claims. When a claim is made to a tribunal, it is copied to Acas; a conciliator then contacts the parties and tries to help them resolve the dispute without the need to go to a hearing.

Acas has the power to continue trying to settle all kinds of case right up to the date of the hearing. There are no fixed conciliation periods. Acas operates in England, Scotland and Wales. In Northern Ireland, conciliation is through the Labour Relations Agency, and the same set periods for conciliation apply.

From April 2014, pre-claim conciliation by Acas is expected to be mandatory. Before a claim is issued in the tribunal, the claimant will have to agree to allow Acas up to a month to explore the possibility of a negotiated settlement. These proposals appear in the draft Enterprise and Regulatory Reform Bill.

Binding arbitration

Acas also operates a voluntary but binding individual arbitration scheme, available as an alternative to taking a tribunal claim in unfair dismissal and flexible working claims.

If a claimant decides to enter into arbitration, they waive their right to pursue the claim in the tribunal or through the courts. The arbitration scheme can only be used if both parties agree in writing to resolve the dispute in that way, and if this agreement has been reached either through a conciliation officer or by way of a compromise agreement following independent advice. Both parties must also complete a waiver form. In practice, this scheme is under-utilised. More details are available on the Acas website at: www.acas.org.uk