f Sandy Adirondack: Voluntary Sector Legal Handbook update chapter 37
Legal and governance training and consultancy
for the voluntary sector

Ch.1: Setting up an organisation
Ch.2: Unincorporated organisations
Ch.3: Incorporated organisations
Ch.4: Charitable status, charity law & regulation
Ch.5: The organisation's objects
Ch.6: The organisation's name
Ch.7: The governing document
Ch.8: Registering as a charity
Ch.9: Branches, subsidiaries & group structures
Ch.10: Changing legal form
Ch.11: Collaborative working, partnerships and mergers
Ch.12: Members of the organisation
Ch.13: Members of the governing body
Ch.14: Officers, committees & sub-committees
Ch.15: Duties & powers of the governing body
Ch.16: Restrictions on payments & benefits
Ch.17: The registered office & other premises
Ch.18: Communication & paperwork
Ch.19: Meetings, resolutions & decision making
Ch.20: Assets & agency
Ch.21: Contracts & contract law
Ch.22: Risk & liability
Ch.23: Insurance
Ch.24: Financial difficulties & winding up
Ch.25: Employees & other workers
Ch.26: Rights, duties & the contract of employment
Ch.27: Model contract of employment
Ch.28: Equal opportunities in employment
Ch.29: Taking on new employees
Ch.30: Pay & pensions
Ch.31: Working time, time off & leave
Ch.32: Rights of parents & carers
Ch.33: Disciplinary matters, grievances & whistleblowing
Ch.34: Termination of employment
Ch.35: Redundancy
Ch.36: Employer-employee relations
Ch.38: Self employed & other contractors
Ch.39: Volunteers
Ch.40: Health & safety
Ch.41: Safeguarding children & vulnerable adults
Ch.42: Equal opportunities: goods, services & facilities
Ch.43: Data protection & use of information
Ch.44: Intellectual property
Ch.45: Publications, publicity & the internet
Ch.46: Campaigning & political activities
Ch.47: Public events, entertainment & licensing
Ch.48: Funding & fundraising: General rules
Ch.49: Fundraising activities
Ch.50: Tax-effective giving
Ch.51: Trading & social enterprise
Ch.52: Contracts & service agreements
Ch.53: Financial procedures & security
Ch.54: Annual accounts, reports & returns
Ch.55: Auditors & independent examiners
Ch.56: Corporation tax, income tax & capital gains tax
Ch.57: Value added tax
Ch.58: Investment & reserves
Ch.59: Borrowing
Ch.60: Land ownership & tenure
Ch.61: Acquiring & disposing of property
Ch.62: Business leases
Ch.63: Property management & the environment
Ch.64: How the law works
Ch.65: Dispute resolution & litigation

This page contains information that has appeared on Sandy Adirondack's legal update website for voluntary organisations at www.sandy-a.co.uk/legal.htm. For current updates, including potential changes that are in the pipeline, see the legal update website.

These websites for each chapter update the 3rd edition of The Russell-Cooke Voluntary Sector Legal Handbook by James Sinclair Taylor and the Charity Team at Russell-Cooke Solicitors, edited by Sandy Adirondack (Directory of Social Change, 2009). The websites are not intended as a comprehensive update and should not be treated as such.

To order a copy of The Russell-Cooke Voluntary Sector Legal Handbook, print out the order form at www.sandy-a.co.uk/bookserv.htm or send an email order by clicking . It costs £60 for voluntary organisations or £90 for others, plus 10% p&p.

To avoid spamming, an email address is not given on screen. If you can't see the word 'here' or have trouble sending an email by clicking on it, the address is bookservice at sandy-a.co.uk, with the spaces and 'at' replaced by the @ symbol.

The information here covers the law applicable to England and Wales. It may not apply in Northern Ireland and/or Scotland. These news items are not a full or definitive statement of the law and are not intended as a substitute for professional legal advice. No responsibility for loss occasioned as a result of any person acting or refraining from acting can be taken by the author.

Chapter 37

The items below formerly appeared on the legal update website for voluntary organisations and are archived here. The content may be out of date and links may not work. For current updates to the chapter, see the legal update website for voluntary organisations at www.sandy-a.co.uk/employment.htm.


Updated 17/2/12. This information updates s.37.2.1 in The Russell-Cooke Voluntary Sector Legal Handbook (VSLH3).
Very strict rules apply to settlement agreements (arranged through ACAS) and compromise agreements (not involving ACAS) under which an employee agrees not to pursue a claim arising from the employer's breach of anti-discrimination or employment legislation. Such settlements also frequently include provision for related issues such as contractual rights, confidentiality and references.

One of the rules relating to compromise agreements is that the employee must receive independent advice on the agreement from a qualified lawyer, certified trade union official or certified advice centre worker, and the advisor must have appropriate indemnity insurance. But due to a drafting error, s.147 of the Equality Act 2010 states that a person cannot be an independent advisor on a compromise agreement if they are already acting for the employee.

From 6 April 2012 this drafting error is amended by the Equality Act (Amendment) Order 2012 to make clear that a solicitor, authorised trade union official or member or authorised advice centre worker already acting for the employee can be an independent advisor.

S.147 of the Equality Act 2010 is at www.legislation.gov.uk/ukpga/2010/15/section/147. The amendment order is at www.legislation.gov.uk/uksi/2012/334/made.


Updated 16/6/13. This information updates s.37.3 in The Russell-Cooke Voluntary Sector Legal Handbook.
S.11 of the Enterprise and Regulatory Reform Act 2013 [see paragraph above for link] allows for regulations to be made permitting appointed legal officers to make decisions on behalf of the employment tribunal in specified low value, straightforward claims such as holiday pay. This procedure will be able to be used only if all parties to the dispute agree in writing. The intention is to create a rapid resolution scheme in future which would be quicker and cheaper than tribunal proceedings, for example by allowing for non-judicial determination based only on papers, without an oral hearing. The introduction of any such scheme will be subject to a full public consultation.

In its indicative timetable for implementation of the Enterprise and Regulatory Reform Act, issued on 6 June 2013, the Department for Business, Innovation and Skills said there are no current plans to use this provision.


Tribunal procedure
Updated 4/8/12. This information updates s.37.3 in The Russell-Cooke Voluntary Sector Legal Handbook.
From 6 April 2012 a number of changes in employment tribunal procedure have taken place, intended to reduce the complexity and perceived inefficiency of the system.

Deposit orders. The maximum amount for a deposit order is increased from £500 to £1,000. The employment judge or tribunal can order any party to pay a deposit as a condition of being allowed to proceed if it considers its case has no reasonable prospect of success.

Costs cap. The maximum amount for a costs order, requiring the employer or employee to contribute to the other's costs, is increased from £10,000 to £20,000. The tribunal or employment judge has a duty to consider awarding costs where the case had no reasonable prospect of success or where one of the parties or its representative has acted vexatiously, abusively, disruptively or unreasonably, but can award them even if this is not the case. Practical Lawyer magazine suggests that tribunals are likely to move away from a general "no costs" presumption towards the county court system of "loser pays", which could make the consequences of losing more serious for both employers and employees.

If a claimant persists with a claim after being ordered to pay a deposit at a pre-hearing review and then loses, the deposit may be awarded as costs to the other party.

Witness statements. Witnesses' written statements will be "taken as read" and witnesses will no longer need to read them aloud, unless the tribunal or employment judge orders otherwise.

Witness costs. The tribunal or employment judge has power to order the parties to a dispute to pay witnesses' expenses, and to require the party who loses the case to reimburse the successful party for any such witness costs they have already paid.

The Employment Tribunals (Constitution and Rules of Procedure)(Amendment) Regulations 2012, covering the above changes, are at www.legislation.gov.uk/uksi/2012/468/contents/made.

Maximum awards. The method of calculating the basic award in unfair dismissal claims, and the maximum compensatory award, are both being changed [see Weekly pay for unfair dismissal awards and possible change in compensatory award, above].

Discrimination compensation. The government announced in May 2011 that it would look in detail at concerns about the high level of compensation awarded by employment tribunals in some discrimination cases, and whether this leads some workers to take weak, speculative or vexatious cases in the hope of a large award and/or leads employers to settle such cases before they reach the tribunal.

In the BIS employment law review annual update in March 2012, the government said that because discrimination law derives from EU law, it would not be possible to put a cap on awards. However, information on median awards will be included in tribunal claim forms, so workers and employers realise that large awards are not the norm.

The annual update is on the BIS website via tinyurl.com/7o389e9. The statement on discrimination awards is on p.15.

Financial penalties. Under clause 14 of the Enterprise and Regulatory Reform Bill, which was introduced in Parliament on 23 May 2012, employment judges will have discretion to serve a penalty on employers who breach employment rights where there are "aggravating features". So as well as paying compensation to the employee, an employer could be required to pay a penalty (a fine) to the Exchequer of up to 50% of the tribunal award, subject to a lower limit of £100 and an upper limit of £5,000. The penalty will be reduced by 50% if it is paid within 21 days. The bill can be accessed on the Parliament website via tinyurl.com/7f5rvs5.

Yet more changes. Yet another review of employment tribunal rules and procedures for England and Wales, carried out by Mr Justice Underhill, was published on 11 July 2012. This review includes recommendations that the employment tribunal rules should be completely rewritten in an accessible style; case management discussions and pre-hearing reviews should be combined in an all-purpose "preliminary hearing"; cases should go through an initial paper sift, to consider directions and striking out of aspects lacking a reasonable prospect of success; judges should be given an express power to limit oral evidence and submissions; and the £20,000 cap on cost orders [see Cost cap, above] should be removed. The recommendations can be accessed on the Department for Business, Innovation and Skills website via tinyurl.com/88v74ep, and the draft rules via tinyurl.com/cyd49j7.

Tribunal constitution
Updated 4/8/12. This information updates s.37.3 in The Russell-Cooke Voluntary Sector Legal Handbook.
From 6 April 2012 employment judges will hear unfair dismissal cases alone in the employment tribunal, unless the judge directs otherwise. The Employment Tribunals Act 1996 (Tribunal Composition) Order 2012 is at www.legislation.gov.uk/uksi/2012/988/made.

The Enterprise and Regulatory Reform Bill, now going through Parliament, includes provision in s.11 for employment judges to hear all cases (not just unfair dismissal) alone in the employment appeal tribunal, unless they direct otherwise. The bill can be accessed on the Parliament website via tinyurl.com/7f5rvs5.

In a recent employment appeal tribunal case, an EAT judge expressed concern about judges sitting alone for unfair dismissal cases in the ET. In a case involving a postman with 19 years' service dismissed for alleged dishonesty in using the Royal Mail's taxi account, the ET judge found the dismissal unfair but the majority — the two lay members of the tribunal — found it fair. On appeal the EAT upheld the view of the lay members rather than the judge's view, saying the lay members drew on "their valuable common sense and knowledge of what any employee could be expected to know". The EAT decision in McCafferty v Royal Mail is at www.bailii.org/uk/cases/UKEAT/2012/0002_12_1206.html.

Tribunal fees
Updated 4/8/12. This information updates s.37.3 in The Russell-Cooke Voluntary Sector Legal Handbook.
The Ministry of Justice consulted from 14 December 2011 to 6 March 2012 on the introduction of fees for anyone wishing to take a claim to an employment tribunal, and published the results of the consultation on 13 July. Currently there is no charge, but charges are expected to come into effect in summer 2013 and are intended to bring the employment tribunal in line with other civil courts, and to lower the cost of the employment tribunal system to the taxpayer.

For level 1 claims (straightforward claims such as unlawful deductions, unpaid wages and redundancy payments), the proposed fee is £160 for the issue of a claim and £230 if the claim goes to a hearing. For level 2, covering claims such as unfair dismissal, equal pay and discrimination, the proposed issue fee is £250 and £950 for a hearing. For the employment appeal tribunal, an issue fee of £400 and hearing fee of £1,200 are proposed.

Other application fees include £100 to set aside a default judgment, £60 to dismiss a claim following settlement or withdrawal, £600 payable by the employer for judicial mediation, £160 payable by the employer for a breach of contract counter-claim, and £100 or £350 for a review of a tribunal's decision or judgment.

As these fees do not cover the full cost of employment tribunals, they may be reviewed again after implementation.

The fees have to be paid in advance by the party bringing the claim. People receiving certain welfare benefits or tax credits or on low incomes will be able to apply for the fee to be waived. The tribunal will have power to order the unsuccessful party to reimburse fees paid by the successful party.

There is considerable concern that the introduction of fees will discourage employees from taking action against employers, and will discourage employers from trying to settle disputes if they know employees are unlikely to go to the tribunal. But where an employee has been dismissed and has not found other employment, they may be entitled to remission of the fees so will not be affected.

The consultation documents and response are on the Ministry of Justice website via tinyurl.com/d3juc8c.

Go back to contents
Go to archived items about employment claims and settlement (VSLH3 chapter 37)


Updated 28/3/14. This information updates s.37.4.2 in The Russell-Cooke Voluntary Sector Legal Handbook.
For unfair dismissals taking effect on or after 6 April 2014, the maximum compensatory award for unfair dismissal is increased from £74,200 to £76,574, or 52 weeks' of the employee's normal pay, whichever is lower. Normal pay in this context is as defined in s.221 of the Employment Rights Act 1996. It is not "weekly pay" as defined for calculating redundancy pay and some other statutory entitlements.

The compensatory award is intended to compensate employees for loss of earnings, and does not apply in discrimination and whistleblowing cases, where there is no cap.

The change in compensatory award — to either the statutory amount or 52 weeks' pay, whichever is lower, for dismissals taking effect on or after 29 July 2013 — was brought in by s.15 of the Enterprise and Regulatory Reform Act 2013 and the Unfair Dismissal (Variation of the Limit of Compensatory Award) Order 2013.

The act is at www.legislation.gov.uk/ukpga/2013/24/contents/enacted, and the order is at www.legislation.gov.uk/uksi/2013/1949/made.

The compensatory award in discrimination cases remains uncapped.

For basic awards, the maximum is increased from £13,500 to £13,920 from 6 April 2014. The minimum basic award for unfair dismissal on grounds of health and safety, trade union involvement, serving as an employee representative or occupational pension scheme trustee, or other reasons that are automatically unfair is increased from £5,500 to £5,676.

Where notice of dismissal has been given before 6 April 2014 but the notice period expires on or after 6 April, the new amounts apply. Where pay in lieu of notice has been given before 6 April, the effective date of dismissal is the date the actual dismissal takes effect, plus the statutory period of notice (one week's notice per year of employment, to a maximum of 12 weeks). If this would take the effective date of dismissal to 6 April or later, the new amounts apply.

The changes on 6 April 2014 reflect the retail prices index (RPI) increase in September 2013.

The Employment Rights (Increase of Limits) Order 2014, covering events taking place on or after 6 April 2014 in England, Wales and Scotland, is at www.legislation.gov.uk/uksi/2014/382/made. The Employment Rights (Increase of Limits) Order 2012, covering events taking place between 1 February 2013 and 6 April 2014, is at www.legislation.gov.uk/uksi/2012/3007/made.

The formula for calculating changes in the amounts is now different in Northern Ireland, resulting in increases there being larger than in the rest of the UK. From 16 February 2014 the maximum compensatory award in unfair dismissal claims is £76,600, and the maximum basic award is £5,700.

These and other awards are in the Employment Rights (Increase of Limits) Order (Northern Ireland) 2014, at www.legislation.gov.uk/nisr/2014/39/contents/made.


Added 1/5/10. This information updates s.37.4.4 in The Russell-Cooke Voluntary Sector Legal Handbook (VSLH3).
In discrimination cases an employer may be ordered by the tribunal to pay a compensatory award which can take into account not only actual or potential money losses, but also personal injury (such as psychiatric illness caused by the discrimination) and injury to feelings. Any amount awarded for injury to feelings is based on Vento guidelines (named after the case in 2002 in which they were set). These guidelines were revised in September 2009 to take account of inflation, and are now £600-6,000 for the lower band, £6,000-18,000 for the middle band, and £18,000-30,000 for the upper band.

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