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Employment Tribunal Fees: The Unintended Consequences

Posted on Aug 13, 2013 by Hannah Roche  | Tags: tribunal fees  | 0 Comments

To Len McCluskey (Unite) it’s a “sledgehammer to workers’ rights”.  To the Government, it’s a sensible way of reducing spurious claims against employers and encouraging parties to find alternative ways to resolve disputes.  Whatever your opinion, the introduction of Employment Tribunal fees, which took place a fortnight ago today, is nothing if not controversial. 

Pay To Play?

Against a backdrop of public sector cost-cutting, the fees, which were implemented on Monday 29th July 2013, require claimants to pay up to £250 to commence a claim against their employer or former employer and up to a further £950 before a full hearing goes ahead.  If a claimant is successful in his claim, the Employment Judge can order the employer to reimburse the claimant but this is not automatic.    

To Len McCluskey (Unite) it’s a “sledgehammer to workers’ rights”.  To the Government, it’s a sensible way of reducing spurious claims against employers and encouraging parties to find alternative ways to resolve disputes.  Whatever your opinion, the introduction of Employment Tribunal fees, which took place a fortnight ago today, is nothing if not controversial. 

The Coalition Government has presented the change to the system, the most fundamental in decades, as a business-friendly measure to reduce spurious and weak claims against employers by around 25%.  It will also, cut the cost of the Employment Tribunal system which, the Government says, cost the public £74.4m last year.

The revenue from Tribunal fees is expected to be around £10m per year.

Controversial Changes

But why is the introduction of fees so controversial? After all, fees have long been a feature of the ordinary civil courts. The issue seems to be related to the level of fees (which are much higher than in the ordinary courts).

Unions and workers’ groups have stated that the £1,200 total fee to make a claim of, for example,  unfair dismissal, is disproportionate (especially when many of the claimants will just have lost their jobs) and will limit access to justice for the poor.  Such an assertion has led Unison to challenge the Government’s imposition of fees in the High Court and a full hearing on the matter should take place in October.  A similar legal challenge is on-going in Scotland.  If either challenge is successful, the Court’s decision will apply across the UK and the Government has already pledged to refund Tribunal fees paid by claimants. 

The Government's Position

The Government’s position is that the poor will not be disadvantaged by fees as a Remission Scheme has also been implemented meaning that those who are in receipt of certain benefits (e.g. income support and job-seekers’ allowance), have less than a specified gross annual income or less than a specified monthly net income will not have to pay fees (or will, at least, have the fees discounted).  Despite this, the unions have described the scheme as “woefully inadequate”. 

What Are The Likely Consequences?

Whatever the rights and wrongs, the introduction of fees is bound to have consequences, some of which may not have been intended: 

  • Unite has pledged to financially support its members in relation to Tribunal fees.  Other unions could follow suit.  This could well result in a rise in union membership, which is likely to strengthen the unions and could result in them having more influence over the terms and conditions on which their members are employed.  Despite this, the number of union-backed claims at the Employment Tribunal are likely to fall as unions are forced, for financial reasons, to select only the strongest claims to invest in.   
  • There may be a rise in the number of claims the awards for which are not capped.  For example, instead of making a claim for ordinary unfair dismissal (the award for which will be capped at £74,200 or 12 months’ salary, whichever is lower), claimants may be tempted to make claims for automatic unfair dismissal (e.g. dismissal for whistle-blowing) or discrimination, the awards for which are uncapped, to try to maximise the return on the investment of fees.
  • The number of “economic” out-of-court settlements are likely to fall.  If a claimant has paid over £1,000 to make a claim and ensure a hearing, he is unlikely to want to settle the claim for £500 or any other nominal amount.
  • The number of breach of contract claims in the county court in England and Sheriff Court in Scotland are likely to rise.  Given that the time limit for making such claims is 5/6 years rather 3/6 months (as it is in the Employment Tribunal system), employers may face uncertainty for longer.
  • In relation to claims that are made at the Employment Tribunal, these are likely to take significantly longer to work their way through the system as claims made before 29th July, as the request for fees and applications to the Remission Scheme will take some time to process.  Again, this is likely to mean that employers will be uncertain about whether they’re going to face litigation for longer.
  • Legal fees are likely to increase as lawyers have to spend time dealing with the new rules and applying for remission for their clients.  In fact, even if a claimant is successful in being granted remission, the legal fees in preparing the application could be as much and possibly more than the fees themselves.

The Future For Employment Claims

The true impact of the introduction of fees will not become apparent for some time.  What does seem clear, however, is that if the judicial review of Employment Tribunal fees is successful, not only will the Government have lost the ability to charge fees, tax payers will have to pay for those who have already paid fees to be reimbursed. We'll also shoulder the cost of the new IT systems and staff at the Employment Tribunal involved in implementing the fees (which won’t then be offset by the fee income) and the substantial legal fees involved in defending the review. 

So, will the introduction of fees really save the Government and the public money?  We’ll have to wait and see...  

What do you think?  I'd love to hear your thoughts...

Hannah

@hlroche 

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