Enquire Online

Introduction of Fees into the Employment Tribunal system

26/07/13

MM

On Monday 29th July 2013, a charging structure will be introduced to the Employment Tribunal system. In
the financial year 2010/11, 218,000 Employment Tribunal claims were presented and 2,048 appeals were made to the Employment Appeal Tribunal, costing the taxpayer £84.2 million.

A two stage charging structure will be implemented for Employment Tribunal claims, justified by the Coalition argument that the costs of running the system currently weigh too heavily upon the taxpayer as opposed to the recipients of the service. Indeed, the Justice Minister stated: "We want people, where they can, to pay a fair contribution for the system they are using, which will encourage them to look for alternatives."

The government's primary justification for fees has shifted to some extent. At one time the primary reason given for fees was that they would reduce the number of weak claims. Now, the primary justification for fees is austerity and reducing the burden upon the Treasury; fees are necessary to make the system pay for itself or at least make a start in that direction. However, there is no way that on the current fee levels, the system will be self-sufficient and the government accepts that the proposed fees are too low to achieve that. Ultimately, the government wants Tribunals to be a last resort for the most complex cases.

A Claimant will be required to pay:

  1. An issue fee to commence their claim
  2. A hearing fee if the claim proceeds to a full Tribunal hearing.

The level of fee will be determined by the nature of the claim.

  • Level 1 claims will be those deemed "straightforward" and of relatively low value, encompassing payments such as wages, redundancy pay, holiday pay and notice pay.
  • Level 2 claims will include unfair dismissal, discrimination, equal pay and whistleblowing.
  • If a Claimant issues claims encompassing level 1 and 2, they will have to pay the
    higher  fee.

 

The proposed fees

 


Fee Type


Level 1 claims


Level 2 claims


Issue fee


£160


£250


Hearing fee


£230


£950

  

So, bringing a "straightforward" claim will now cost a Claimant £390.00, excluding any legal fees whilst an unfair dismissal claim will now cost a Claimant £1200.00, again before factoring in any legal fees.

In cases where more than one Claimant is bringing the same claim the fee structure makes provision for this and has suggested fees accordingly. These fees are set out below:

Level 1 claims 


Fee Type


Two to ten Claimants


11 to 200 Claimants


201 or more Claimants


Issue fee


£320


£640


£960


Hearing fee


£460


£920


£1,380

 

 Level 2 claims 


Fee Type


Two to ten Claimants


11 to 200 Claimants


201 or more Claimants


Issue fee


£500


£1,000


£1,500


Hearing fee


£1,900


£3,800


£5,700

 

The fees for the Employment Appeal Tribunal will mirror the structure outlined above and there will be a fee of £400 to issue an appeal and a fee of £1200 to proceed to a full hearing. 

Specific applications

Fees will also be introduced in relation to specified applications to the Tribunal.

 

Dealing with the inability to pay fees

Some individuals may find themselves unable to pay fees. The Government has attempted to ameliorate such difficulties by allowing a fee remission.

Tribunals will have the power to reimburse the fees paid by the successful party but it is envisaged that this will be the exception rather than the rule. Accordingly, on this basis, a Claimant who succeeds in his level 2 claim could potentially still be £1200.00 worse off. 

The Tribunal system is alone in not expecting a fee to be paid upfront. We all accept that these are financially straitened times. Budgets have to be cut and belts tightened.

Many will also rejoice that a system that is perceived to bear so heavily upon the Respondent will now have a shift in focus. The
current imbalance will unquestionably be resolved - workers will pay the fees; employers will pay nothing.

As now, some claims will settle before the institution of a claim because employers do not want evidence of bullying or other bad behaviour to be in the public domain but inevitably, the changes will serve to reduce the financial liability of employers who behave unreasonably.

Business has taken the view that although fees are welcome, the proposals do not go far enough on the basis that the proposed remission scheme may mean that fees would only apply in a limited number of cases and not significantly reduce the number of claims brought. Alexander Ehmann of the Institute of Directors strongly supported the government's decision on the
basis that it would "make people think twice before submitting vexatious or weak claims.

"Businesses are too often forced to defend themselves against claims which have no merit, incurring heavy costs in the process. However, the IoD is concerned that under current proposals many unemployed claimants will have their fees waived despite having the means to pay. Even the government accepts this could mean that the majority of claimants are exempt from their new rules - a result that would undermine the entire purpose."

Tim Thomas, Head of Employment Policy at EEF, the manufacturer's organisation, said"Fees are one way to encourage more responsible behaviour by Tribunal users. We warmly welcome the announcement from the Government that realistic fees will be required from claimants in a way which will still preserve an incentive to settle. Employers have faced a steep rise in speculative claims in recent years, many of which are withdrawn or struck out leaving employers picking up the bill. Claimants risk little under the current system. Fees, if properly introduced, will help check this rise."

Respondents should be pleased. The notion that a fee of £1200.00 (potentially not refundable) for an out of work individual will not serve as a deterrent to instituting a claim is nonsense. It will inevitably serve to focus the mind of a prospective Claimant.

In addition to dealing with the three month time limit for instituting their claim, they will also have to find the initial issue fee. On the one hand, this means that unmeritorious claims will be consigned to the dustbin without ever causing the Respondent any concerns. However, on a wider public policy consideration, claims with some merit may also go the same way. 

Given that we have spent much time considering and dealing with the impact of the Equality Act, it is a bizarre twist in government policy that an individual facing workplace discrimination (for any of the protected characteristics), not only has the spectre of the statistical hurdle to surmount in succeeding in a claim but also the very real prospect of never having "their day in court" and challenging the discriminatory practices of an employer due to lack of funds.

Of course, another way of looking at it is that the Employment Tribunal system may be freed up to focus solely on those claims that have merit and alternative dispute resolution may receive a boon with greater focus upon mediation, ACAS conciliation or directly negotiated settlement to resolve matters.

 

Implications

Respondents believe that the introduction of fees will deter weak and vexatious claims.

The fees system could also discourage employers from making early settlement offers and merely sit by and wait to see if the Claimant pays the issue fee.

Another consequence of the changes may be that there is an increased formality in the Tribunal system, opposed from its roots as an informal jurisdiction - accessible to all.

My view

I am concerned that these changes will result in a reduction in litigation. It is probably difficult to ascertain exactly what the impact will be but given that, since its institution in 1964, this has always been a "fee-free" jurisdiction, the huge cultural shift that this change makes could serve to dissuade individuals en masse.

For lower earners, junior employees and unskilled workers I am convinced that there will be a change and that many of these claims will no longer be brought.

Introducing fees for Tribunals is a great way to encourage parties to think twice before embarking upon the adversarial claims procedure and it is welcome that mediation should be considered as an alternative.

I consider that the fees are relatively high and hopefully, the remission scheme will serve to ameliorate many of my concerns about access to justice for low paid individuals and those with limited means with valid claims.

In principal, I am against the introduction of fees and simply do not accept the argument of the government that this is a means to make the system self-sufficient. On balance, I tend to the view that it is a Conservative agenda (especially when one considers the extension of the qualifying period for unfair dismissal) to reduce the number of claims being brought to the Tribunal.

My view is reinforced by the knowledge that at one stage there was a pernicious proposal that those bringing discrimination claims would agree a capped award at the outset of the claim in return for a lower fee paid at the commencement of proceedings. This has been removed from the proposals.

People locked in conflict will always want their day in court and fees will not deter those with this strength of will.

If I am wrong and the proposals are a disaster in practice, litigation will slump, workers will be denied their right to justice and unscrupulous employers will have little fear about punishment for the way that they treat their employees.

Only time will tell…….

Martin Mensah

 

This publication is intended to provide general guidance only. It is not intended to constitute a definitive or complete statement of the law on any subject and is no substitute for legal or professional advice in any case.   Any views or opinions expressed in this article are those of the author only.