The impact of scrapped employment tribunal fees

With immediate effect there will be no employment tribunal fees levied so claims will undoubtedly increase substantially almost certainly reversing the near 80% decline after fees were introduced. Should employers be concerned?

Employment Tribunal (ET) fees were introduced in July 2013. This meant an employee bringing a claim for unfair dismissal or discrimination would pay £1200 to get their case heard.  For simple claims like unpaid wages, notice and holiday pay the fee was £390.  The ET fees are much higher than the pursuing a similar value claim in the County Court.  For example, the fee to claim £300 in the County Court is £50 whereas the fee to claim £300 of say unpaid holiday pay was £390.  A County Court claim between £5,000 to £10,000 costs £745 against £1200 at the ET.

So, who would pursue a claim in the ET for £250 unless they were 100% certain of winning, and most importantly 100% that their employer would actually pay?  Bear in mind that only 49% of ET awards are paid in full and 35% of employees receive nothing even when enforcement action is taken.

Last month, however, the highest court in the UK decided in favour of the trade union, Unison, which argued that fees of up to £1200 were preventing workers from getting access to justice in a tribunal system which is primarily designed for processing small claims. The Supreme Court’s decision declared the fees both illegal and unconstitutional under both UK Common Law and EU Law. The Court also found that fees were also contrary to the Equality Act 2010 and was thus indirectly discriminatory as they disproportionately affected women.

The introduction of fees resulted in a nearly 80% fall in ET claims.  Fees were intended to weed out unmeritorious claims however the number of claims won by employees has actually fallen since the introduction fees.  This is of course the opposite of what should have happened if only the strongest claims were left in the system.

As the judgement makes clear, justice requires that arguable cases can be put before the courts not just winnable ones: “More fundamentally, the right of access to justice, both under domestic law and under EU law, is not restricted to the ability to bring claims which are successful. Many people, even if their claims ultimately fail, nevertheless have arguable claims which they have a right to present for adjudication”.

So what next?

With immediate effect there will be no ET fees levied so claims will undoubtedly increase substantially almost certainly reversing the near 80% decline after fees were introduced.  The Lord Chancellor has already accepted that all claimants will be reimbursed the fees paid, some £32m.

It is possible that the Government could reintroduce much reduced fees however one consequence of the judgment is that this would have to be by way of an Act of Parliament (rather than by Regulations as before).  This seems very unlikely given the current Parliamentary timetable, Brexit and the slim Conservative majority.

Should employers be concerned?

There is strong anecdotal evidence that the employers that have benefited most from the introduction of fees are those that are unscrupulous – there are many such employers who have been routinely withholding holiday pay or notice and thus giving the employee ‘choice’ of paying an ET fee (often higher than the value of the claim) or just giving up and accepting the loss of their contractual and employment rights.

Good employers who treat all their employees fairly and where necessary dismiss staff for good cause and following a reasonable process should not be unduly concerned – they will continue to have a strong defence against potential ET claims.

 

Please email on [email protected] for further advice on this area.