The latest employment tribunal (ET) statistics released by the Ministry of Justice make interesting reading and if confirmation were needed, underline that the fees regime – abolished in July 2017 – deterred the bringing of thousands of cases.
The figures show that between October and December last year, single ET claims increased by an eye-watering 90 per cent, and this followed a 64 per cent surge in the number of single claims brought in the previous quarter. This immediately followed the Supreme Court ruling that the requirement to pay a fee to raise a claim was unlawful and that it created a barrier to access to justice.
This massive increase in the number of single claims lodged since fees abolition is a demonstration that the court ruling was correct and it is a trend that may well continue.
It is interesting that cases relating to the unlawful deduction of wages rose by almost 60 per cent in the same quarter – to 8,697 – but perhaps that is not surprising, given that the expense of the fee for raising these often low-value claims regularly outweighed the value of the potential pay-out.
The unlawful deduction from wages can include claims for underpayment of holiday pay, which are sometimes relatively small amounts of money being disputed, but can be of significant collective value if the claim sets a precedent for other employees in the workforce.
I believe those types of claims are the ones most likely to increase, now the fee barrier has been removed, but there is a number of measures businesses can take to mitigate against litigation.
Making sure rigorous payroll processes are in place, and that weekly or monthly pay packets for employees are correct, is a basic but sometimes-overlooked requirement. A more strategic audit of how holiday pay is calculated would be beneficial, as this is a fast-moving area of employment law. A more broad-ranging review of how holiday pay is assessed, and is therefore accurate, will cut the chances of later appearing at an employment tribunal.
Tribunal claims are often the culmination of a lengthy and enduring miscommunication and unresolved disagreement between an individual and the management or the company for which they work.
We deal with situations that have often arisen out of a very straightforward misunderstanding, perhaps because the employer has not made an accurate pay calculation. The situation is left to fester, and by the time it has developed into an employment tribunal claim, the parties’ positions have become entrenched and are much more difficult to resolve.
In addition to the financial outlay involved for employers in defending a tribunal case, there are many intangible effects – management time taken up in responding to and preparing for a hearing, and long-lasting consequences such as the stressful impact on colleagues, on staff morale, trade union relations and on the company’s reputation.
Ironically, one of the reasons put forward for the introduction of the fee regime in 2013 was to deter spurious claims from disgruntled employees. In time, the statistics have demonstrated there was no strong evidence of that deterrent effect. I don’t believe employers are at any greater risk of spurious claims now, but they are at greater risk of litigation if they fail to resolve an issue with some merit.
Now that the fees regime has been abolished and a significant barrier to accessing the tribunal system removed, it makes it all the more important for employers to quickly deal with issues. By facing them head-on in the workplace and maintaining accuracy, precision and good communications, issues can be addressed before they develop into litigation, and a process that can become complicated, long-running, expensive and often leads to the breakdown of relationships can be avoided.
Katie Williams, partner and employment law specialist at legal firm Pinsent Masons.