New employment tribunal fees regime under fire

Employers like it, but Unison is challenging, says Alan Glazer

When the scheme was introduced last year, it was met with praise by many employers. Picture: TSPL
When the scheme was introduced last year, it was met with praise by many employers. Picture: TSPL

THE employment tribunal fee system has now been operating in the UK for over a year. Under the new regime, employees have to pay an upfront fee to raise a claim and they must pay a further “hearing fee” once the case is referred to a tribunal.

When the scheme was introduced last year, it was met with praise by many employers and their representative organisations. Employers have long campaigned for such measures, arguing that the economic and logistical burden of defending (what are often asserted as spurious or vexatious) claims has hurt small-to-medium sized businesses in particular and hindered economic recovery across the UK as a whole.

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At the other end of the spectrum, trade unions have argued that the fee regime restricts employees’ access to justice, thereby heightening an existing power imbalance between employers and employers, not to mention giving a green light to those employers who may wish to exploit vulnerable employees. The sheer cost of the fees has also been heavily criticised. Fees range from £160-£1,200, depending on the type of claim lodged and the stage of the tribunal process involved.

Consequently, the UK’s largest trade union, Unison, has brought judicial review proceedings to challenge the new fee regime. Unison’s initial challenge was rejected by the English High Court earlier this year but an appeal against this decision is due to be heard by the Court of Appeal at some point over the next few months.

So, 12 months on, have the unions’ fears turned out to be well-founded? The Law Society of Scotland certainly thinks so. Stuart Naismith, convener of the Law Society’s Access to Justice Committee, has recently stated that the Law Society “believe(s) that claims which would previously have been successful are not now being brought to the tribunal as a direct result of fees… this cannot have been the intention of government and an urgent review is now needed.”

The link between the introduction of tribunal fees, on the one hand, and a significant drop in tribunal cases, on the other, seems to be borne out by the government’s own statistics. These figures show that the number of employment tribunal claims in the UK in 2013-14 has almost halved when compared to those in 2012-13. In addition, there has been a drastic reduction in the number of discrimination cases, which are the most expensive claims to pursue at £1,200 for a hearing, where race discrimination claims fell by 59 per cent and sex discrimination claims fell by 81 per cent in the first quarter of 2014 when compared with the same period in 2013.

As expected, opponents of the fee regime are quoting these figures as evidence that the introduction of fees is pricing many legitimate claims out of the tribunal system and thereby denying access to justice to those who cannot afford it.

The government statistics were not available to the English High Court at the time it issued its decision. It is highly likely that Unison will rely on these figures in the forthcoming appeal and they may have the effect of swaying the Court of Appeal in favour of Unison’s position. However, even if the Court of Appeal does find in Unison’s favour, it may remit the case back to the High Court and this process could take many months, if not years, to complete. In addition, the government has stated that, whilst it will keep the fee regime under review, it has no plans to abolish it in the short-term.

Many will hope that the fee-scheme will be abolished, regardless of whether that outcome is achieved via a court decision or a government review. It is suggested that the more likely scenario, at least for the foreseeable future, is that the tribunal fee scheme will be retained but that the level of fees will reduce. In the meantime, potential employment tribunal claimants would be wise to seek legal advice regarding potential claims as early as possible and to explore all available funding options.

One funding option that is being increasingly used is legal expenses insurance, which many people (often unknowingly) have as an added benefit to a home contents or motor insurance policy. Under the terms of this policy, the insured often has the right to nominate a solicitor of their own choosing and the insurance company will then pay the associated legal costs of bringing an employment tribunal claim.

• Alan Glazer is head of employment at Murray Beith Murray