Devolved employment tribunals would be key

The Commission's recommendations could have significant implications for employees who wish to pursue employment tribunal claims. Picture: Ian Rutherford
The Commission's recommendations could have significant implications for employees who wish to pursue employment tribunal claims. Picture: Ian Rutherford
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HOLYROOD could control fees and remissions, says Mark Walker

One of the policy areas that did not figure significantly in the Smith Commission’s report was employment law. Despite the view of the SNP, which unsurprisingly wanted this area to be fully devolved, the Commission’s recommendations were in fact very narrow, focusing principally on the idea that powers regarding employment tribunal administration should be transferred north of the border.  While this may seem like an inconsequential bureaucratic change, it could have significant implications for employees who wish to pursue employment tribunal claims.

Assuming employment tribunal administration is devolved, Holyrood would be able to set the level of employment tribunal fees and develop its own fee remission system. The expectation is that the Scottish Government would make it easier to bring a claim north of the border, by lowering tribunal fees and putting in place a more employee friendly remission system.

If tribunal fee levels are lowered or abolished, it could become much more attractive to raise an employment tribunal claim in Scotland, rather than another part of the UK. We may therefore witness ‘forum shopping’, where English-based employees of Scottish employers choose to bring their tribunal claims north of the border. This would be possible if their employer “resides or carries on business” in Scotland. Clearly, the cost of having to attend hearings in Scotland might deter some, but many employees living outwith Scotland could nevertheless bring their claims in Scotland, with a view to obtaining a settlement before any hearing takes place.  One way or another, the main fear of Scottish employers is that there will be a significant rise in the number of tribunal claims being brought against them.

To appreciate the wider consequences of this, it is necessary to retrace our steps to 29 July 2013 when tribunal fees were first introduced.  It is not hyperbole to say that this day saw one of the biggest changes in employment law since the 1970s.  Since that day, if an employee believes they have been unfairly dismissed or subjected to discrimination, they must pay £250 to raise a claim, with a further £950 to hold a hearing.  Straight-forward claims, such as arrears of wages or unpaid holiday pay attract lower tribunal fees of £160 to raise a claim and £230 to hold a hearing.  Although a fee remission system was introduced to assist those on low incomes or receiving benefits, eligibility for this is very limited, meaning that few claimants have benefitted from this.

By way of contrast, an individual raising a small claim (to recover a debt of up to £3,000) in the Scottish courts would pay only a one-off fee of £73.

Although the Westminster government said that tribunal fees were introduced to generate income to fund employment tribunal administration, in practice fees have led to a drastic reduction in the number of tribunal claims – far greater than anyone expected.  According to the most recent set of tribunal statistics, the number of claims brought during the second quarter of 2014 was 71% lower than the number for the same period a year earlier.

If the Commission’s recommendations are implemented, there are likely to be anomalies between Scotland and the rest of the UK in relation to tribunal fees.  While these may create some difficulties, it is helpful to take a step back and remind ourselves of the options that were open to the Commission.  It could have gone much further than it did - recommending a separate National Minimum Wage for Scotland, for example.  However, it chose not do this.  No doubt it was mindful of the longer term impact that wider devolution of substantive employment law might have had on the future stability of the UK.  In some quarters, the Commission’s limited recommendations were a relief, but for others they did not go far enough.

Of course, the issue of tribunal fees continues to resonate in England and Wales. Unison has launched a High Court challenge against tribunal fees on the basis that they are a barrier to justice. A decision was issued recently which rejected Unison’s challenge although permission to appeal this decision has been granted.  Clearly if tribunal fees are held to be unlawful south of the border, the waters will become very muddy indeed. This probably explains why a similar challenge in Scotland has been paused pending the outcome of the challenge in England and Wales.

Mark Walker is a senior associate at CMS www.cms-cmck.com