The effects of the Abolition of Employment Tribunal Fees

On 29 July 2013 the Government introduced fees for claimants who wished to pursue  employment tribunal claims against their employer or former employer.  The Government’s rational e for introducing fees was to place the burden of costs to the employment tribunal service onto the user.   It was also argued by the Government that the introduction of fees would deter unmeritorious claims and encourage the early settlement of disputes.

There were two levels of fees for Type A and Type B claims.   Type A clams covered unlawful deduction of wage and breach of contract type claims and attracted fees of up to £390.

Type B claims covered typically unfair dismissal and unlawful discrimination claims and attracted fees of up to £1200.

The trade union – Unison challenged the legality of fees and sought Judicial Review proceedings over a period of 4 years.   They argued that the introduction of fees was devastating for claimants, and that the vulnerable would have a lot to lose.  Further that employment laws were integral to workplace rights.  The case went all the way up to the Supreme Court who in a landmark decision determined  that employment tribunal fees were unlawful after all.

The basis for the Supreme Court’s decision was that fees hindered the common law right to access to justice, it was a breach of European Union Law and Type B fees indirectly discriminated against women and others with protected characteristics such as race and age.   They also determined that fees were not a proportionate means of achieving a legitimate aim.

As a consequence of the Supreme Court decision ,fees were immediately abolished and claimants can now issue proceedings without incurring any fees.   There is also the issue as to  whether those who were deterred from issuing claims due to the implementation of fees and whose claims were rejected for failing to pay fees  can present backdated claims.

The Presidents of  the Employment Tribunals in England and Wales and Scotland quickly issued orders for employment tribunals not to make decisions on the reimbursement of fees and the reinstatement of claims until it had issued a Practice Direction.

So what are the consequences of the abolition of Employment Tribunal fees?   There are quite a few which have been set out below.

  1. Firstly the number of individual stand-alone employment tribunal claims has dramatically increased. The latest figures were published in December 2017 by the Ministry of Justice for the period July to September 2017 which shows a 100% increase in claims.   This is astonishing when you consider that fees were not abolished until the end of July 2017.   There has also been a large increase in ACAS Early Conciliation applications which must be issued as a prelude to issuing proceedings in the employment tribunal.

The indications are that the figures for the period October to December 2017 will also show a 100% increase in claims.     The statistics so far show that there has been a large increase lower value claims for example unpaid wages claims and unfair dismissal claims.  There has also surprisingly been an increase in pregnancy related discrimination claims.

  1. There is also likely to be an increasing backlog of claims due to the lack of employment tribunal staff to deal with the increase in the number of claims. The Ministry of Justice reduced the number of staff following the introduction of fees which drastically reduced the number of claims going through the system.   The Ministry of Justice has confirmed that it is now in the process of recruiting more staff and increasing the number of days per year that employment judges can sit from 70 to around 110.    Some employment tribunals are consequently experiencing a backlog of claims and are currently listing cases 12 to 18 months ahead.
  2. Research by ACAS during 2016 that was put forward at the Supreme Court hearing was that around 20% of potential Claimant’s had been put off from issuing proceedings in the employment tribunal due to fees.   This was therefore  a significant deterrent.    This begs the question as to whether such individuals are able to issue deterred claims dating back to 29 July 2013 when fees were first introduced.   Unfortunately there have not been many deterred claims  since fees were abolished.   The only authority is a first instance employment tribunal decision AE Benton -v- Give to Give (Case Number 2302156/2017) which looks at the approach that the employment tribunal can take when deciding whether to extend time for such deterred claims.  This established  a two-stage test where it is necessary for an employment tribunal to ask whether it was not reasonably practicable to present a claim in time and only if it was not, to then go on and consider whether it was presented in a reasonable time thereafter.   The burden of proof is on the claimant to satisfy both limbs of the test.
  3. There is also the issue of reinstated claims for those that were rejected because they had failed to pay fees. Statistics show that around 7,400 claims were rejected and that so far the employment tribunal service has written to  800 of those claimants  asking whether they would like to proceed with their claim.  There is a three-month time limit for these claimants to confirm how they would like to proceed.   So far there has been a slow take up of reinstated claims.  There is no rationale for this other than perhaps such claimants have decided to move on after such a lengthy time lapse.
  4. Judicial mediation has been reinstated which is an option open to the parties to attempt settlement. The cost of this however is £600 payable by the Employer.
  5. There is also a refund scheme set up by the Ministry of Justice in October 2017. It is estimated that some £32million worth of fees were collected during the fees regime however only around 6000 applications have been made to date totalling a refund of around £6000.    The reasons for the slow uptake in applications for reimbursement of fees is not clear however  it is thought that fresh attempts to communicate the scheme should generate more interest.  Another factor is that Claimants may believe that if a case has settled it will also include the fees.    Applications for the reimbursement of fees together with interest can be found on the following link.

https://employmenttribunals.service.gov.uk/apply/refund/profile-selection

In summary the abolition of employment tribunal fees has brought us back to the situation before 29 July 2013 with a rapid increase in individual employment tribunal claims now being registered.   There  is also the issue of deterred and reinstated claims and how these will be addressed in terms of being allowed in some cases so long out of time and additional guidance is required from the Ministry of Justice in the absence of legal precedents to date.

It also remains to be seen whether the employment tribunal system itself  will be able to attract sufficient numbers of  staff across the country to deal with the increasing backlog of claims which in itself is delaying justice to many Claimants.  The good news is that claimants can issue claims without having to pay fees which in itself is a concern for employers who may fear the rise of the vexatious litigant.

Looking at this from an employer’s perspective it  is always advisable to have good policies and procedures in place for dealing with workplace issues and to seek timely legal advice especially before dismissing an employee.  This will ensure that you are in a strong position to defend such claims.

Please contact Steven Eckett at seckett@meaby.co.uk

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