Shifting tribunal costs to claimants will cost employers too

Employment tribunal fees are not supported by the unions, but it should not be assumed that they are in the interest of employers either. Peter Wallington outlines how tribunal fees will, in practice, benefit nobody.

The consultation exercise on the Government’s proposals to introduce fees for employment tribunal (ET) claims has now closed, and the civil servants at the Ministry of Justice (MoJ) have the unenviable task of absorbing a heavy postbag of what, to judge from published responses, has been a pretty critical reaction, especially from employment practitioners.

There was no consultation at all on the decision that fees will be introduced – this was simply announced as a policy last October. Many will see fees as part of an agenda, in response to increasingly strident criticisms of the ETs from some employer groups, to make it more difficult to make ET claims, thus reducing the burden on employers of dealing with the claims. On that analysis, the proposals may be viewed as a good thing for employers and HR professionals in particular.

Practical implications of proposals

Setting aside the debate about whether or not it is too easy to make claims, we need to focus on the practical implications of the fee proposals for employers. These are, I am afraid to say, very poorly thought through. Some of the problems that employers, as well as claimants and the tribunals themselves, will face are down to the lack of a proper analysis of the implications of the proposals.

The primary stated objective of the Government is to transfer some of the cost of the ETs – currently £84 million per year – to users. The MoJ’s own calculations, however, indicate an annual net contribution from fees of only £10 million. Even this depends on some very optimistic estimates of how little it will cost to administer the collection of fees and apply a complex set of criteria for remission of fees for the least well off.

Acas conciliation

The first casualty of the new system is likely to be one of the flagships of the last round of proposed tribunal reforms: routing all cases initially via Acas to give conciliation officers an opportunity to settle disputes before they mushroom into claims. How many employers, knowing the would-be claimant will have to pay a fee of anything between £150 and a massive £1,750 (depending on the option chosen and estimated value of the claim), will refuse to settle until they see the colour of the claimant’s money? And how many more claims will result from that entirely understandable reaction?

So too, if the preferred option is taken of fees at two stages, the additional hurdle for the claimant of paying a hearing fee will provide another perverse incentive for employers to refuse to settle, in the hope that the employee will not be able or willing to put up the fee.

Once fees have been paid, there will be two potential downsides for respondents. The first is that the ET will be given the power to order losing respondents to pay claimants the fees they have incurred – in addition to whatever compensation is awarded. While this is expressed as a discretion, there will surely be an expectation that winning employees are entitled to be reimbursed, unless there is a good reason to the contrary.

Taking into account fee paid

That, in turn, leads to the second negative; that once fees have been paid, any settlement will almost inevitably have to take into account the fee paid. The MoJ proposes that fees will under no circumstances be refunded by the tribunal, even if it is a hearing fee and the settlement avoids a hearing.

For the 26% of claimants that are expected not to have to pay (many others will get partial remission, dependent on “disposable income”), the dynamics of their cases will look rather different: with nothing to pay they may see little to lose by pressing on to a hearing, and their cases may be among the more difficult to settle as a result.

Nor should it be overlooked that respondents will also sometimes have to pay fees – for appealing against adverse judgments, or to set aside a default judgment, and even, most remarkably, to use the judicial mediation service.

Shifting costs to all users

In short, shifting ET costs to “users” will mean, at least indirectly, to all users, including employers. That is quite apart from the concern that erecting more barriers to the enforcement of employment rights will do little to cement feelings of job security, and perhaps more to assist union recruiting drives than some employers would welcome. While the strongest opposition to the proposals has come from the unions, it should not be assumed that it follows that tribunal fees – particularly as currently proposed – are good for the interests of employers.

Peter Wallington QC is a barrister at 11 KBW Chambers and joint chair of the Employment Lawyers Association (ELA) sub-committee, which responded to the Government tribunal fees consultation. The ELA is a national membership association of 5,900 lawyers who specialise in employment law.

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