Will employment tribunal fees really cut the number of claims?

Tribunal fees

Following the Government’s introduction of tribunal fees for employment tribunals, DAC Beachcroft’s Charlotte John asks whether they will dissuade people from taking a claim to hearing or claims will simply increase in their complexity.

Tribunal fees came into effect on 29 July 2013, which means that, from now on, it will cost a claimant between £410 and £1,200 to fight a claim to hearing. By introducing fees, it is anticipated by the Government that claims will reduce by 25%, saving the taxpayer millions of pounds.

The Ministry of Justice recently published statistics showing the number of employment tribunal claims received between July and September 2013. The normal monthly average is 17,000. In June and July, 25,000 and 17,000 claims were received respectively. This spike can be explained by people lodging their claims in advance of the introduction of the fees regime on 29 July 2013.

In August, only 7,000 claims were received, increasing to 14,000 in September – with a notable increase in the number of multiple jurisdiction claims as opposed to more straightforward single claims. Although this represents an overall reduction, it does not take into consideration the peak seen before the end of July, or the fact that it is anticipated that there are a number of claims still awaiting payment of fees or a decision over whether or not the fee can be waived.

Are fees having an effect?

On the face of it, these statistics suggest that the new system is having a genuine effect on the number of claims being received, albeit not to the extent that the Government might have hoped.

If the new system simply leads to an increase in the complexity of claims, it will certainly not fulfil its stated aim of reducing costs and, in fact, may ultimately lead to an increased cost to both taxpayer and employer.

Can we expect to see this trend of decline continue, and should this change the way that organisations deal with employee relations?

With change comes innovation. It has been suggested that the major unions, including Unison and Unite, are harnessing the imposition of fees to increase membership by offering to fund their members’ tribunal fees.

Claimants with low incomes can also ask to have their fees waived in full or part – also known as fee remission. Many now have their legal costs covered under legal expenses provisions included in home insurance policies, not to mention “no-win, no-fee” arrangements where claimant solicitor firms will pay the fee and seek to recover it from any compensation awarded.

With the exception of remission, all of these approaches will lead to individuals taking advice on the merits of their claim before submitting them. This may lead to a reduction in the number of spurious claims, but it could also explain why we are already seeing an increase in complexity.

Complex cases increasing

From April 2014, before a claim is issued, a claimant will be required to discuss settlement with Acas. This will be known as Early Claims Conciliation (ECC) – another scheme introduced by the Government to reduce the number of tribunal claims.

The service will be free and will therefore provide claimants with an avenue to “have a go” without incurring any tribunal fees. There are currently question marks as to whether or not the already overburdened Acas service will be able to handle this increase in work. The Government has promised adequate funding to enable Acas to do so, but no details have been forthcoming as to what this will look like in reality.

Whether the introduction of fees or the ECC will result in a sustained reduction in the number of claims received by the tribunals will be something better assessed over a longer period of time.

Employers will need to consider whether or not to adapt their current people strategies in the light of the changes that have been introduced. At present, they should not change their approach – however, if over time the statistics demonstrate that employees’ rights are being prohibited by the new fee regime, organisations may feel more comfortable taking greater risks.

It should be noted that the fees themselves are subject to two legal challenges, which – if successful – will swiftly end the entire debate as to their impact.

What we do know for certain right now is that employment tribunal claims are here to stay and if, as anticipated, the actual effect of the fee regime is to increase the complexity of claims, the costs to employers may rise considerably. As such, it is important that organisations are able to budget effectively for the risk while still obtaining expert, high-quality advice.

Charlotte John

About Charlotte John

Charlotte John is head of employment claims solutions at DAC Beachcroft, which offers a fixed fee tribunal claims service.
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