Plans to transfer control of the Employment Tribunal system in Scotland to the Scottish parliament and government could lead to a significant increase in employment-related claims, including claims from workers who have no connection with Scotland.

In the meantime, pressure is building for the Employment Tribunal in England and Wales to be moved into the civil court system. Such a change could have a significant impact of the volume of claims and associated costs and expenses.

In this briefing we look at the latest developments and what they mean for employers.

Employment Tribunals in Scotland – fees and forum shopping

The devolution of the Employment Tribunal system in Scotland took a step forward this week, with the publication of draft legislation covering the legal framework that will underpin the move.

The present government in Scotland has made clear its intention to abolish fees for employment claims. That being the case, the change is likely to lead to an increase in claims made North of the border.

Significantly, it is not only those who work or worked in Scotland who will be able to take advantage of the fee-less Scottish tribunal system. The intention is that the Scottish tribunals will be able to deal with any case where the respondent, or the case, has a close enough link to Scotland.  Unsurprisingly, the legislation includes in this category claims against employers who live, or are headquartered, in Scotland. What is more striking is that the Order also, at present, includes cases where the only connection with Scotland is that the employer happens to carry on some business there. So companies that operate on both sides of the border could face claims in Scotland from employees who have, and whose work has, no connection with Scotland.  

BIS has made it clear that these provisions are still under discussion. The Scottish government launched a public consultation on the mater this week and BIS has said it intends to have discussions with key organisations.

Is the end nigh for Employment Tribunals in England and Wales?

As Scottish tribunals prepare to go their separate way, a report published last month suggests that the Employment Tribunal system in England and Wales may have a limited lifespan.

The report was prepared by Lord Justice Briggs, who has been commissioned, by the Lord Chief Justice and the Master of the Rolls, to carry out a review of the civil courts structure, including the boundaries between the courts and tribunals. The report notes that the Employment Tribunal and Employment Appeal Tribunal are ‘uncomfortably stranded between the civil courts and the main Tribunal Structure’, a state of affairs that it is widely acknowledged cannot continue. The key question, then, is whether they should be integrated within the structure of the civil courts or, in the alternative, made properly part of the main, two-tier Tribunal structure. For various reasons, the Presidents of the Employment Tribunal and the Employment Appeal Tribunal and the lead judges in the Employment Tribunal regions are all in favour of the first option (integration within the structure of the civil courts) and Briggs LJ appears to be sympathetic to that view, although his final recommendations are not due until later this year.

A decision to make a change of this nature is one for the Government and it is not yet clear where Ministers stand on the issue. With the senior judiciary pressing for change, however, it is looking increasingly likely that employment claims will eventually be dealt with in the civil court system rather than in a stand-alone Employment Tribunal system.

The President of the Employment Tribunal, Brian Doyle, has suggested the creation of a specialist Employment and Equality Court that will sit within the existing court system. However, proposals to reform the civil justice system may mean that employment cases would simply be dealt with alongside other civil disputes in the main court system.

One of the main reforms proposed for the civil justice system is that claims valued at less than £25,000 should be dealt with in a new ‘online court’. The idea behind the new court is that it should be designed so as to make it easier for parties to handle cases on their own, without legal representation, and should make better use of technology so that cases can be dealt with without face to face hearings wherever appropriate. We would expect fees for litigating in the online court to be lower than the current level of Employment Tribunal, at least for some cases. So, if this comes to pass, employers could see an increase in claims compared to current levels.

Unless a specialist Employment and Equality Court is established, a move to the civil court system would mean that higher value and more complex claims, as well as multiples, would be dealt with in the somewhat more formal environment of the County Court (or possibly the High Court in some cases). It is likely then that ‘costs shifting’ rules would apply, meaning that a losing party would have to pay some or all of the winner’s legal costs. This could deter some potential claimants; but, equally, it could lead employers to settle claims they might otherwise have defended.

Fees – the short term

A great deal needs to be done before any of the changes outlined above can be effected. So the Employment Tribunal system as we know it still has at least four or five years’ life left in it. The question remains, then, what will happen with fees in that time?

The Government embarked on a review of the fees regime last year and we understand that the findings of the review team have been presented to Ministers for their consideration. The outcome of that review is impossible to call: the Government has come under a great deal of pressure to reduce the level at which fees are set but, with austerity measures biting hard, the Ministry of Justice will be reluctant to lose this source of income. 

In the meantime, Unison’s legal challenge rumbles on: the Supreme Court is expected to give the union permission to appeal against last year’s Court of Appeal ruling but a final ruling is unlikely before 2017.