The introduction of fees to the employment tribunal system has had an enormous impact - far more, I believe, than most people had expected. This must be good for business as there are now more impediments to making a claim than there have been for 40 years or so. But many are not so sure that the price paid has been a fair one. Unison has challenged the introduction of fees, albeit unsuccessfully, and some 400 barristers have written an open letter to the justice secretary, Chris Grayling, protesting about them. Is this ‘vested interests’ or is it really a concern about barriers to justice? Tim Randles and Hilary Aldred debate this below.

Last month’s results can be seen here and, while most were in favour of limiting tribunal postponements, only a small majority thought that this should be backed up with a costs threat. Gratifyingly, the vast majority of those voting also thought that banning lawyers from tribunals would not be advisable, although the vote was not unanimous! For the full results, press here.

Paul Mander, Head of Employment

Tim Randles

Employment “rights” have enjoyed a bad name ever since employers were called masters and their workers were called servants. Since those times, the body of employment law has considerably increased as has its complexity. In the year January to December 1971 fewer than 9,000 claims were lodged but in 2009-10, tribunals accepted over 236,000 claims.

In many senses the system was regarded as being “broken” and in need of an overhaul. The Government began its “Consultation on Modern Workplaces” soon after arriving in power in 2010 and rather rapidly concluded that significant reform of employment law and the tribunal system was not going to be possible. Instead it introduced fees into the tribunal system for the first time.

The Government’s stated purpose was to help “transfer some of the cost burden from general taxpayers to those that use the system, or cause the system to be used” (a difficult argument to sustain at the best of times where the issue is access to justice) and “to disincentivise unreasonable behaviour, like pursuing weak or vexatious claims.” The fees proposed were substantial in cases involving unfair dismissal or discrimination and on a somewhat lower scale for the “wages” claims.

Since the fees were introduced on 29 July 2013, claims have dropped to just below a third of the level pre-introduction of fees, including a staggering drop in discrimination cases - particularly sex discrimination where the majority of claimants are women. Despite ministerial claims, it is the level of the fees that is deterring a very wide range of claimants but not necessarily the vexatious claimants.

The critics say that, if the reduction in number is because vexatious claimants are being deterred, one ought to expect the proportion of successful claims to rise. In fact, the number of successful claims has gone down sharply while the number of claims being dismissed at preliminary hearings has considerably increased.

However, the wages claims, an area where claims tended to be modest but usually successful, have also collapsed. It would appear that the issue and hearing fees of £390 are proving to be a substantial barrier, particularly as the people making such claims are often the lowest paid to begin with.

One has to accept that this was a system out of balance and in need of reform. However, erecting a substantial financial barrier to claimants to reduce the volume of claims not only excludes them from the enjoyment of the rule of law but unbalances the system in the other direction.

Employment law makes difficult demands on employers - particularly small businesses - because of an often very unsympathetic ‘one size fits all’ approach. Excluding claimants by making access to some quite simple employment rights unaffordable cannot be the right answer. A law against unfair dismissal has only existed since 1971 but this is the moment to remember that this only came into being after many years of very serious industrial unrest. One only needs to look at the mis-treatment of some zero hours workers to realise a system of employment rights has a place in this society and the unintended consequence of preventing access to justice is that the people look for other means to resolve their disputes.

Hilary Aldred

It is not yet time to reduce or eliminate tribunal fees until it is clear to both businesses and employees what they will be replaced with and who should be responsible for ensuring that employment disputes will not be funded by the public purse.

In principle, the fees mechanism was not a bad idea. Before fees were introduced, employees could bring claims with little or no risk to themselves even though the risks to businesses were considerable. If, for the sake of argument, we accept that the Ministry of Justice budget needed to be cut, it is right that those who use the civil court system should be responsible for at least some of the costs incurred. Something did need to change to balance a system which had become weighted in favour of employees, including the vexatious and unreasonable ones.

A fair fees mechanism was therefore needed to transfer some of the cost burden from general taxpayers onto the loser in tribunal. The courts have charged fees for family and civil disputes for some time and there is no fundamental difference between these courts and the employment tribunals. Allegations of ‘barriers to justice’ should be just as persuasive for cases about child custody and contact as they are for employment disputes.

In addition, a price mechanism by way of tribunal fees has, in general, helped to incentivise earlier settlements and, in turn, dis-incentivised some unreasonable behaviour on the part of both employees and employers. In theory, this should have improved the overall effectiveness and efficiency of the system.

More generally, a recent CIPD survey found that 38% of respondents felt that the fees should be maintained and 26% were undecided. Against that background of broad-based business support, I believe it is too soon to decide that the fees should be either reduced or eliminated, even if there is evidence that the current system is operating as a barrier to justice. Unison has not only failed with its judicial reviews but has also failed to make a political case to the current government or the opposition - who have not yet committed to their abolition should they be elected - that fees should be abolished.

There are many different options which could allow the costs of the tribunal system to be passed on including a “part 36” system in which the fees could be paid by a winning party where they have failed to receive an award in excess of a previous offer made by the opposing party. Another alternative is a system where the parties could be required to agree who will pay the tribunal fees if cases are settled in advance of a hearing. This could be policed by ensuring no withdrawal or dismissal of claims. Alternatively, fees could be introduced to defend a claim as this would ensure that unscrupulous employers faced with small claims worth less than the claimant’s issue fee have to repay both the issue fee and the amount owed if they are not to be penalised themselves. With an effective system of early conciliation no employer or employee should then be prevented from accessing justice if they have a good case. Any of these options could replace fees when they are reviewed. But we all need to know which, if any, is going to happen before fees are abolished or reduced.

Many employers believed that the previous system had become weighted too much in favour of employees. Given that employees now see the balance has shifted the other way, the time to reduce or eliminate the fees will only come when there is a better, fairer solution for all parties including employers, employees and the taxpayer.