Following on from reforms to employment law earlier this year, the Ministry of Justice has now published its response to the consultation on introducing fees for claims brought in the Employment Tribunal, confirming the fee scheme that will come into effect next year. Harriet McInnes, Associate Solicitor with Howes Percival LLP, takes a look at the new scheme and what impact it may have in practice.

The current position is that, in contrast with the County Courts, issuing a claim in the Employment Tribunal is free of charge. As early as January 2011 the coalition government had expressed discontent with this position, indicating a proposal to introduce fees in the Employment Tribunal in its consultation paper “Resolving Workplace Disputes”.

The consultation paper on fees that was subsequently published on 14 December 2011 put forward two main options for fees, one setting different levels of fees depending on the complexity of the claim, with individuals paying an initial fee when they submit their claim, and then a secondary fee prior to the final hearing. The second option was for an initial fee only, the amount of which would be dependent on the potential value of the claim.

On 13 July 2012, the government published its response, confirming that the former, two-stage fee structure would be introduced in summer 2013. It is divided into two sets of fees, Level 1 fees for simple claims, such as those relating to unpaid wages and redundancy payments, and Level 2 fees for more complex cases, including unfair dismissal and discrimination. The amount of the fee will depend on whether the claim falls into Level 1 or Level 2, Level 2 being the more expensive. There will also be increased fees where there are multiple claimants, with three bands depending on the number of individuals involved, and additional fees (mirroring the Employment Tribunal fee structure) for claims issued in the Employment Appeal Tribunal.

As well as the initial fee (referred to as the “issue fee”), individuals also have to pay a second, separate fee (the “hearing fee”) approximately 4-6 weeks before the final hearing. As an example, an individual who wishes to bring an unfair dismissal claim will have to pay £250.00 when he/she submits the claim, and a further £950.00 as a hearing fee.

The intention behind the introduction of these fees was to pass some of the costs of the Employment Tribunal system from the taxpayer to the user. The government are also hopeful that it will encourage early settlement of claims. Indeed, the selection of the two-stage fees option rather than the option based on the value of the claim was to encourage parties to consider settlement at both stages of the process.

The introduction of fees will come as a welcome relief to employers, who are hopeful that the reform will go some way to deterring ill-founded or unmeritorious claims. That said, employers should be aware that individuals on benefits or low incomes may be exempt from paying the fee or may be eligible to pay a reduced fee under the Courts Remission Scheme. Given that many of the claims submitted are based upon dismissals, and therefore individuals bringing claims often have no income at all, the remission system may reduce the impact of these fees.

In addition, there are fees payable by employers as well, including when an employer wishes to issue a counter claim, where an employer wishes to enter into judicial mediation, and where an employer wishes for a case to be dismissed after it is withdrawn.

The Employment Tribunal have the discretion to order the unsuccessful party to reimburse the fees paid for the successful party, although this will not be automatic. Hearing fees will not be refundable unless the final hearing does not proceed, and the individual is able to prove within 6 months that, at the time of payment, he or she was eligible for remission of all or part of the fee. It is therefore difficult to see in what circumstances an individual would wish to settle their claim after this second fee is paid.

The government have confirmed that guidance will be issued before the fee system is introduced, so that the parties know when the fees become payable, how they are paid, and how much is payable. Only time will tell the true impact of these fees on the quantity of claims issued and pursued to final hearing, and whether they will deter vexatious claimants, and encourage settlement or, conversely, spur the individual to pursue the claim to the final hearing once the fees are paid.