The Government has recently announced some fundamental changes to the employment tribunal system, in particular in relation to the funding arrangements.  Here we look at the impact that this may have for discrimination claims.

Why are the Government proposing changes?

Users of the Employment Tribunal system will be well aware of the fact that the number of claims has generally increased year after year, leaving the tribunals struggling to cope.  Many critics of the current system also claim that, unlike the other civil courts, the lack of fee system encourages individuals to "have a go" on the basis that it costs them nothing to lodge a claim and there is little risk of financial penalty even where a claim is weak.  In our experience, such weak claims often leave employers in the unenviable position of choosing to settle the claim or face the prospect of incurring significant legal costs and staff time in order to defend it.  In such cases, even where an employer successfully defends the claim, the outcome can often be a hollow victory.

What changes are being introduced?

A number of changes were implemented from 6 April 2012, including increasing the 1 year qualifying period for unfair dismissal to 2 years, Judges sitting alone in certain cases, and doubling the amount that Judges can order by way of deposit order to £1,000 and costs order to £20,000.

From summer 2013, a system of fees will be introduced into the Employment Tribunal system.  There will be 2 fees payable - one on issue of a claim, the other payable around 4-6 weeks prior to the hearing.  The amount will depend on the type of claim but discrimination claims will result in total fees of £1000 being payable.  A similar system of fees will apply to the Employment Appeals Tribunal (EAT), with the total fees there being £1600.  The Government has decided to include discrimination claims within the fee system, despite strong opposition during the consultation period from a number of sources, including the Equality and Human Rights Commission.

In addition, Mr Justice Underhill has recommended a new set of rules for Employment Tribunal claims to replace Schedule 1 of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2006.  These are aimed at Judges taking a more interventionist approach than present, including an initial sift stage intended to weed out weaker claims and setting timetables to limit evidence and submissions at hearings.  There is also a recommendation that the £20,000 cap on costs awards in the ET be removed.

Although the proposed new rules have been published, the Government has not said whether or not it intends to adopt them.  Instead it says it will consult later this year before reaching a decision.  We can expect, however, that most, if not all, of the suggested reforms will be adopted in due course.

Will this result in unfairness to individuals?

The changes, and in particular the fee system, have been criticised as potentially creating an unfair barrier to justice for individuals.  The same fee remission system which already exists for civil court users will apply to ETs.  This provides for a complete waiver of fees or a reduction in fees, depending on the financial circumstances of the individual in question.  The Government will also consider this remission system as part of a wider review.

Will the changes reduce the number of claims and therefore benefit employers?

Many of the changes are not really novel or dynamic.  For example, Judges already have the power to make deposit and costs orders but are often reluctant to do so, not least because of the restrictions placed on them by case law.  The case law makes it particularly difficult for Judges to make such orders in discrimination cases, where there may be a large amount of factual dispute between the parties.

Other changes will not provide any assistance to employers defending discrimination claims.  For example, the increase in the unfair dismissal qualifying period may work against employers by encouraging discrimination claims from individuals who do not qualify to claim unfair dismissal.  Discrimination claims will still be heard by a panel rather than a single Judge.   

On the other hand, Judges may welcome the opportunity to be more proactive and see some of these measures as something of an investment for the long term.  Some of the proposals, such as limiting evidence at hearings and taking witness statements as read, are already common practice in some Tribunals and we welcome the consistency of approach.  Also, from our anecdotal experience, this proactive case management appears to have paid off in terms of efficiency savings for those tribunals that have implemented such practices for some time. We believe that the fee system in particular is likely to have the greatest impact on speculative discrimination claims, particularly those claims brought by individuals who remain employed by the respondent employer and who may therefore not qualify for waived or reduced fees.  However, the timing the payment of the hearing fee (around 4-6 weeks prior to hearing) is unlikely to assist employers in multi-day or complex discrimination cases as employers will have done the bulk of the hearing preparation by this point in a case.  Instead, it may encourage individuals to delay preparation until they decide whether to pay the fee or not.  Also, as is often the case in the tribunal, will the individual get a second chance to pay if the deadline is missed?  If yes, will the case be postponed and relisted or will respondents be left in limbo not knowing whether the hearing will go ahead or not?  Neither of these are satisfactory positions for a respondent and their witnesses to be in.

What also remains to be seen is whether tribunals have the resources or willingness to implement all of these changes.  As we know, Judges' time is already stretched and the sifting of claims lodged, for example, may not be seen as a priority, especially if claim forms contain complex legal issues or are lengthy and would therefore be time consuming to review in detail, as is often the case with discrimination claims. The introduction of the fee system into the tribunals will also no doubt provide challenges for the administrative staff: the HM Courts current guidance on the existing complex system of fees and remissions for court users runs to 20 pages.

It is certainly encouraging to see a move in the right direction; employers and those of us acting as their legal advisers, may well have opportunities to use the changes to  advantage.  Having said this, we doubt whether employers will see any significant, or instant, benefits.