In the last 12 months, the government has taken initial steps to reform the Employment Tribunal process.  These include an announcement that from summer 2013 fees will be payable for bringing a claim in the Employment Tribunal or an appeal to the Employment Appeal Tribunal.  The Enterprise and Regulatory Reform Bill, which sets out proposals for the early conciliation of Employment Tribunal claims and a fast track system for less complex claims, is currently being debated in the House of Commons.  Simultaneously, at the government's request, Mr Justice Underhill published his own review of the Employment Tribunal rules on 29 June 2012 and the government is due to consult publically on this later in the year.

There is no doubt therefore that changes to the Employment Tribunal system are afoot, but what are these likely to mean in practice for discrimination claims?

The changes in detail

Tribunal fees

Following a public consultation on the proposed changes, last month the government announced that a two-stage fee structure would be introduced next summer.  The first fee (the "issue fee") would be payable at the issue of the claim and the second fee (the "hearing fee") payable around four weeks prior to the hearing.  There will be two levels of fee payable at each stage depending on the nature of the claim:

  • Level one fees, constituting an issue fee of £160 and a hearing fee of £230, will be payable for claims categorised as more straightforward, including unlawful deductions from wages and holiday pay;
  • Level two fees, constituting an issue fee of £230 and a hearing fee of £950, will be payable for claims deemed to be more complex, including unfair dismissal, discrimination and whistleblowing complaints.

Higher fees are payable for multiple claims, including equal pay claims, with issue fees of £1,500 and hearing fees of £5,700 being payable for the most complex claims involving over 200 Claimants.  A fee of £600 will also be payable for judicial mediation services, to be paid by either party, or jointly.

The Tribunal will have the power to order the unsuccessful party to reimburse the fee to the successful party.  A remission scheme similar to the one used in the civil courts will also be applied, which means that Claimants whose earnings fall below a certain threshold will pay reduced fees or nothing at all.  A consultation on the proposed remission scheme is due to be opened later this year.

Other Tribunal reforms

In his review of the Tribunal system, Mr Justice Underhill proposes a set of Tribunal rules that are shorter than the existing ones and written in plainer English.  The report suggests a number of changes to facilitate more robust case management and the expedient management of hearings themselves:

  • an initial sift stage at which every claim will be reviewed by an Employment Tribunal Judge on the papers after the claim and response forms have been filed, to consider what directions are required to prepare the case for a hearing and whether the claim or response should be struck out on the basis that they have no reasonable prospects of success.  Case management discussions and pre hearing reviews will be combined into a "preliminary hearing;"
  • the rules will contain an express reference to the use of alternative dispute resolution, to encourage the parties to use the services of ACAS and judicial mediation;  
  • proposals for the more efficient timetabling of hearings, including rules enabling Tribunals to set time limits on oral evidence and submissions.

The proposals contained in the Enterprise and Regulatory Reform Bill similarly provide for early conciliation of claims and a fast track process for less complex cases.

What does this mean for discrimination claims?

Many business respondents to the public consultation on the new fees advocated the their introduction as a means of reducing Tribunal litigation.   The application of the higher fee structure to discrimination complaints may well act as a deterrent to some of the most vexatious litigants who lodge a claim for nuisance value and/ or the potential of an early settlement payment.  The fees may also deter low value claims, in particular those brought by individuals who are still in employment and where the value of their claim is likely to be limited to an injury to feelings award; that is, assuming the individual receives advice on the value of their claim at an early stage.   For those claims that are brought, the two stage fee structure has the potential to incentivise settlement before the higher hearing fee is due around four weeks before the hearing.  This could be helpful for employers dealing with complex discrimination complaints that involve preparing large numbers of witnesses for attendance at a full Tribunal hearing or where the prospects of successfully defending the claim are low.

What the new fee regime does not do is differentiate between the way in which claims involving allegations such as those of discrimination can vary enormously in complexity.  A multi-Respondent discrimination claim involving allegations spanning a considerable period of time can take up far more of an employer's time and resources than, say, a relatively straightforward unfair dismissal claim.  These claims are all subject to the same fees, the most complex of which may involve a significant amount of preparatory work before the hearing fee even becomes due.   Therefore, whilst the new fee structure may deter some of the most spurious claims, an issue fee of £230 is unlikely to deter an individual who feels they have real complaints to bring, particularly if they have the financial backing of their union, nor will it necessarily prevent complex and / or time consuming litigation from progressing through the Tribunals.  Whilst the parties will still have the option of judicial mediation in eligible cases, such as those where the Claimant is still in employment, it is likely to be the employer that will pay the £650 fee for using this service. 

In the responses to the government consultation, concerns were also raised over the workability of the remission scheme and the numbers of Claimants that will be eligible for reimbursement of their fees where their income falls below the designated threshold.  Where discrimination claims are accompanied by a claim for unfair dismissal and a Claimant is out of work when they bring their claim, they may well be eligible for full reimbursement of their fees in any event.

Whilst the streamlining of the Tribunal process is also welcome, the most relevant aspect of the proposed reforms for discrimination cases is likely to be the emphasis on early conciliation.  Whilst the proposal for the earlier strike out of those claims that have no reasonable prospects of success and the fast tracking of less complicated claims is potentially welcome, it is unlikely that large numbers of discrimination claims will be suitable for a fast track system or that Tribunals will be willing to strike such claims out based on the papers alone, given the historic reluctance of Tribunals to do so at an early stage without first probing the evidence of those individuals who are alleged to have engaged in the discriminatory conduct.

Conclusion

The introduction of Tribunal fees and a streamlined Tribunal process is welcome news for employers, however it remains to be seen how some of the reforms will work out in practice and the impact on these on some of the most complex litigation that the system sees.