Since the introduction of fees in July 2013, the number of claims brought in the Employment Tribunals has fallen dramatically. From April to June 2014 the number of single Tribunal claims fell by 70% compared to the same quarter in 2013. This has been good news for employers, since it must mean many weak and unmeritorious claims have been prevented. But, could it also mean that the fees regime is denying access to justice for those workers who have been unfairly treated by their employers? The trade union UNISON has challenged the lawfulness of fees, and we understand that the outcome of this challenge in the High Court is expected before the end of the year. If fees are eventually abolished, employers can expect a substantial increase in Tribunal claims.
Fees were introduced in the Employment Tribunal and the Employment Appeal Tribunal (EAT) in Great Britain in July 2013. Whilst business leaders considered that fees would deter weak and vexatious claims, the Government has denied that was their purpose. The Government’s position is that they were introduced to ensure that the users of the Tribunal system also paid for it. The fee which is payable by a claimant depends on the type of claim. Type A claims (such as for unpaid wages or redundancy payments) require an issue fee of GBP 160 and hearing fee of GBP 230. Type B claims (such as unfair dismissal or discrimination complaints) are higher, at GBP 250 and GBP 950 respectively. Generally,the fee is recoverable by the winning party and there is a remissions system which assists cash-strapped claimants who would otherwise be unable to afford the fee.
UNISON’s challenge to fees
UNISON first sought to challenge the introduction of fees in the Tribunal and EAT on an application for judicial review in 2013 just as the fees were introduced in July of that year1. In addition to arguing the fee regime denied workers access to justice, they also said the requirement to pay fees had a disproportionate impact on women since most sex discrimination and equal pay claims are brought by women. In dismissing the original application, the High Court decided that the application had been made prematurely. They considered that it was impossible to determine the full impact of the fees regime by October 2013, when the application was heard, since it had been introduced just a few months earlier. However, in light of statistics published by the Ministry of Justice showing that the number of claims brought in the Tribunal and EAT since that initial hearing have dropped significantly, leave was given for a fresh set of proceedings to be heard in late October 2014. The outcome of those proceedings is expected before the end of this year.
What if fees are abolished?
If the High Court determines that the fees regime is unlawful, it would be likely to justify its decision by emphasising the drop in the number of claims since the introduction of fees. If fees were abolished in light of the decision, there is a possibility of not only increased claims in the future, but also that a glut of claims would follow from claimants arguing for an extension of time for otherwise out of date claims. Tribunal claims must be made within three months of the date of termination of employment, or alternatively the event that is the basis for the claim. The Tribunal has a discretion to extend the time limit for bringing a claim if the claimant can show that it was not reasonably practicable to present their claim within the three-month period (and, in discrimination cases, the Tribunal’s discretion extends to whether it is “just and equitable” to do so). So it is not impossible to foresee successful applications to extend time, particularly by less wealthy claimants who did not quite qualify for help with their fees under the remissions system.
Whatever the outcome of the High Court proceedings, this is unlikely to be the end of the matter since the losing party would be highly likely to appeal to the Court of Appeal.
Reform rather than abolition
Rather than a complete abolition of the fees system, which would be highly unpopular amongst businesses, the likelihood is that if UNISON eventually succeeds in its challenge, the fee system would be reformed. Clearly it is impossible to predict how this might turn out but one option would be to introduce a variable fee structure which reflects the value of the claim (as is now the case in the High Court) or even perhaps, the length of hearing. Another option might be to abolish fees altogether for Type A claims (eg unlawful deduction from wages). Criticisms levelled at the complexity of the remissions system application process and the low qualification thresholds may also lead to reforms in that area.
The future of Tribunal fees will depend not only on the outcome of the current High Court challenge and any subsequent appeals, but also the outcome of the General Election next year. If the High Court does not find the current fees regime unlawful and the Conservatives are re-elected as either a majority Government or as the main partner in another Coalition, the current system will probably remain, possibly subject to a review and adjustment to the remission system. If Labour were to form the next Government, the picture may well change. Although no reference was made to reforming the Tribunal fees system at the Labour party conference, Chuka Umunna, at the TUC Congress in September said that “affordability should not be a barrier to workplace justice” and that Labour would abolish the current system and reform Employment Tribunals. However, he did not give any details of what this would involve so it is anyone’s guess whether this means Labour plans to abolish Tribunal fees entirely, or to modify the existing system. Although the Liberal Democrats did not announce proposals for Tribunal reforms, they have been critical of the Tribunal fees system.
So, whatever the outcome of the current challenge in the High Court, Tribunal fees will continue to be a hot topic, both in employment law and in a wider political context, as we enter into 2015.