The introduction of fees and new rules on 29 July marks a key stage in the restructuring of our employment tribunals that began last year. In this briefing we describe the most significant changes being implemented next month and assess their likely impact

Overview

As from Monday 29 July 2013, fees will be payable on the issue of a claim in the employment tribunal and on the lodging of an appeal in the Employment Appeal Tribunal. An additional fee will also be payable in advance of the final hearing, and for certain applications in the course of proceedings.

On the same day new rules of procedure will be introduced in the employment tribunal, which will, with limited exceptions, apply to both current and new proceedings. One key aim in introducing the new rules has been to make them simpler and easier to understand, but there are also some significant innovations which are described below.

The new fees regime: outline

In the employment tribunal the fees payable will depend on the type of claim or application and whether there are single or multiple claimants. For the most straightforward claims with single claimants, there will be two fee points: an issue fee of £160 and a hearing fee of £230. For more complex claims (including unfair dismissal and discrimination for example) these figures rise to £250 and £950. For litigation involving multiple claimants, the fee per claimant is discounted on a sliding scale.

In the EAT, there will be a fee of £400 payable on lodging a notice of appeal, and a hearing fee of £1,200. Fees are also payable for certain types of application in the employment tribunal - for example applying to set aside a default judgment, or for making a counterclaim in response to an employee’s contract claim.

Individuals presenting claims will benefit from a remission system, which provides a complete exemption for the recipients of certain state benefits, and partial remission on a sliding scale for those on low incomes. Currently claimants are not required to make a contribution out of disposable capital, but this is likely to change in the autumn when the Government plans to introduce a new fee remission scheme.

Full details of both the fees and the initial remission system are contained in the draft Employment Tribunal Fees Order.

The practicalities

A claim that is lodged in the employment tribunal from 29 July onwards will need to be accompanied either by the appropriate fee or an application for its remission, otherwise the claim will be rejected. If the claimant gets the fee wrong and pays too little, there will be time to pay the balance before the claim is rejected.

The hearing fee is payable on a date that will be specified when the parties are notified of the date fixed for the final hearing. The tribunal rules state that if the fee is not paid or an application for its remission is not made by the due date, then the claim will be dismissed without further order. The same principles will apply to fees payable on an employer’s counterclaim and on the making of an application.

Where a claim succeeds at a final hearing, the tribunal has power to order the respondent to refund the fees the claimant has incurred. Unlike the power to order costs, this does not depend on the other party having conducted the proceedings unreasonably. That means that respondents who defend claims unsuccessfully will normally expect to cover the claimant’s fees as well as any compensation awarded by the tribunal.

More about the new rules

As well as addressing the new fees regime, the new rules make a number of substantive changes, of which the following are the most important:

  • The new rules make provision for the use of practice directions – there are already two prepared in draft. This will encourage greater standardisation in the way tribunals across the country make decisions on issues such as the postponement of hearings.
  • The employment judge will have an express obligation to conduct an initial consideration of the claim and response, to weed out claims and responses that are outside the tribunal’s jurisdiction or have no reasonable prospect of success.
  • The distinction between case management discussions and pre-hearing reviews will be abolished. They will both be called preliminary hearings in the future.
  • Employment judges will now have concurrent jurisdiction with the county court to assess costs in excess of £20,000.

The full rules are attached to the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013, which have now been laid before Parliament.

What difference will all this make?

The introduction of fees, particularly after the planned tightening of the remission scheme, will certainly make many individuals pause for thought before issuing proceedings, and in some cases may stop them doing so altogether. However they are unlikely to deter really determined claimants, or those with strong or valuable cases, particularly where third-party funding is a possibility.

The impact on respondents is likely to be more indirect, but there is no doubt that their financial exposure will be greater for claims that do proceed, particularly once the hearing fee has been paid. It is more difficult to assess how the prospects of settling claims will be affected. The answer probably lies in how the parties perceive the strength of their respective positions. An employee who does not have full confidence in their claim is likely to wish to settle before the hearing fee is paid, but once that point is passed is likely to have little incentive to do so unless that fee is refunded as part of the settlement package. Conversely, employers who think their defence is strong are likely to want to wait and see whether the claimant is able to come up with the hearing fee before opening settlement negotiations.

We suspect that the impact of the other changes is likely to be more modest. They need to be seen as part of a constant battle to keep cases moving through the employment tribunals as quickly and efficiently as possible and to make sure that the system is not clogged up with hopeless claims or defences. Changes to the rules are unlikely to solve this by themselves, particularly at a time when the budget of the entire courts and tribunals service is under such severe pressure.