Expect tribunal claims surge to continue following end of fee regime

Out-Law Analysis | 28 Mar 2018 | 12:29 pm | 2 min. read

ANALYSIS: The eye-watering increase in claims recorded by the latest employment tribunal statistics provides confirmation that the now-abolished fee regime deterred the bringing of thousands of cases.

Single employment tribunal claims increased by 90% between October and December last year, according to the recently-published figures. This followed a 64% increase in the number of single claims brought in the previous quarter, which immediately followed the Supreme Court's ruling of July 2017 that the requirement to pay a fee to raise a claim was unlawful and created a barrier to access to justice.

The massive increase in the number of single claims lodged since fees were abolished clearly demonstrates that the Supreme Court's conclusions were correct, and its impact is likely to be particularly stark in relation to low-value claims, such as those for unlawful deduction of wages. The expense of the fee for raising these claims regularly outweighed the value of the potential pay-out, and therefore would have been most affected by the fees regime.

Cases relating to unlawful deduction of wages have risen by almost 60%, up from 5,502 to 8,697, according to the most recent figures. But while I believe these types of claims are the ones most likely to increase now that the fee barrier has been removed, there are a number of measures which businesses can take to mitigate against future claims.

Unlawful deductions from wages can include claims for underpayment of holiday pay, which are sometimes relatively small amounts of money being disputed but can be of significant collective value if the claim sets a precedent for other employees in the workforce. Making sure rigorous payroll processes are in place, and that weekly or monthly pay packets for employees are correct, is a basic but sometimes overlooked requirement.

A more strategic audit of how holiday pay is calculated would also be beneficial, as this is a fast-moving area of employment law and some employers are yet to catch up with that pace of change in terms of what holiday pay should include. A more broad-ranging review of how holiday pay is assessed, and is therefore accurate, will reduce the chances of later appearing at an employment tribunal.

By the time a dispute reaches tribunal, the claim is often the culmination of a lengthy and enduring miscommunication and unresolved disagreement between an individual and the management of the company for which they work. The dispute may have arisen out of a very straightforward misunderstanding: perhaps because the employer made an inaccurate pay calculation; or because one side has just misunderstood the other side's position or intentions. What starts as a lack of effective communication is left to fester, and by the time it has developed into an employment tribunal claim the parties' positions have become entrenched and are much more difficult to resolve.

In addition to the financial outlay involved for employers in defending a tribunal case, there are many intangible effects: management time and effort taken up in responding to and preparing for a hearing; and long-lasting consequences such as the stressful impact on colleagues, on staff morale, trade union relationships, and on the company's reputation.

As my colleague Andrew Kane has pointed out, the increase after the abolition of fees still does not take case numbers up to the levels before fees were introduced. This is in part because of good early conciliation work by ACAS, and partly because the number of solicitors and barristers available to deal with claims fell dramatically when fees were introduced.

Now that the fees regime has been abolished and a significant barrier to accessing the tribunal system removed, it makes it all the more important for employers to quickly deal with issues as and when they crop up. By facing them head on in the workplace, and maintaining accuracy, precision and good communications, issues can be addressed before they develop into litigation and a process which can become complicated, long-running and expensive, and which often leads to the breakdown of relationships, can be avoided.

Katie Williams is an employment law expert at Pinsent Masons, the law firm behind Out-Law.com.