Employment tribunal cases drop significantly, but claims that go forward tend to be more expensive, says expert

Out-Law News | 31 Jul 2014 | 2:36 pm | 3 min. read

The number of claims referred to employment tribunals may have dropped by as much as 79% in the year since fees were introduced, according to figures produced for the Trade Unions Congress (TUC).

However, employment law expert Jon Fisher of Pinsent Masons, the law firm behind Out-Law.com, said that some types of claim had not fallen by as much as the official figures suggested. In addition, he said that the changes had resulted in some claims becoming more expensive for employers to deal with.

"There's no doubt that the number of claims has fallen significantly, although our experience is that for larger employers the reduction has not been as great as the official statistics suggest," he said. "We have also encountered an increase in the number of 'kitchen sink' claims: if an employee is going to pay the fee, they appear to be more willing to try to inflate the potential value of what is at heart an unfair dismissal claim by adding in allegations such as discrimination or whistleblowing."

"An additional consequence of the introduction of the fees is that it is now cheaper to bring breach of contract claims in the county court in England than in an employment tribunal. This partly explains the 85% reduction in such claims being brought in the tribunal system. Company HR teams are less familiar with the county court regime, and such claims tend to involve more time and expense for employers to resolve - so, whilst overall the new fees have undoubtedly reduced employers' tribunal costs by reducing the number of claims, those claims which are brought tend to be more expensive to deal with," he said.

Fees to bring a claim to an employment tribunal or the Employment Appeal Tribunal (EAT) were introduced on 29 July 2013. Under the new structure, parties have to pay an upfront fee to raise a claim followed by a further 'hearing fee' once the case is referred to a tribunal. Claim types are subdivided into the administratively simple 'Type A' claims, with fees of £160 and £230; and 'Type B' unfair dismissal or discrimination claims, with fees of £250 and £950. Flat fees apply to EAT cases. A remission system operates to exempt people on low incomes from having to pay the full fees.

The fees regime is currently the subject of a legal challenge from the trade union UNISON, with an appeal to the Court of Appeal pending. UNISON is arguing that requiring employees to pay a fee to bring a claim against their employer reduces access to justice, and that the fees particularly disadvantage lower paid workers and so indirectly discriminate against women and ethnic minorities. The government has defended its policy by saying that the fees regime is necessary to ensure the cost of the tribunal system is shared more equally between the taxpayer and tribunal users.

TUC's report (10-page / 193KB PDF) was based on the latest figures from the Ministry of Justice (MoJ). It found that although there had been an overall reduction of 79% in the number of claims taken to employment tribunals since the fee regime was introduced, women and low-paid workers were disproportionately affected by the changes. There was an 80% fall in the number of women pursuing sex discrimination claims, from 6,017 in the first quarter of 2013 to 1,222 in the first quarter of 2014, while pregnancy discrimination claims also fell. Claims for unpaid wages and holiday pay fell by 85% overall, which TUC said was because the cost of going to a tribunal was "often more expensive than the sum of their outstanding wages".

TUC was also critical of the tribunal fee remission system, which came into force in September. According to its report, only 24% of workers who applied for financial assistance received any form of fee remittance, while even those earning the minimum wage had to pay fees of up to £1,200 if a member of their household had more than £3,000 in savings.

The Law Society of Scotland, which is the professional body for Scottish lawyers, has also condemned the fee regime as "a major barrier to access to justice" and has called on the Scottish and UK governments to carry out an urgent review of the system (8-page / 265KB PDF). Stuart Naismith, who heads the Law Society's access to justice committee, said that the effect of introducing fees had been "drastic" and was "preventing legitimate cases being heard by a tribunal".

In response, UK justice minister Shailesh Vara said that it "cannot be right that hardworking taxpayers should pick up the bill for employment disputes in tribunals".

"It is reasonable to expect people to pay towards the £74 million bill taxpayers face for providing the service," he said. "But it is important to emphasise that the government has been very careful in ensuring that those who have limited means have fee waivers and are not excluded from seeking redress in tribunals."

Since 6 May this year, employees have been required to notify the Advisory, Conciliation and Arbitration Service (Acas) before they can lodge a claim with an employment tribunal. The notification triggers an 'early conciliation' scheme where Acas will attempt to resolve the dispute at a pre-tribunal stage.