Employment tribunal fees to be abolished in Scotland, Scottish Government announces

Out-Law News | 03 Sep 2015 | 9:57 am | 3 min. read

The Scottish Government will abolish employment tribunal fees once it is "clear on how the transfer of powers and responsibilities" under the Smith Commission agreement will work, it has announced.

First minister Nicola Sturgeon made the announcement as part of her 'programme for government' agenda for 2015/16. The Scottish Government also intends to consult on how it can "best support people's access to employment justice" once certain powers over employment tribunals are transferred from Westminster to Scotland, according to a supporting document.

However, employment law expert Stuart Neilson of Pinsent Masons, the law firm behind Out-Law.com, said that the removal of employment tribunal fees in Scotland only could lead to "a real risk of 'forum shopping'".

"As the rules currently stand, if any employer has a place of business in Scotland, claims from UK employees can potentially be brought there irrespective of where the subject of the grievance took place or the employee actually worked," he said.

"If there is an increase in claims lodged in Scotland, the cost of administration to the public purse will increase accordingly. That may lead to revision of the rules around jurisdiction. There is also a real risk that some businesses will put Scotland and the UK into the 'too difficult' box if there are different legal positions north and south of the border," he said.

The five-party Smith Commission, led by Lord Smith of Kelvin, recommended in November 2014 that powers over the management and operation of the majority of the reserved tribunals be devolved to the Scottish Government. A new Scotland Bill, currently being considered by the UK and Scottish parliaments, would implement this recommendation, along with powers over "some employment services".

Current jurisdictional rules allow claims to be brought before employment tribunals in Scotland if the employer "resides or carries on business in Scotland", or if "one or more of the acts or omissions complained of took place in Scotland", among other qualifications. These rules, which are contained in the Employment Tribunal (Constitution and Rules of Procedure) Regulations, could effectively allow an individual to raise a claim against an employer that is headquartered in Scotland, even if the individual is based elsewhere in the UK.

Tribunal fees, payable in relation to claims brought to an employment tribunal or the Employment Appeal Tribunal (EAT), were introduced on 29 July 2013. Parties now have to pay an upfront fee to raise a claim, followed by a further 'hearing fee' once the case is referred to a tribunal. Flat fees apply to EAT cases. A remission system operates to exempt people on low incomes from having to pay the full fees.

The introduction of tribunal fees has coincided with a dramatic decrease in the number of cases brought to the employment tribunals, although other changes to employment law introduced at the same time may have influenced patterns of use. For example, since May 2014, anyone planning to bring an employment dispute to a tribunal has been required to notify the government-backed conciliation service, Acas, before they can proceed. The notification triggers an offer of early conciliation, during which Acas will attempt to help the parties resolve the case.

Last week, the Court of Appeal in London rejected trade union UNISON's latest attempt to overturn the fee regime on the grounds that it reduces employees' access to justice and particularly disadvantages women and ethnic minorities. However, the judge said that he had a "strong suspicion" that some people were unable to afford the fees - something that should be considered by the Lord Chancellor during the UK government's review of the policy, which is due to report by the end of the year.

"Certainly, it will be interesting to see what sentiments come through in the Scottish Government's consultation," said employment law expert Stuart Neilson.

"Many of the businesses we speak to actually feel fees have a place, but could be reduced to ensure access to justice. Unfortunately, it would appear that the option of reduced fees has been excluded even before consultation begins," he said.

Parties must currently pay either £160 or £230 to lodge a claim, depending on whether it is an administratively simply 'Type A' claim or a more complex 'Type B' unfair dismissal or discrimination claim. The further hearing fee is £250 for Type A claims, and £950 for Type B claims.

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