UK employment tribunal figures show fees discouraging "weak and fictitious" claims, says expert

Out-Law News | 17 Mar 2014 | 11:35 am | 2 min. read

The dramatic fall in the number of claims for unfair dismissal and other complaints against employers shows that the introduction of fees to bring a claim to a UK employment tribunal is discouraging "weak and fictitious" claims, an expert has said.

Christopher Mordue of Pinsent Masons, the law firm behind Out-Law.com, said that the introduction of mandatory conciliation through Acas from May could reduce the number of tribunal applications still further. This is good news for employers, who before the introduction of fees would often settle out of court rather than incur the cost of defending a case, he said.

"Prior to the introduction of fees in July 2013, aggrieved employees were launching a huge number of weak and fictitious claims in the knowledge that it was cheaper for their employer to settle out of court than to incur the cost of defending the case," he said. "The introduction of fees has meant that people without a strong and valid case have been put off making claims in the hope of making a quick buck."

"It will be interesting to see if this trend will continue. We may see the number of claims fall even further in future following the introduction of 'Early Conciliation in Tribunals on 6 April 2014, which will be mandatory for claims after 6 May 2014. On the other hand further declines may be offset by the rising number of unions offering to pay tribunal fees for their members. There is also an unknown quantity of tribunal claims waiting to be processed under the Fee Waiver Scheme, under which claimants who can't afford fees are able to apply for an exemption. It is possible that some of the reported decline in the number of claims will be accounted for by claims yet to emerge from the fee waiver system," he said.

Figures recently published by the Ministry of Justice (MoJ) showed that the number of applications lodged with the employment tribunals fell for the third consecutive quarter between October and December 2013. With 9,801 new claims, the figures showed a 75% drop from the previous quarter and a 79% drop from the same period in 2012. This was the first full three-month period in which tribunal fees had been charged after their introduction on 29 July.

The new regime requires parties to pay an upfront fee to raise a claim with 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 cases at the Employment Appeal Tribunal (EAT). A remission system operates to exempt people on low incomes and with little in the way of savings from having to pay the full fees.

Last month, a legal challenge to the introduction of the fee system by trade union UNISON was dismissed by the High Court. At the time, the judge noted that it was too early for the union to prove that the new regime breached European law by preventing vulnerable workers and those with ‘protected characteristics’ from claiming against their employers. UNISON intends to appeal the decision, with a particular focus on the adverse effect on women of the introduction of fees, it has said.

From next month, those with employment disputes will have to contact Acas, the government-funded conciliation service, before they actually bring a tribunal claim. This will give parties an additional month in which to reach a settlement outside of the tribunal process.

“Early conciliation may encourage potential claimants to threaten claims in the hope of obtaining a quick and easy settlement but many employers may prefer to test the claimant’s resolve and see whether they are prepared to pay a tribunal fee before they engage in settlement discussions in any detail,” said employment law expert Christopher Mordue.

“However, early conciliation does give employers a new route to avoid tribunal claims and the employment tribunals themselves are also under a new duty to encourage the parties to use alternative dispute resolution, such as Acas or judicial or other mediation, and will consider this at the preliminary hearing stage,” he said.