Will employment tribunal fees decrease case numbers?

Today, 29th July, people wanting to bring cases to an Employment Tribunal (ET) will for the first time have to pay fees. The government hopes this will deter frivolous cases and so reduce the £74million annual costs for the Tribunal Service and also reduce employers’ costs.  But will it?

The most common types of ET cases

CAB advisors are often asked if they see more debt cases in this recession. My answer is no, but I see a lot more employment cases. Part of this may be because workers who felt they were badly treated before often used to shrug and get a new job, but now that is harder. But a considerable amount seems to me to be because small firms under pressure are having to get rid of staff and are cutting corners. That is of course a euphemism for breaking the law.  Very often the workers affected are young, part-time or not British – unscrupulous employers know that these people are much less likely to know what their rights are or how to enforce them.

Tribunal Service logoThe most common employment issues I see are not unfair dismissal or discrimination, but unpaid wages, unpaid notice and money not paid for accrued holidays.

Most of these are settled simply, with no ET case, by me phoning or writing to the employer and including a phrase along the lines of “I look forward to receiving a satisfactory reply because I am sure that you will not want the expense or hassle of my client having to take the case to an Employment Tribunal.”

But now employers know that claimants will usually have to pay fees.  It seems likely that more employers will decide to bluff it out, guessing that many clients will not want to take the risk of having to pay any fees, however good their case is. So there will actually be more cases where I have to discuss taking a case to the Employment Tribunal with my clients.

Switching to small claims court

Claims for unpaid wages, unpaid notice and unpaid holiday don’t have to be heard in an Employment Tribunal, they can be heard in the County Court. There the fees are not fixed but are dependent on claim size. For many people with small claims of less than £3,000, it will be cheaper to put in a Small Claim.

Whether this is actually a cheaper process for the government is unclear – if anyone knows the answer please comment below! My suspicion is that there has been a lack of joined-up thinking here…

Are there many frivolous cases?

What an employer thinks is frivolous may seem desperately serious to the affected worker. Employment Tribunals realise this, and even when a case is dismissed, an ET very rarely exercises its power to make the losing claimant pay the employer’s costs if it considers that the case was friviolous.

Some less good cases will be deterred by the introduction of fees. But there will be other ones where a client is determined to take the case through.  Many such cases have previously been resolved by the employer offering £500 to settle early in the process – with the introduction of fees, the costs of early settlement will be higher.

Won’t Fee Remission help a lot of the poorest clients?

Yes, a lot of clients will probably be eligible for fee waiver or reduction. But it’s not easy to tell at glance who is – there is a complicated form to be completed, as explained in this 22 page government leaflet.   A lot of information needs to be supplied by the client, including recent pay slips.

I do hope someone has considered how this Fee Remission application will apply to ET cases where one of the issues is that the worker has not been supplied with correct (or sometimes any!) pay slips…

Effect on case numbers

There is likely to be a significant drop in the next couple of months, because anyone coming through the door at a CAB or a Law Centre with a potential employment case in the last month will have been urged to get their case in quickly before today’s fee changes. But after this temporary effect it will be interesting to see how numbers of cases change.

ET cases number will only fall if the numbers of clients deterred from taking cases or switching to Small Claims cases outweighs the number of employers who refuse to resolve disputes before going to a Tribunal.

Whether the total number of ET cases + Small Claims cases for unpaid wages drops will only be clear after quite a while. The government may not be going to get the result it expects.

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  1. melonfool says:

    I think the cost to the government will go up in fact – the fees are, effectively, means-tested (see remission) and therefore a whole new layer of bureaucracy is invented which was not there previously. Much has been made of judges’ ability to strike out cases with no merit – they always had this ability, I don’t know if it has been enhanced in any way though. Also, judges always had the ability to impose a £500 fee for cases with little prospect of success and the respondent was always able to ask for this to be considered – again, the claimant could show they were suffering hardship and the fee could be reduced, but even so, the fee itself is not wholly new.
    Judges are not daft, I have heard them heavily persuade claimants to withdraw claims in the past and been successful, where I have been acting for the respondent (and the trick here, as a respondent, is to keep your mouth shut while this happens!). So I’m not entirely sure how many claims with no real prospect of success really do get to hearing. I know for sure I have never sat in a hearing feeling 100% sure we’d win, so the claimant must always have felt there was *some* chance.
    OK, it may stop those claims which go along the lines of “I may as well make a claim, it’s free and the company will probably pay me just to avoid a hearing even if I have no chance” – but in my experience, the key to those cases as a respondent is actually to hold your ground. I think if more employers held their ground there would be fewer spurious claims so, from this point, employers as a whole (and the legal profession) have themselves to blame for promoting a settlement culture.
    I really can’t help feeling this is another slightly toothless change which is designed to grab headlines – and, of course, that headline grabbing will reduce the claims initially. From my experience actually very few claims come via the CAB, most are direct, so there is no-one explaining the rules to people and they will have see the “ET fees £1,200″ headlines and will not approach the issue now, not knowing about the tiered fees nor the remission – which is unfair and a denial of justice.
    On which point – it should also be noted there is a challenge to this which I think is currently going to judicial review but which I would guess will end up in the European Court of Human Rights, as it is a potential breach of Article 6, Right to Fair Trial as it is not just an administrative fee, though the main challenge seems to be about removing people’s ability to challenge their rights under EU law.

    More here: http://www.danielbarnett.co.uk/download.pdf (it’s an advert for his masterclass but there’s a decent amount of information in here too)

    The best advice for claimants making claims for unpaid wages, holiday etc (the straightforward claims) is to detail the claim very carefully. I suspect the majority of mispayment in these areas is incompetence by the employer, or ignorance, rather than malice, and a carefully itemised claim in a letter (potentially a ‘letter before action’) will make most employers pay up. I do know of one employer that routinely fails to pay holiday on leaving but will always pay when it is brought to their attention – few people notice or claim it so the employer wins out and they won’t change their policy on it.
    ACAS are also very good at helping claimants understand pay issues – I have certainly had claimants who have not understood their pay/payslips etc bring claims where no pay was due, but always once I have explained to ACAS why it is how it is we have managed to sort it out and have the claim withdrawn. sadly the government seem to reducing the number of ACAS advisers just as more are needed.

  2. melonfool says:

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