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.
The 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.