To pay or not to pay: the introduction of Employment Tribunal fees

Most unlike the UK Government’s proposed policies to cause controversy, I know, but it is fair to say that its recent decision to introduce Tribunal fees from Summer 2013 has really kicked up a storm in the employment teacup.  Branded as outrageous, punitive, over-complicated and even unlawful by some, and refreshing, positive, necessary and welcome by others, opinion on this policy could not be more divided.

In short, the changes will see Claimants having to pay a fee to issue a Tribunal claim and another to proceed to a full Tribunal hearing.  There are to be two levels of fee payable and these will depend upon the type of claim being brought: Level 1 will cover the simpler claims (i.e. unpaid contractual sums and unauthorised deductions) and Level 2 all the more complex claims. 

The proposed fees are:

To ensure that nobody is barred from the machinery of justice, the Government has decided to extend the remission system (the fee waiver system which is already in place for the civil courts) to the Tribunals, with the effect that those on low incomes are likely to be exempt from the requirement to pay Tribunal fees. 

Whilst the payment of fees has always been part of the process for the civil courts this is a significant milestone in the development of the Tribunal system, not least given that Tribunals were established as an informal and readily accessible forum for employees to resolve workplace disputes.  So why did the Government open itself up to such vociferous debate and introduce Employment Tribunal fees?

The Government has stated that whilst it believes it is unfair for the taxpayer to foot the £84 million cost of running the Tribunal system, the driver for the new fees is not to fund the system, dear me, no.  Indeed, the Ministry of Justice’s figures only indicate an annual net contribution from fees of £10 million which in State funding terms is little more than lunch money.  However, by our extremely rough calculations, the introduction of fees could potentially result in an income in the region of £75 million.  Whilst this is a crude forecast, and does not take the cost of administering the fee system into account, the introduction of Tribunal fees will result in significant savings for the Ministry of Justice, which must have been a (the?) key consideration in the decision-making process.

The Government has also stated that the purpose behind introducing fees is not to dissuade claimants from pursuing claims.  Dear me, no again, despite the cost saving and despite other parallel Tribunal reforms which are expressly aimed at reducing the number of claims made.  However, the Ministry of Justice’s own Impact Assessment on the proposed policy assumes that the steady state (i.e. once the system has bedded down) of the number of claims per annum will be 47,200 – compared to 186,300 in 2011/2012.  This suggests an expectation that around 75% of potential claimants will be deterred from bringing a claim.  Again, it seems that the publicly announced policy intention differs from reality.

Questionable policy motives aside, if the policy results in vexatious claimants thinking twice before bringing a claim or prompts settlement of claims prior to the hearing fee being incurred, this must be good news for employers, right?

Not quite!  Employers should not be too jubilant just yet as there are a few glaring shortcomings in the proposed system.  For example, in the majority of Tribunal cases, claimants will be unemployed following their dismissal.  In these circumstances, the remission scheme is likely to operate in such a way that many claimants will not have to pay Tribunal fees at all.  The result of this will arguably be that many of the same vexatious and poorly formed claims that employers have protested about for so long will continue to be brought.  It also seems likely that employers will end up having to bear the cost of Tribunal fees in most cases; either as part of a negotiated settlement or as part of an award.

Now that the introduction of fees has been confirmed and with the proposed roll-out in less than a year’s time, we look forward to receiving much-needed guidance from the Government as to how it envisages the system working in practice.