Hurrahs and cheers can heard from employers across the country this month as the Government announces proposals for major reforms to the UK Employment Tribunal system.  But will they work?  

The changes announced by Chancellor George Osborne at the Conservative Party conference in Manchester at the beginning of October include the introduction of an upfront fee to lodge a Tribunal claim. This is predicted to be in the region of £250.  As well as this, there will be a further court fee of approximately £1,000 payable by a Claimant when the hearing is listed. Such fees are to be refunded to the Claimant if he is successful and will be forfeited if he loses. There may also be higher fees for cases where the compensation claimed exceeds £30,000.   Precise fees are yet to be decided and will be subject to a consultation due to take place in November this year. However, fees are likely to be effective from April 2013.

This measure accompanies the announcement that employees will usually be required to have two years’ continuous employment rather than one before they can claim unfair dismissal. Both measures are aimed at reducing spurious claims, and are intended to deter vexatious claimants from bringing costly claims against their employers in the current economic climate.  This again looks like cheap politics (see David Whincup’s post on 4 October below).  Even if that 2 year threshold is robust against any indirect sex discrimination challenge, it will merely encourage, indeed oblige, sub-2 year claimants to bend their circumstances into allegations of unlawful discrimination instead.

The Tribunals have recently published their annual statistics and the median compensation award for unfair dismissal claims in 2010/2011 was £4,591. In light of this, it is clear that a total fee of £1,250 may be a considerable disincentive to an employee in lodging proceedings, particularly as there is always an aspect of uncertainty when bringing any Tribunal claim. It seems likely that the fees will reduce the number of unlawful deduction of wages claims lodged, as the amounts claimed in such cases are often less than the predicted fees.   

OK in principle, but the group this measure actually excludes are not the frivolous or vexatious litigants since they will be confident of recovering at least that amount through a settlement.  Instead it will knock out those who cannot afford to pursue it, the very weakest members of the workforce who are often most in need of the “justice” the Tribunals can offer.  Sadly it seems likely that the only way to dissuade speculative Tribunal claims is for employers to fight them, almost irrespective of merit.  Formal litigation, even in the ET, is a uniquely stressful pastime and the reality is far more off-putting than one might think at the outset of the claim.