The Future for Employment Tribunal Claims

A very interesting change will happen on 29th July 2013.  At the moment an employee can have a pop at their employer or ex-employer for nothing.  Tribunals are free to all users.  An employee can bring a claim and pursue it to the bitter end or withdraw at any stage and there is no fee.  An employer faced with a claim has no choice but to defend themselves, or surrender and lose.  Defence involves the cost of management time and distraction, and legal costs.  It is rare for the loser to have to pay any of the winner’s costs.  There is little deterrent to the employee, and the Tribunal system and the employer have to pay the price.

From Monday 29th July 2013, the Government is transferring some of the costs of the Employment Tribunal from taxpayers to users.  Claimants who are deemed to afford it will have to pay a fee to bring claims.  Fee levels are set, payable in advance and then at various stages.  If the money is not paid then the claim stops.  The Tribunal can order the loser to reimburse the fees of the winner, but the employee has to put the fees up-front and gamble them on winning and finding favour with the Judge.

There will be some remission of fees, based on proof of savings and income.  A lot of lower paid employees are likely to qualify and pay no fees.

Fee examples:

  • Unpaid wages, notice pay, redundancy pay will cost £160 to start and £230 to take to a hearing.
  • Unfair dismissal, discrimination and equal pay will cost £250 to start and £950 to take to a hearing
  • Appeals against a Tribunal Judgment will be £400 to appeal and £1,600 for a hearing in the Employment Appeal Tribunal.

These levels are fairly low and substantial increases seem inevitable once the new regime works.

Though the aim of these changes is to save public money rather than that of the employer, the changes will have an indirect benefit to employers.  An employee who has to stump up fees is far less likely to try a spurious or chancy  claim.  However, even those with a good claim may be put off, especially where their income has been stopped by dismissal.  One consequence of fees is likely to be the further growth of legal expenses insurance to cover claims, including Tribunal fees, though in such cases a lawyer will need to confirm that the claim has reasonable chances of success.

Employers should not think that fees mean that employment good practice is not as important.  Most lawful action is anyway good business sense and good practice.  Many lower paid employees will be able to claim fee exemption.

The Government wants Tribunals to be ‘used as the option of last resort to resolve employment disputes’. This is moving towards the same sort of emphasis as is found now in the Family Courts, encouraging alternative ways of resolving disputes and saving the huge public expense of formal justice.  More mediation and ACAS settlement is likely once a Claim has started, though until that point employers may just wait to see if the employee walks away rather than come up with the claim fee.

Fees up front for a claim will make people put their money where their mouth is and make them think twice about how much they believe in their case. It will off course put some people off who have been treated unlawfully and who have a good claim.  It will mean many will prefer to settle rather than risk losing not just their case but some of their money – for a losing employer, possible money towards the employee’s fees in addition to any compensation awarded by the Tribunal; and for a losing employee, the money they paid in fees to bring and continue with their claim.

It will be interesting to see what difference these changes make to the Tribunal system and work relations. I predict less claims, but those that are brought will be pursued more vigorously and only settle for higher amounts

For specific advice on any employment matter contact Frances Barker, Employment Partner at Blockslegal LLP on 01473 343911 or frb@blockslegal.co.uk.