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The Changing Landscape Of The Employment Tribunal

The Changing Landscape Of The Employment Tribunal

It was announced today that the much-debated Employment Tribunal (ET) fees system will be implemented on 29 July 2013 (subject to the necessary Parliamentary approvals). This change, which is one of a number of reforms to the ET system, has generated polarised views. Regardless of divergent opinions on the rights and wrongs of the system, it’s important that parties on both sides of the fence are aware that the system will “go live” on 29 July 2013.

By way of brief reminder, the fees system will provide for the following:-

  1. Fees will be due:-
    a. when a claim is issued (the “Issue Fee”):
    b. in advance of an ET hearing ( the “Hearing Fee”); and/or
    c. when other specific orders are applied for (e.g. review of a default judgment; dismissal following settlement; and judicial mediation).
  2. Fees will be payable by the Claimant in respect of the Issue Fee and Hearing Fee, and by the party making the application for the specific orders which attract a fee.
  3. There will be provision for the ET to order the unsuccessful party to reimburse the successful party for fees that they have incurred.
  4. For “Level 1 Claims” (e.g. unlawful deduction from wages and statutory redundancy payment) the Issue Fee and Hearing Fee will be £160 and £230, respectively.
  5. For “Level 2 Claims” (e.g. unfair dismissal and discrimination) the Issue Fee and Hearing Fee will be £250 and £950, respectively.
  6. Fees for the specific orders vary: by way of example, an order for Judicial Mediation will attract a fee of £600.
  7. Where an ET1 contains Level 1 and Level 2 Claims, the higher Issue Fee will be due.
  8. If an Issue or Hearing Fee is not paid, the claim will not be allowed to proceed.
  9. Specific fee arrangements are provided for multiple claims.
  10. A remissions scheme (the structure and requirements of which are yet to be finalised) will be introduced, with the aim of protecting access to the ET for those who cannot afford to pay a fee.

It’s important to note that the fees system will only apply to claims presented on or after 29 July 2013, so any claims in the system before that date will be unaffected.

The stated policy aim of the fee system is to transfer the cost of the ET process from taxpayers to the users of the system. It seems pretty clear that this aim will be achieved, subject to the provision for a reduction or waiver of fees for successful applicants of the remissions scheme. What is harder to estimate at this stage is the effect these changes will have on the number of claims that will be presented to the ET.

Employers will, no doubt, be hopeful that the Fees system will result in a significant reduction in what are considered to be spurious and nuisance-style claims. Together with the new ET rules of procedure (which we anticipate will be brought into force during the course of this summer too), the fees will place substantial barriers in the way of Claimants hoping to have their “day in court” notwithstanding the absence of a legal basis for their complaint. A tightening up of the system to avoid these types of claims, and the associated waste of costs and resources, is to be welcomed.

Employees and employers alike, however, have voiced concern over such a fundamental change to the ET system, which has historically provided free access to justice for all (with the exception of provision for costs to be awarded in limited and relatively extreme circumstances). It remains to be seen whether the remissions scheme will adequately address these concerns. From what we’ve seen so far, the rules of the scheme are quite complicated. This won’t be of great comfort to those employees who are anxious about how they will fund the fee for an unfair dismissal claim when, by definition, their employment will have terminated. 

For employees who are not deterred by the requirement to pay an Issue Fee, a further critical point in proceedings will be reached when the (more substantial) Hearing Fee needs to be paid. As a result, we may see a flurry of settlement discussions in advance of that payment date. On the reverse side, once that substantial payment has been made, Claimants may feel further entrenched and less inclined to settle in advance of a full hearing. It’s clear that settlement dynamics will shift and be informed by the fees (and the associated payment timetable), with the cost of the fee itself, no doubt, being rolled into any settlement package agreed.

One thing’s for sure, I expect we might see a spike in claims presented on 28 July 2013, to ensure the proceedings slip under the fees system net! We expect further clarification from HM Courts and Tribunals Service soon on the remissions scheme (for those who cannot afford the fees), and they have also indicated additional FAQs will be issued in the run up to the implementation date. We’ll be sure to keep you updated, but if you have any questions in the meantime about how these changes might affect your organisation, do get in touch.

Jennifer Skeoch
Senior Solicitor