Challenge to Employment Tribunal Fees

On 29 July 2013 fees were introduced for lodging claims of unfair dismissal or discrimination at the Employment Tribunal (ET) for the first time. The new fees are £160 for a minor claim, such as an unlawful deduction of wages, plus a hearing fee of £230; or £250 for discrimination or unfair dismissal, plus a hearing fee of £950.

Uncertainty now presides over the future of these fees after Unison was given the right to challenge the fees by judicial review which will take place in October.

Why were Employment Tribunal Fees Introduced?

The government has introduced fees for two reasons.

First, is to help pay for the rising cost of the Employment Tribunal. As cases reach 191,000 a year the Ministry of Justice says this costs the taxpayer £74 million annually.

Secondly, it is believed that by introducing fees it will weed out claims that are without merit and ease the burden on businesses. The British Chambers of Commerce estimates the average cost of defending each claim is £8,500.

The government also hopes that more claimants will seek to resolve their workplace disputes using the mediation services provided by Acas rather than bringing the matter to a Tribunal hearing. This would bring down legal costs for both the taxpayer and businesses. Currently, the parties involved usually wait until a claim has been lodged before mediation services are used. From April next year, however, there are plans to extend early conciliation services to potential claimants and their employers, even before a claim is lodged.

Unison’s Claim to Basic Employment Rights

Unison, however, believes that free access to a tribunal is a basic employment right and that the fees will discourage many employees who have genuine grievances. The Union, therefore, has made a judicial review claim and campaigned vigorously against the changes. Unison argues that the new fees breach EU law by making it difficult or impossible for workers to exercise their rights.

In response to these criticisms the government points out that waivers are available for those who cannot afford the fees, and anyone who pays and goes on to win their case can apply to the judge to have their fees paid by the other side.

Implications of Employment Tribunal Fees for Employees and Employers

As they stand the changes will have a number of potential implications on employees and employers.

The new fee system will create additional bureaucracy that the ET hasn’t yet experienced to date. This could delay access to justice for both parties as the ET copes with additional processes that include means testing claimants and accepting payments.

Those who don’t qualify for a waiver, aren’t a member of a trade union (that has promised to pay members fees) or have legal insurance will find it more difficult to make a claim against their employer so are less likely to bring claims unless they have a strong case.

The fees are also likely to raise the value of settlement offers for low-value claims. Offering £500 now to settle is not likely to be attractive to a claimant who has paid £1,200 to bring their claim.

Like all major changes to legal procedure there is likely to be some upheaval and undoubtedly, satellite litigation.

For more information please contact Aneil Balgobin by telephone on 0207 611 4848.