The deadline for responses to the government consultation on Employment Tribunals is 6 March 2012. Lyons Davidson’s Employment Department have participated in the consultation and the response has been submitted.
The government has decided to introduce fees for parties who wish to bring claims in the Employment Tribunal. This is ostensibly an attempt to reduce the burden on the taxpayer of running the system, but has also been sold – to business in particular – as a way of reducing the number of vexatious litigants.
Two options have been proposed:
- Under Option 1, fees are payable at two stages: an issue fee and a hearing fee;
- Under Option 2, one fee is payable at issue, with an increased fee being required if a claimant claims more than £30,000 in compensation, regardless of the type of claim.
Under both options, the fee level will depend upon the type of claim; broadly, level 1 is for simple money claims, level 2 is for claims such as unfair dismissal and level 3 for discrimination and ‘whistleblowing’ claims.
Tribunals will have power to order reimbursement of fees to the successful party. Importantly, a remission system will also operate, whereby claimants who earn below a certain level or who are entitled to certain benefits will not be required to pay a fee. This echoes the County Court system.
In the Employment Appeal Tribunal, a simplified approach has been proposed, whereby fees are payable at two stages: commencement of the appeal and at appeal hearing.
Lyons Davidson’s response to the consultation
Lyons Davidson prefers Option 1.
Having two charging points should encourage parties to settle matters earlier and avoid the mindset of people wanting to go to a hearing because they have ‘paid for’ it. Likewise, respondents with a weak defence may be encouraged to settle earlier to avoid being liable for the hearing fee.
We do not believe that the threshold proposal is proportionate; greater compensation claimed does not necessarily equate to greater tribunal resource. We have raised issues around the effect that the proposed structure will have on all claims, and in particular low-value claims. We have also expressed surprise that the consultation paper contains no question on the proposed level of fees.
It is currently indicated that a claim for unlawful deductions from wages will cost £550 to take to a hearing. Many claimants may not believe that it is worth the initial investment or risk to bring a low-value claim.
County Court Claim
The proposed fees for other claims are potentially greater than analogous County Court claims. More informed claimants may opt to bring their claim in the County Court instead, where the fees will be lower; this will simply shift the burden on to the justice system.
The philosophy of the employment tribunals has always been one of access to relatively swift and efficient justice; a disparity between the cost of bringing claims in the County Court and the Employment Tribunal runs contrary to that philosophy.
We have strongly objected to a proposal that fees be payable for some applications, such as reviews of decisions and requests for written reasons, arguing that parties should be entitled to make such applications and that charging fees for this will make for less effective justice.
Judicial mediation will attract a fee, albeit lower than a hearing fee. We feel that, if hearings are to attract a fee, it is appropriate that mediation should attract a fee. While this may discourage some parties from entering into judicial mediation, it should mean that those who do participate will be more positive about achieving settlement.
One of the areas where we have proposed an alternative way forward is refunds. Currently, the government doesn’t propose to make any refunds outside of the remission system. We have proposed a refund where the matter settles at least four weeks prior to the hearing, to focus the parties’ minds on settlement and reduce the concern that once people have paid a hearing fee they may be less inclined to settle.
The government response is eagerly awaited.
For more information contact our Leeds Employment Law team.