Government plans to reintroduce Employment Tribunal fees

The government is proposing to reintroduce fees for employment tribunal claims nearly seven years after the Supreme Court quashed the previous charging regime ruling it to be unlawful. The government is proposing a modest £55 fee to issue any claim at an employment tribunal and, unlike the previous regime, there would be no additional hearing fee. The government says reintroducing fees would help to fund the under-resourced tribunal service, incentivise parties to settle disputes at an early stage and encourage better engagement in Acas early conciliation. We’ll speak to one of our lawyers about the likely impact on employers.  

The HR press covers this in some detail as you might expect, with both Personnel Today and People Management making comparisons with the previous regime. The coalition government introduced employment tribunal fees in July 2013, categorising employment tribunal claims as Type A and B. Type A claims covered simple disputes such as unpaid holiday pay and attracted an “issue fee” of £160 and a “hearing fee” of £230. Type B claims were for more complex disputes such as discrimination, with an issue fee of £250 and a hearing fee of £950. The EAT attracted a £400 issue fee and a £1200 hearing fee.

As People Management reports, the introduction of fees in 2013 resulted in a drop of tribunal cases by 53% in the following 12 months. In 2017 the Supreme Court ruled that the fee structure was unlawful, preventing access to justice, and indirectly discriminated against women and individuals with protected characteristics who were paying more in fees as they were more likely to bring type B claims. In the year after the fees were quashed cases rose by 39%, according to figures published by Acas. 

Not surprisingly, trade unions are opposed to fees being brought back. Personnel Today quotes Christina McAnea, general secretary of Unison, the union which took the government to the Supreme Court in 2017. She said:  “The fact that ministers want to reheat a failed and illegal policy shows that this is a government that ran out of ideas some time ago and needs to step aside. Tribunal fees denied the poorest and most vulnerable access to justice. The only people who would benefit from their reintroduction are unscrupulous bosses. When Unison forced the fees to be scrapped in 2017, the UK Supreme Court said the government had acted unlawfully and unconstitutionally. Nothing has changed. Tribunal fees were unfair then and they are still unfair today.”

The government is confident that the new lower fees regime would be lawful and indicted they could be brought back as soon as November, so let’s consider that possibility. Earlier, I spoke on the phone to employment lawyer and experienced tribunal user, Rebecca Sulley:
Rebecca Sulley: “The government's proposal to introduce fees is based on a number of different reasons, one of them being the fact that it costs a huge amount of money to run the tribunals and the EAT system. I think, in 2022-2023 that was £80 million so what they're looking to do is have tribunal users make a small contribution to running that system in the hope that they can improve the admin, the technology, and improve usability of it. I think they're also looking to try and make sure that things are resolved early on, if they can do, through Acas and they're also mindful of the fact that in the civil courts you've had to pay fees for a very long time to bring a claim so it puts the tribunal on a similar footing to the civil courts. What they're hoping to do is generate fees of around £1.3 million to £1.7 million, which is still only really a very, very small proportion of how much it actually costs to run the tribunal, so it will be interesting to see in practice whether it actually makes a difference to improving the tribunals and the experience that people get from bringing a tribunal claim, but given the actual amount that the tribunal are proposing to charge is so significantly lower than it previously was I'm not sure whether it will have such a huge impact on the claim numbers as the previous system. 

Certainly, I don't think we'll see the drop anywhere near the 50% that we saw previously, but it will still be interesting to see how unions react, how claimants react. There's clearly an issue, still, about whether it's indirectly discriminatory against women and against individuals who have protected characteristics because that was exactly why the Supreme Court determined that the fees were unlawful in the first place. So, we may still see challenges coming through as a result of it if they do introduce the fee system and we also potentially might see more joint claims because the £55 fee is per claim and if there are a number of claimants bringing one consolidated claim then it's still that £55. So, we might see in things like redundancy exercises, or TUPE transfers, more claimants joining up, potentially, to bring a claim. So, we'll have to wait and see what impact it has if it does get through.”

Joe Glavina: “You’ll remember the impact fees had in that period between 2013-2017. How do you think the new fees regime compares from a client’s perspective?”

Rebecca Sulley: “So, from a client's perspective, we saw from the previous introduction of fees back in 2013 a massive drop in tribunal numbers for all of our clients which was obviously quite welcome, in many respects, because it drove down the number of spurious tribunal claims, but we did see a lot more discrimination being added in to really warrant the fact that they're having to pay quite a large fee to put in their claim. So, we saw a huge reduction and I believe that the case volumes actually fell by half after the introduction of those fees. Now, these fees being introduced are obviously quite a lot lower than the fees that had been introduced back at that time so I don't anticipate that there will be such a drop in claim numbers so I don't think our clients will see a massive difference. What they might see is, perhaps, more willingness from claimants at an early conciliation stage to accept an offer. Clients might be slightly more willing to settle at that stage because they'll have to factor in the fact that they will, undoubtedly if they need to settle at tribunal, they would have to pay the issue fee that the individual has lodged. So, we might see more of an emphasis at an early stage on Acas early conciliation, but I certainly don't think we will see a huge drop in claim numbers coming through as a result of these new fees.”

Joe Glavina: “Last time we chatted, Becki, you talked about the long delays in the tribunal system with clients waiting a very long time to get cases listed and you said you’d noticed a willingness on the part of clients to try mediation to resolve the dispute. Is that still the case?” 

Rebecca Sulley: “So, my recent experience with mediation is that clients are actually quite willing to take part in mediation for a number of reasons, really. So, one being the fact that a lot of tribunals, especially those down south, are listing hearings still 18 months, two years, away from when the actual events took place and because, generally speaking, turnover is higher, especially in this kind of generation, we are seeing a lot of people leaving employment and therefore not willing to give evidence at these hearings. So, we do find clients are quite interested in mediation to account for the fact that they might not have key witnesses available, but also to account for the fact that tribunals are invariably listing hearings for longer than they ever used to. So, whereas we used to see a lot of one-to-three-day hearings, typically now they are five days or more where you have discrimination involved and that really drives up fees so there is more incentive for the client to enter into judicial mediation. One of the things that I have found, though, is that we do find a lot of claimants are becoming increasingly unrealistic in their expectations and we also find that that's quite helpful to suggest mediation to them because then you have a judge who is able to give them a bit of an insight as to what a more realistic level of compensation might be. So, we have certainly found an increase in people interested in judicial mediation and some tribunals are still taking part in the trial for alternative dispute resolution, which is a mandatory short mediation just before the tribunal hearing itself. So, once the whole case is prepared, once you've done your witness statements, the judge will have a mandatory meeting with both parties to give a bit of an assessment as to whether they think the claim is one that will be won or lost, and also to encourage the parties to have a kind of last-ditch attempt at settlement. So we are seeing that on the increase as well.”

The consultation suggests that, if implemented, fees may become payable from November 2024 and it remains unclear whether Labour, if they came to power, would reverse this policy so that is a possibility. The consultation runs until 25 March 2024 and if you like to put forward your views you can – we’ve included a link to the consultation paper in the transcript of this programme for you.

LINKS
- Link to government’s consultation on employment tribunal fees