Will the abolition of Employment Tribunal fees result in ‘old’ 2013-2017 cases being permitted in Tribunal?

Employment Tribunal fees are illegal. This was declared on 26th July 2017 by the Supreme Court in R (on the application of Unison) v Lord Chancellor. Put simply, from that day onwards, Employment Tribunals completely scrapped both issue fees (the fee for submitting a claim form to Tribunal) and the hearing fee (the fee incurred 3 weeks before a final hearing date) due to their illegality.

Unfortunately, however, it’s not that simple. This is because tribunal fees were ruled to be ‘unlawful’. This means that all previously obtained Tribunal fees from the introduction of the fees in 2013 onwards were illegally obtained and must be paid back. Now, whilst that sounds simple, in reality, it’s far from it.

Why? Well, to start with, employees bringing group actions through one main claimant paid a combined fee. So, how do you handle returning a split fee to each applicant (particularly in situations where some settled and others continued to final hearing)? Also, many COT3 (ACAS brokered) agreements (the legal document by which parties agree to settle claims) provided for employers to repay the equivalent of the employee’s tribunal fees to the employee on top of their separate settlement amounts; do those employers now have the right to claim that portion back from Her Majesty’s Courts and Tribunals Service (HMCTS) upon simply producing the relevant paperwork?

The only comment from HMCTS so far is that a system for reimbursing fees will be announced soon, hopefully by September. Until that date, there is uncertainty as to what will happen.

The biggest question, however, is what happens to the claims of employees who would have brought a claim but who were put off by the tribunal fees. It is undeniable that thousands of employees acted in this way – in this case the statistics don’t lie, namely that there was an appropriate 70% drop in Tribunal claims following the introducton of tribunal fees.

Usually, employees have a three month time limit in which to contact ACAS and then, allowing for time spent during ACAS Early Conciliation, issue a claim to Tribunal. However, many solicitors believe that the ‘unlawfulness’ of the Tribunal fees opens the door to former prospective claimants to bring post-2013 claims. Is this true?
The honest answer is ‘nobody really knows’ and, eventually, this question will be decided by tribunal judges.
One of the reasons this question hasn’t been effectively answered yet is partly due to the President of the Employment Tribunals issuing a universal stay on all claims linked to the ‘unlawful’ Tribunal fees judgment. This has, so far, prevented claims to tribunals asking this question.

However, one case, that of Dhami v Tesco Stores Ltd, slipped through the net. It did so because the case also included confusion over the effective date of termination by Tesco (which took it outside the stay imposed by the President of the Employment Tribunals).

In the Dhami case, the Claimant brought claims for disability and age discrimination against Tesco. However, her case was previously thrown out for non-payment of Tribunal fees due to her application for a fee remission being rejected. In the recent hearing, the Tribunal allowed her application for an extension of time in which to bring her case. Put simply, the Tribunal agreed that it was “just and equitable” (the legal test for extensions of time in employment tribunals) to do so in light of her case having been rejected due to unlawfully applied fees.

The end of employment tribunal fees

In a surprise judgment handed down on 26 July the Supreme Court unanimously decided that charging claimants to bring employment tribunal claims was unlawful and the fees scheme (introduced in 2013) was quashed. The Government promptly acknowledged that it accepted the judgment and wasted no time in confirming that the fees have been scrapped. The Law Society Gazette described the judgment as a humiliation for the Government.

Commentators have described the judgment as being constitutionally significant, since it addresses the question of what is meant by “access to justice”. As such its ramifications could extend well beyond the relatively narrow issue of employment tribunal fees. In his lead judgment (which distinguished legal commentator Joshua Rozenberg described as “terrific”) Lord Reed began by recognising that relationships between employers and employees are “generally characterised by an imbalance of economic power”. He noted that tribunals “are designed to deal with issues which are often of modest financial value, or of no financial value at all, but are nonetheless of social importance”.

In 2011, the Government proposed the introduction of fees on the basis that (1) this would transfer some of the cost of the system from the general taxpayer to its users, (2) it could encourage early settlements and (3) that it would help to weed out weak and vexatious claims.

What happened following their introduction was “a dramatic and persistent fall in the number of claims brought in ETs…of the order of 66-70%”.

Lord Reed first considered whether the fees order was unlawful under English law. At paragraphs 66 to 85 of the judgment, headed “The constitutional right of access to the courts” he sets out a compelling analysis of what is meant by the rule of law and how it is inextricably linked with access to justice. He is concerned that these concepts may have become lost in favour of an ideological view that “…the administration of justice is merely a public service like any other, that courts and tribunals are providers of services to the “users” who appear before them, and that the provision of those services is of value only to the users themselves and to those who are remunerated for their participation in the proceedings”. His response is firm and clear:

Publication of employment tribunal decisions

A little publicised but potentially very significant development in the field of employment law in 2017 will be the introduction of the routine publication of employment tribunal judgments. As matters stand, anyone (other than the parties and their representatives) who wants to search for or browse first instance decisions in the Employment Tribunal has to attend in person at the Bury St Edmunds office for English and Welsh decisions or Glasgow for Scottish decisions. Copies of specific decisions can be ordered but at a cost £10 and £5 each for additional decision in the same order. Decisions of the Northern Ireland Industrial Tribunals and Fair Employment Tribunals have been available online for some time.

Last June HM Courts and Tribunals Service announced that new employment tribunal decisions will be publicly available online from autumn 2016, subsequently put back to early 2017.

As many readers will know, employment tribunal decisions are not binding on subsequent tribunals so why is this news potentially very significant? Well, it’s primarily to do with reputation management. Years ago it would be quite usual to see local court reporters attending employment tribunals and their reports on cases would frequently appear on a page in a local paper devoted to employment and other judgments. However, the regional press has suffered huge financial cutbacks in recent years and the days of reporters attending tribunals as a matter of routine have long gone. Generally, cases are not reported unless they come to the attention of journalists as a result of contact from the parties or their representatives. For example, unions often issue press releases about cases they have backed in order to demonstrate successful outcomes for their members. Barristers’ chambers also publish details of successful cases, but these are overwhelmingly appeal hearings which are already available online, for example through the EAT online service and BAILII.

The new online employment tribunals decisions service will be an easy and free resource for accessing newsworthy content without the need to send someone to a tribunal. We can therefore expect to see a notable increase in the number of cases reported. Of course, online publication increases the chance of case reports being picked up by mainstream and national websites, with syndicated content (authorised or not) at the heart of many news websites.

Employment Tribunal holds that dyslexia is a recognised disability

A Starbucks employee has won a disability discrimination case against her employers after problems arising from her dyslexia led her to make mistakes. Meseret Kumulchew was a supervisor at a Starbucks branch and one of her duties included taking the temperature of fridges and water at specific times and then entering the results in a duty roster. When the information inputted appeared to be wrong Kumulchew was accused of falsifying documents and disciplinary proceedings were instigated. She told the tribunal that she had always made it known to her employer that she was dyslexic and said her actions were no more than a mistake.

The Employment Tribunal found that Starbucks had failed to make reasonable adjustments and had discriminated against her because of the effects of her dyslexia. They also found an element of victimisation and said that there appeared to be little or no knowledge of equality issues.

Unfortunately, the above is a situation that we see all too often in the workplace and can often be as a result of employers misunderstanding their obligations to disabled employees. Fairness and equality in the workplace are vital parts of a successful business and the failure comply with such practices often leads to expensive and highly publicised claims at the Employment Tribunal, as Starbucks have undoubtedly learnt.

I find that the most effective way to prevent complaints of disability discrimination is to educate employers from the outset. The starting point is undoubtedly the definition of disability. The Equality Act 2010 provides that “a person is disabled if they have a physical or mental impairment which has a substantially adverse and long term effect on their ability to carry out normal day to day activities.” There are no set rules on what is covered however employers must at the forefront consider “the effect” on an employee’s ability to do their role.

Aside from establishing the actual disability employers often misunderstand what constitutes a discriminatory act. It’s a matter of common sense that employers should not directly discriminate, so for example should not dismiss an employee because they are disabled.  However, it is often not known that an employee will also have a valid claim at the Employment Tribunal if they can argue that they have been discriminated by perception, for example if they have been discriminated against because of their association with a disabled person and also if a workplace practice disadvantages them.

One of the most common types of disability discrimination is failure to make reasonable adjustments. In the Starbucks case the Employment Tribunal found that that the failure to provide disciplinary notes in a typed form and in a timely fashion, amounted to a failure to make reasonable adjustments. What will amount to a reasonable adjustment is a matter for the tribunal to decide and we can only advise on the basis of previous decisions. However, the general position is, if an adjustment is reasonable then you  must make it to ensure you are not disadvantaging  disabled employees.

Furthermore, it is not a prerequisite for employees to prove their disability. The Employment Tribunal criticised Starbucks in requiring Ms Kumulchew to prove her dyslexia with a “certificate” before her mitigation could be considered.  She informed her employer, after having taken advice from her GP, that she was unable to issue a certificate for dyslexia but suggested that they send her to a company doctor should they wish. They failed to do so and instigated disciplinary proceedings anyway, which the tribunal held was direct discrimination.

Nevertheless Employers should not be deterred from instigating disciplinary proceedings against their disabled employees, although the starting point in deciding whether to do so, should be to consider whether it could be construed that their disability may have affected their conduct or performance. If in doubt, you should always obtain an Occupational Therapist’s report.

The future of employment tribunal fees

According to the bookies (at the time of writing) Ed Miliband is an average 4/6 (i.e. odds on) to become the next Prime Minister. (For those who are interested David Cameron is 11/10 against and it’s any price the rest.) Bookies are rarely wrong in such matters. After a lot of fairly non-committal talk about reform of the system Labour finally confirmed on 1 April that, if elected, it will abolish tribunal fees altogether.

However no-one thinks that either of the main parties will win an outright majority so what of those that might support a Labour-led government, whether by coalition or informal arrangement? Unsurprisingly, the SNP which is identified as a staunch supporter of workers’ rights is committed to the elimination of tribunal fees. The Liberal Democrats are in a rather odd position since, as a coalition partner, they supported the introduction of employment tribunal fees but they now seem to be directly opposed to them. It is clear that Vince Cable takes the view that he was misled by Justice Secretary Chris Grayling. In February he said:
The quid pro quo of my party supporting the Conservative proposal to introduce employment tribunal fees was that we should conduct a rigorous review within a year of their introduction, to determine whether there had been any unwanted consequences and to ensure no one was deterred from legitimate access to justice.

Despite much prompting from my officials and Jo Swinson [Liberal Democrat minister for employment relations], including at cabinet, 18 months have now passed and nothing has happened. I am concerned that we appear as a government to have reneged on our public commitment to conduct this review. [Mr Grayling] gave assurances during parliamentary debates that the Ministry of Justice would monitor the impact of the proposals on women and other vulnerable groups and that the reviews would take place regularly and on an ongoing basis. This is not happening either.

This review now needs to be progressed as a matter of urgency … I have instructed my officials to initiate a review of employment tribunal fees based on all the publicly available data and research on the impact of fees in employment tribunals.
But now it seems that they have gone further. Jo Swinson has indicated that the Liberal Democrats will seek to undertake a major review of the entire employment tribunal system which could see them being replaced with entirely new labour courts. Significantly, Labour seems to be thinking along the same lines.

If the Conservatives get in then it is fairly clear that the status quo will remain. Their manifesto makes clear that they have no plans to change existing employment law and related procedures. If UKIP have a say then their much watered-down proposals include extending the two-year qualifying limit for unfair dismissal to all claims including discrimination. Of course many have observed that the rationale for effectively allowing discrimination for two years, whether based on race, sex, disability or otherwise, is far from clear, particularly taking into account that many such claims are based on single incidents.

As I have mentioned before, this is not an issue that is divided clearly between employers and employees.

end of the line for employment tribunal fees challenge (for now)

The challenge to employment tribunal fees brought by UNISON finally hit the buffers when Lord Justice Elias (pictured), delivering the lead judgment in the High Court, rejected the application. There were two grounds for the application. First, it was claimed to be unlawful in not complying with the EU principle of effectiveness because it was either impossible or exceptionally difficult for prospective claimants to bring a claim. Second, it was claimed that fees were indirectly discriminatory in that they placed women, ethnic minorities and the disabled at a substantial disadvantage.

In a controversial judgment Judge Patrick Elias, who has a strong background in employment law, observed that the reduction in the number of claims brought after the introduction of fees was “striking”. Before fees were introduced Employment Tribunals received an average of 48,000 claims per quarter. In the most recent recorded period (July to September 2014) that number had dropped to 13,612. Evidence from the CAB showed that fees made four out of five workers less likely to claim or deterred from claiming at all. Further, over four in ten of those with employment problems had a household income of less than £46 per week after essential bills.

The Government contended that other factors, such as the introduction of ACAS compulsory conciliation, might have contributed to the reduction. Regular readers know my views about the effectiveness of the new ACAS scheme and even the Government’s own figures concerning the operation of the scheme cannot justify any significant impact.

However, the main reason why the application failed was the lack of tangible evidence “that any individual has even asserted that he or she has been unable to bring a claim because of cost”. The most contentious part of the judgment then followed:

The question many potential claimants have to ask themselves is how to prioritise their spending: what priority should they give to paying the fees in a possible legal claim as against many competing and pressing demands on their finances? And at what point can the court say that there is in substance no choice at all? Although Ms Monaghan would not accept that this is the task facing the court, it seems to me that in essence that is precisely what the court has to do. In that context, as Moses LJ said in the first Unison challenge, it is not enough that the fees place a burden on those with limited means. The question is not whether it is difficult for someone to be able to pay – there must be many claimants in that position – it is whether it is virtually impossible or excessively difficult for them to do so. Moreover, the other factors which I have identified as potentially inhibiting a worker from pursuing a claim may reinforce the conclusion that the risks inherent in litigation are not worth taking. These factors engender a cautious approach to litigation but do not compel the inference that it would be impossible in practice for some of these claimants to litigate.

This part of the judgment has led to considerable debate which centres around the widely held view that judges are out of touch with the real world and do not understand the financial strictures which blight many people, particularly low paid workers. Some have even gone so far as to compare Judge Elias’ salary with many of those contemplating proceedings and questioning whether the judge was able to understand such problems in practical terms.

A particularly strident critic is employment lawyer and blogger Kerry Underwood who took the opportunity to write A Christmas Carol by the High Court in which he takes aim at what he perceives to be the obvious inequities demonstrated by the judgment.

half of employment tribunal awards are not paid

Research in Scotland has revealed that nearly half of employment tribunal awards are not paid, while a further 13% of successful claimants receive only part of their award. This follows research carried out across the UK last year which showed that only 49% of successful claimants received payment in full, 16% received part payments with 36% receiving nothing at all. It seems that the situation in Scotland is worse because the methods available for enforcement of tribunal awards are unwieldy and not widely known.

According to a report in the Scottish Herald examples include a Sikh garage worker, Paramjit Singh, who was racially abused by his Muslim bosses. They called him a “lazy low-caste Sikh” and, with reference to his white British wife questioned how he “could stay with a white woman. They’re not clean and they don’t know how to live”. He was also forced to carry out demeaning work repeatedly. He was awarded over £18,000 but has recovered nothing. In August 2014 the Respondent, P K Imperial Retail Limited, made an application to Companies House to be struck off and a director resigned. The reality is that the prospects of Mr Singh recovering anything are negligible.

Recently, the Government decided against tightening the existing regime concerning the liquidation and/or administration of companies and the formation of new companies which often carry on the same business with the same owners from the same premises, but without any of the former liabilities, including tribunal awards. The rationale for this is that the “enterprise culture” should not be suppressed so that people who have lost their businesses through no fault of their own should not be deterred from starting over. I think that many would say that not paying tribunal awards is an unlikely indicator of a no-fault business failure.

In response the UK government has suggested giving powers to employment judges to require businesses deemed to be possible non-payers to be required to pay a deposit. Deeming a business a possible non-payer is a big call for an employment judge to make and one that is likely to prompt at least indignation from the business owners. What evidence would be relied on and what tests would be applied?

what is the future of employment tribunals?

That is the question that was asked by former President of the Employment Tribunals of England and Wales in a speech to The Law Society last June. It has turned out to be a timely question given the near-collapse of the current employment tribunal system following the introduction of fees, mixed reports about ACAS early conciliation (as I predicted) and the announcement by Chuka Umunna at the TUC Conference this month that, if elected, Labour plans a complete overhaul and perhaps even replacement of employment tribunals.

Tribunals as we know them were introduced in 1971 as a “cheap and informal” alternative to conventional court proceedings. As I have pointed out on many occasions they have become and expensive and complex alternative, to the extent that many would now prefer litigation in the county courts. It is therefore reasonable to suggest that their raison d’être has been undermined over time. It is also a cause of some concern that a significantly higher percentage of employment tribunal judgments than county court judgments are successfully appealed. We seem to have come to the point that all participants in the employment tribunal process, apart from those that have a vested interest, are ready for a change.

I have suggested on many occasions that employment claims should be dealt with in the county court on the basis that the respective processes are barely distinguishable in terms of the key elements of dealing with a claim – notice of claim, defence, schedule of losses, disclosure of documents, exchange of witness statements, exchange of legal arguments, advocacy, evidence in chief and cross examination, summing up and the delivery of a judgment. Indeed, the terminology – “judge”, “judgment” – has been merging in recent years.

number of employment tribunal claims plummets but “too soon” to say whether that’s to do with the new fees

On 7 February the High Court published its judgment following a hearing last October and Noovember and confirming its rejection of Unison’s challenge to employment tribunal fees in Unison, R (on the application of) v The Lord Chancellor & Anor. Put simply, the overall outcome was that the Court considered that it was too soon to tell what the impact of the introduction of fees would be and so the case had been brought prematurely.
The challenge was fourfold:

1. The obligation to pay a fee made it excessively difficult to enforce EU law rights such as equal pay. In the absence of concrete evidence that this is in fact the case, it was too soon to say, in the Court’s view.
2. The fee levels were not equivalent to those in other courts. This was rejected for a number of reasons, including that in the county court, where fees may be lower, there is more of a risk of having to pay the other side’s costs, and the option of free conciliation is not available.
3. The Public Sector Equality Duty had not been complied with. This argument also failed – these proceedings were the wrong way to make the challenge. Moreover, it was too soon to see whether fears that the elimination of discrimination would be held back were well-founded.
4. Fees are indirectly discriminatory, having a bigger impact on, for example women. Recognising that generally speaking women tend, still, to be paid less than men, and so would find it harder to find the money to pay fees, it was still too early to say.

However Unison could still garner some hope from the decision:

– The Lord Chancellor appeared to accept that as a general rule, successful claimants should recover any fees they have paid from a losing employer. The fly in that particular ointment is the poor recovery rate in tribunals – what are the chances of recovering fees when many employers never pay any part of the compensation that they have been ordered to pay?
– It was made plain that if and when evidence emerges that the fee regime has had, for example a discriminatory impact, then The Lord Chancellor will not be able to argue that Unison have left it too late to bring a claim.

The Court had plenty to say about the haste with which the case had been brought and was clearly underwhelmed by the standard of preparation. For example, the time estimates for the case were inadequate, adjournments were necessary to deal with new material, new documents and arguments cropped right up to the end of the hearing and over a hundred authorities were produced, most of which were never looked at.
In addition the timing of the case turned out to be most unfortunate. The Court sat on 22 and 23 October and 4 November. On 18 October the Government published details of new employment tribunal claims brought between July and September 2013. The information was referred to in the judgment but rather airily dismissed.

appalling incompetence by an employment tribunal, yet the claimant loses out

Elliott v The Joseph Whitworth Centre Ltd is a decision of the Employment Appeal Tribunal which demonstrates what can only be described as an abject failure of the judicial process. In his judgment His Honour Judge McMullen QC describes the chronology of relevant events as “sad and disappointing”. Mr Elliott had been working as a caretaker at a local community centre until he was dismissed on 6 February 2010. He presented a claim of unfair dismissal to a tribunal on 30 April that year – well within the three months’ time limit. Remarkably his claim was not sent by the tribunal to his employer until nearly two years later. Ironically the Employment Tribunals Service was piloting a new computer system at the time – unfortunately named in this context Caseflow – and as is so often the case the system had in fact caused considerable administrative difficulties. Mr Elliott’s union representative was also at serious fault because he did not get round to enquiring about the progress of the case until February 2012. When he finally did, the tribunal sent out the claim form to the Respondent.
The Respondent filed a completed response but also applied to have the claim struck out on the ground that there had been such a long delay. In particular reliance was placed on Employment Tribunals Rules 18(7)(d) (claim not actively pursued) and 18(7)(f) (it is no longer possible to have a fair hearing).
Very surprisingly the employment judge who dealt with the strike out application did not consider any oral or written evidence. Nonetheless, based on consideration only of the claim form and the response, the judge decided that there could not be a fair trial. Pausing there, this is a remarkable conclusion to have reached, bearing in mind how long it can take cases to come to trial – often six years or more, particularly in the criminal jurisdiction. The judge decided that the delay of nearly two years was inordinate and, taking into account the errors by the employment tribunal and the claimant’s representative, inexcusable. I am bound to observe that, in this context, one person’s “inordinate and inexcusable” would appear to be another’s “routine and typical”. This was, on any reading of the matter, a remarkable let off for the former employer.