Ministry of Justice confirm huge increase in Employment Tribunal claims

I’ll start with the big headline: Employment Tribunal claims (brought by individual Claimants) increased by 90% in the period between October to December 2017 (in comparison with the same period in 2016). To cut a long story short, the recent abolition of Employment Tribunal fees has led to Tribunal claims nearly doubling.

A small disclaimer is that the above statistic is currently a provisional figure, however, in reality, that figure tallies with my own expectations and experience over the past 12 months.

These statistics are slightly ironic given that, before the Supreme Court found Employment Tribunal fees to be unlawful, one of the main reasons the lower courts refused to find Employment Tribunal fees unlawful because there was ‘no evidence’ of the fees preventing individuals from accessing justice.

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:

Unpaid award penalties to be introduced in April

Section 150 of the Small Business, Enterprise and Employment Act 2015 provides for a new Part 2A to be inserted in the Employment Tribunals Act 1996 and entitled “Financial Penalties for Failure to Pay Sums Ordered to be Paid or Settlement Sums”. This brings into effect the much heralded and somewhat delayed procedure for imposing financial penalties on paying parties who do not make their payments on time. Notably, any lateness, even of a day or two, can trigger the process although there is a final opportunity to make payment before the fine is levied.

New section 37A confirms that the scope is financial awards made by an order in tribunal proceedings including costs and expenses and amounts ordered to be paid to the Secretary of State. The amount covered includes the initial award and interest. It does not include any amount awarded when the order can still be appealed. Where an award is payable by instalments and there is a default in making a payment when it falls due any remaining instalments are treated as falling due on the same date as the missed payment, i.e. the balance is treated as payable forthwith.

The new system provides for the appointment of enforcement officers. Where a default is identified an enforcement officer may issue a warning notice stating an intention to impose a financial penalty overdue payments are made by a specified date. If there has been a prior penalty notice a further one cannot be issued for at least three months since the end of the prior relevant period. the date for payment (the specified date) must be at least 28 days after the date of the warning notice and the specified amount must be the amount due on the date when the warning notice is given. Once served it is possible for the employer (assuming that the employer is the paying party) to make representations with a view to challenging the order.

If the employer fails to comply with the warning notice an enforcement officer may issue a penalty notice This requires the paying party to pay a financial penalty to the Secretary of State. If the unpaid amount is less than £200 the penalty is £100. If it is more than £10,000 the penalty is £5000. Otherwise it is 50% of the unpaid amount of the relevant sum.

Applying for fee remission

While we have employment tribunal fees one of the practical issues which has undoubtedly presented problems has been the procedure for applying for fee remissions. Back in July 2013 I highlighted the problems that have beset the fee remission procedure in the county courts and wondered whether the same problems would arise in employment tribunals. However, whereas the problem in the county courts has been a slack procedure, quite the opposite has been apparent in the employment tribunals. The application procedure for fee remission has been rigorously applied and the online procedure requires payment of the fee or a remission application. The remission application form is incorporated within 31 pages of detailed guidance which confirms, critically, that the application must be supported by evidence such as a letter from a Job Centre Plus or the DWP or evidence of income such as three months’ bank statements. What if there is a delay in obtaining that evidence, particularly taking into account the strict three months’ time limit for most employment tribunal applications?

Rule 11(1) of the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2013 provides that “The Tribunal shall reject a claim if it is not accompanied by a Tribunal fee or a remission application”.

As pointed out by Mr Justice Langstaff in the recent Employment Appeal Tribunal case of Deangate Limited -v- Hatley, Patterson and Kurtz “shall” is mandatory and there is therefore no room for the exercise of discretion. Deangate’s former employees submitted their applications online one day before the expiry of the time limit for claiming. However the applications were not “accompanied” by the fees or remission applications. Accordingly the employer contended that they should have been rejected. Had they been resubmitted each with the fee or a remission application they would have been out of time so that the tribunal would have no jurisdiction to deal with them.

However, the claims were accepted. Deangate Ltd complained and the matter was heard by Employment Judge Ferguson sitting in Colchester. She found that the claims had in fact been accompanied by remission applications or, in the alternative, pursuant to Rule 6 of the Rules of Procedure she had the power to correct any “irregularities and non-compliance with the Rules”. Each of the claimants had written in the section headed “Additional information” in the claim form ” “I have sent my application for fee remission by post”. The claim forms were submitted online on 13 February 2014 and the fee remission applications were sent by special delivery on 18 February, arriving on 19 February. The judge noted that the applications could not be submitted online because original documentation was required. The judge took the view that “it is a permissible interpretation of Rule 11 to treat remission applications made in this way as “accompanying” a claim form submitted earlier online”.

There is a common sense problem here concerning the meaning of “accompanied”. When first considered in the Employment Appeal Tribunal it was put this way:
This appeal throws up the meaning of “accompanied” in Rule 11(1).  It is an ordinary English word; and it is not immediately obvious that a fee payment or application for remission made 6 or 7 days later “accompanies” an application made 6 or 7 days earlier.  An analogy might be the 11 year old who turns up to the cinema alone, to see a film with a certificate which requires him to be “accompanied” by an adult if under 12 and asks to be let in on the basis his Dad will turn up two to three hours later… if similarly entry to the ET system has in law to be denied unless and until accompanied, by the time the fee application for remission can be matched with the ET1, the latter may be too late; the question is thus jurisdiction, since the ET has no discretion but to reject an unaccompanied ET1, and it was plainly reasonably practicable to put the ET1 in on time since (but for the fee payment) that was done… Rule 6 may not provide the escape route from these consequences which the Judge thought, though this is arguable: can an absence of jurisdiction be waived in the way suggested?
Since many claims had been accepted in the same way the Secretary of State for Justice intervened in the appeal.

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.

new employment tribunal rules

On Monday 29 July, new employment tribunal rules came into force, and the new tribunal fees regime is now upon us.
The rules have universally been greeted as a model of clarity, which just goes to show what can be done when you get your drafting done by experts who have a deep understanding of both law and practice.
Among the most significant changes:

– Cases are now looked at by an employment judge at an early stage to weed out hopelessly weak claims (and defences);
– There is just one type of preliminary hearing at which tribunals will be able to deal with any kind of prehearing issue;
– Tribunals are allowed to assess costs themselves instead of having to send larger claims to the county court;
– The need to apply for claims to be dismissed when withdrawn by the claimant has been removed;
– Claims will be rejected if the appropriate fee has not been paid (or remission application made); and
– Respondents are allowed to make applications for extra time to respond to a claim after the initial 28 day time limit has expired, and they have an opportunity to present reasons why a default judgment should not be given.

There are new claim forms and response forms and these must be used with effect from 29 July. The online claim form is preceded with a declaration that the claimant is either applying for a fee remission or agrees to pay the fee. In typically confusing fashion claimants are asked to confirm that they will pay the fee even if they are applying for a remission – more haste less speed!

fees payable for employment tribunal claims and appeals

On 29 May HM Courts & Tribunals Service announced that fees for Employment Tribunals and the Employment Appeal Tribunals will be introduced on 29 July.
Having been in the pipeline for some time now, a draft order allowing for the introduction of fees in these Tribunals, and giving full details of their levels and when they will be payable, has been laid before Parliament. Having said “full details”, many of the provisions allow for fees to be payable on “dates specified”, either in notices accompanying notices of hearing or in notices issued by the Lord Chancellor. Clearly we will need to wait and see the system in action before we know exactly when parties will need to get their cheque books out.
The Draft Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013 has prompted a surge in claim numbers as people seek to pre-empt the introduction of the fees regime.
They specify in Part 2 that fees in employment tribunal proceedings are payable:

when a Claim Form is presented (“issue fee”); and
on a date specified in a notice accompanying the notification of the listing of a final hearing of the claim (“hearing fee”).