Last week the Government finally produced its response to the consultation on fees in the Employment Tribunal. The full response, all 86 pages of it is available via the press release. In a controversial move, fees for commencing a claim and then taking it all the way to a final hearing will be introduced from the summer of 2013.
The rationale is to make Tribunal users contribute to the cost of the system they use,
“At present taking a claim to an employment tribunal or appealing to the EAT is free of charge and funded by the taxpayer. An alternative to using the employment tribunals is for parties to use Acas conciliation or other Acas guidance and assistance2, in order to resolve their dispute, which is also funded by the taxpayer. The fee proposals are therefore intended to relieve some of the financial burden on the taxpayer by requiring users of the employment tribunals and EAT to make a contribution to the cost of the service that they receive where they can afford to do so. The consultation invited comment on the proposed fee charging structures for introducing fees into these tribunals”. [1]
The aim of making users pay for the system they use rather than placing the entire burden on the taxpayer doesn’t seem objectionable in principle and is used in other areas of public finance, such as the railways for instance. But just as there is a public benefit in not pricing rail users out of travelling and thus forcing them onto the roads, there is a wider utility in ensuring that claimants can access justice. To achieve this the Government is proposing a two tier fee system, backed by a remissions and exemption system for those on low incomes. This ignores the problems faced by those people on middle incomes, thrown out of work and worried about paying their existing bills who will then be faced with having to find the cash to assert their legal rights.
If pre-litigation mediation/conciliation becomes properly and widely available, as the Government intends, that might answer this problem but many are sceptical of the ability of ACAS to cope with the flood of claims that will come their way.
The fee structure divides claims into Level One and Level Two claims. Level one clams are for unpaid wages, payments in lieu of notice and redundancy payments. The higher level is for all other claims, ie. unfair dismissal, equal pay, discrimination and whistleblowing.
The fees are further split into issue and hearing fees, meaning that to progress any claim a Claimant will have to pay to commence (issue) the proceedings and then pay a further, more substantial fee, to go to the final hearing. Figures in sterling, of course.
Issue Hearing
Level 1 160 230
Level 2 250 950
It is intended that a successful Claimant should get their fees refunded by the other side. Counterclaims in level 1 claims by employers will also attract a fee of £160.
Finally, there will be specific application fees, to cover one party applying to review a decision of the ET or to set aside a Default Judgment (both £100). An application to dismiss a claim will be £60. It was proposed, but has (thankfully) been rejected that a fee would be payable by a party seeking written reasons for the decision made. In a tremendously backward step, judicial mediation in the ET will attract a fee – proposed at £750 for a one day appointment, although initially discounted to £600 at first.
Multiple claims, that caused the Daily Telegraph so much difficulty when reporting on ET stats recently, will be charged at a rate per Claimant depending on the number of individuals involved, so 1 – 10 claimants will be charged at double the single rate, 11-20 at four times the rate and above 200 Claimants at six times the single fee. .
Appeals to the EAT will also be chargeable – £400 for issuing the Appeal and £1200 for the hearing.
The issue fees look expensive, but compare with the court system where an issue fee in a money claim has a variable fee between £35 and a whopping £1670, depending on the sum of money in dispute. A money claim for £73,200 (the maximum compensatory award possible by an ET) would attract a court fee of £685. The principle of a separate hearing fee has been around in the courts for several years now and depends on the “track” involved – a claim above £25,000 attracts a hearing fee of £1,090, which is broadly comparable with a level 2 ET hearing fee, save that an unfair dismissal claim will attract the same fee whatever the value of the claim.
Someone wanting to bring a clam for unpaid wages will now have to pay £390 to take the claim the whole way to a final hearing. That is a lot of money for someone who has not been paid their full wages, most likely people on low incomes in the first place. Will the need to pay a hearing fee lead employers to dispute the claims for longer in the hope that the claimant will not be able to pay? That’s a possibility but because each party bears its own legal costs in Tribunal proceedings, the employer will increase its own costs in adopting that strategy.
I can’t see the rationale for having a two tier fee structure. Presumably it is envisaged that there is more money at stake in an unfair dismissal or discrimination claim than in an unlawful deduction of wages claim and that may be so, but that doesn’t mean the Claimant is any better able to pay the fee, which will now be £1200 to get to the final hearing. The average award in unfair dismissal cases is around £4,000, which is hardly proportionate. It’s a regressive system and will hit the poorest hardest. Unions and legal expense insurers will also feel the pain as well, although maybe insurers will find more people take up before the event insurance to cover these fees?
The consultation is now closed and fees will be introduced in this (or some similar) form next year. Thereafter they will be increased in amount and widened in scope until, eventually, the fees system mirrors that used in the Courts, which is all the same administrative body (HMCTS) now anyway. Will we see a decline in the number of vexatious litigants in the system? Probably not. Will there be a reduction in the numbers of serial litigants? Hopefully, but does anyone know how many there are at the moment in any event?
- [1] Charging Fees in the Employment Tribunal and the Employment Appeal Tribunal – Response to Consultation CP22/2011