Introduction of fees for employment tribunals

From Monday 29^th July, anyone making a claim in employment tribunals will face a number of fees. Here Daniel Wilde explains the new system and considers the impact it may have for employers and employees. 

These dramatic changes to the employment tribunal system have come about partly in response to the government’s dramatic cost cutting agenda. With charges for running the employment tribunals estimated to be £84million a year, this is part of their plan to reduce spending and transfer the costs to the people actually using the system.

The government also hopes that the introduction of fees will encourage those involved in employment disputes to attempt to resolve their differences through other means, such as mediation, promoting early settlement, thereby freeing up the tribunals’ system and reducing costs further.

The fees themselves will be broken into either a Level 1 or a Level 2 claim. Level 1 will include claims for unpaid wages, breach of contract, equal pay, holiday pay and redundancy pay. Level 2 claims will include more complex issues such as unfair dismissal, discriminations and detriment.

A claimant bringing claims in both Level 1 and 2 will pay the fee relating to the highest claim level.

Employment tribunal fees

Whilst the government has stressed that the fee introduction is not intended to deter claims, there is legitimate concern that these changes will reduce access to justice by making it more difficult for claimants to bring valid claims, and deterring some from doing so at all.

Many employers see the move as a positive one, hoping that it will bring a drop in spurious claims from disgruntled employees and subsequently a reduction in potential legal costs.

Despite the government’s hope that the fees will increase mediation, this may not happen in all cases. Employers with deep pockets will know that even if they face the issuing of a claim they will be able to ‘wait it out’ rather than settling in the knowledge that the claimant may not be able to afford the hearing fee and will have little choice than to withdraw their claim or settle on less favourable terms.

However, while the changes may indeed put off those with weaker claims, there will still be financial support for claimants with insufficient income to pay the relevant fees so employers shouldn’t see these changes as reducing the risk of claims entirely.

The remission system of fee concessions means that the fees will be judged on financial grounds alone and not the merit of the case. For example, if a person is on job seekers allowance or income support (which is highly likely if they are contesting issues surrounding losing their job), then they are likely to have their fees paid in their entirety.

Some claimants will also have legal expenses insurance (through their home or car insurance) and this may mean that their insurers will cover their legal fees, enabling them to pursue their claims without financial implications.

Should a claimant be successful, in all likelihood the judge will order the respondent to cover their tribunal fees in their entirety. It is also likely from Spring 2014 that the government will enable tribunals to fine employers up to £5000 for serious breaches of employment legislation.

Ultimately, these changes are still likely to have a detrimental impact on those who do not qualify for fee remission but lack enough disposable income to make a claim in the first place. There are bound to be people who lose out through the new system.

Daniel Wilde is a Partner and Head of Employment Law at law firm, HardingEvans