Since 2013 it has been necessary for Claimants in Employment Tribunal proceedings to pay a fee to the Tribunal Service to pursue their claim. Last week the Supreme Court declared that this system of Employment Tribunal fees was unlawful because it restricted access to justice and was discriminatory. While this may not have been “…the most significant judicial intervention in the history of British employment law…” as UNISON has suggested, it was certainly an unexpected and impressive victory for the Union. The unanimous decision was a reward for the tenacious legal challenge which was pursued notwithstanding several earlier adverse judgments.
Within days of the decision the Employment Tribunal has taken steps to remove all references to fees in their application processes and the Ministry of Justice has accepted responsibility for refunding fees paid by litigants in cases pursued since 2013. It is not yet clear how the process of reimbursement of fees will be managed by the Ministry of Justice or whether the reimbursement will apply to Respondents who paid the fees of Claimants in successful claims.
Some commentators have suggested that the removal of fees will lead to a significant increase in Employment Tribunal litigation and business owners will rightly be concerned about the potential increased risk of claims. My feeling is that the situation is more complex than has been suggested and that it is presently too early to decide whether there will be an avalanche of litigation against businesses as some have suggested.
The introduction of Employment Tribunal fees in 2013 was controversial and unexpected. In 2010 I attended a meeting with the legal advisers to the Conservative Party (at that time in opposition), during which we discussed various suggestions for the development of policy relating to employment law and I was assured that the Party had “no appetite” for the introduction of Employment Tribunal fees. It was therefore surprising that within two years of that meeting the coalition government had instructed Adrian Beecroft to prepare a report considering various aspects of UK employment law. Adrian Beecroft is a city financier (and a substantial backer of the payday loan business Wonga) and it was never particularly clear what technical experience he possessed which qualified him to prepare this report. The Daily Telegraph reported that his motivation for “reforming” the Employment Tribunal process was driven by his experience of paying the £150,000 compensation to the former Human Resources Director of one of his businesses to settle Tribunal proceedings commenced following his dismissal. It is easy to suspect that the report was significantly influenced by this experience.
Many of the recommendations of the report were too extreme for the Conservative Party which refused to support the suggestion of “employment at will” (an American concept whereby employment contracts could simply be terminated without reason subject to a compensatory payment) and the abandonment of the right to flexible working. The introduction of Employment Tribunal fees, together with an increase in the qualification period before which an employee could pursue an unfair dismissal claim were supported by the coalition government and were introduced in 2013 (with strong dissenting views from Vince Cable and others). Given this rather troubled background it was perhaps inevitable that the introduction of Employment Tribunal fees would continue to attract adverse comment, but the unanimous decision of the Supreme Court is a significant indictment of political attempts to restrict or fetter access to justice.
Following the introduction of Tribunal fees there was a significant and sustained reduction in the volume of Tribunal litigation and “pro business” campaigners heralded this as vindication and an example of the removal of “red tape” which restricted business success. It was widely reported that there had been a decline in the level of Tribunal litigation of about 70% in the years following 2013. One obvious conclusion is that that if the introduction of fees resulted in a 70% drop in the level of litigation, the removal of fees may lead to a corresponding increase. I suspect that while there will be an increase in the level of litigation it is far from certain that this will be a return to pre-2013 levels.
The introduction of Tribunal fees coincided with two other policies which also impacted the level of Employment Tribunal litigation in the UK. The other measures were the increase in the qualification period to pursue an unfair dismissal claim and the mandatory requirement that a Claimant would engage in ACAS “pre-claim conciliation” prior to being allowed to commence a Tribunal claim. The unfair dismissal qualification period has been repeatedly “tweaked” by governments over many years. Originally a period of six months it was extended by Conservative government to two years and subsequently reduced to 12 months by a Labour government. In 2013 the period was again increased to 2 years which meant that any employee who had a shorter period of service with their employer was prevented from pursuing an unfair dismissal claim (unless it was for a small number of claims which did not require a qualification period).
My suspicion is that it is simplistic to argue that the reduction in the volume of Employment Tribunal litigation was solely due to the introduction of Tribunal fees. The fee regime provided an exemption for Claimants who were on a low income (logically a significant proportion of Claimants who had just lost their job would probably have been in receipt of benefits and would therefore have qualified for this exemption) and many other Claimants were able to access financial support from unions or other sources to cover the cost of starting a claim. I consider that there is likely to be a significant increase in Tribunal litigation following the return to the “cost free” access model but I am not convinced that this will be as much as the 70% figures which are being suggested by some sources.
Given the probable future increase in levels of litigation and the return to “zero cost option” of starting a Tribunal claim, it is a good time for businesses to review their policies and procedures which could conceivably lead to a claim. Most unfair dismissal claims usually result from a flawed application of a disciplinary policy, or a defective policy which does not reflect modern “good practice” and a review of business policies could identify and correct and weaknesses before they result in a claim.
I offer any new Client to my practice a free review of their disciplinary policies which includes advice on any weaknesses, or potential alterations/improvements to their existing policies. Why not contact me to take up this free offer and have the security of knowing that your business policies are fit for purpose in the face of an increased risk of potentially expensive employment claims.
Contact me now on 0330 2233288