Tribunal fees: balancing the process, balancing the books, or a deterrent to justice?

The introduction of tribunal fees has been controversial for employment claims. Prior to such fees being in place many in the business community felt that a potential claimant had little or no financial risk in issuing a claim against an employer/former employer. The perception amongst businesses and their legal representatives was that the introduction of tribunal fees would help limit spurious claims that had previously cost a claimant very little, and a business significant amount of time and money.

The risk to a business if they lose at an employment tribunal was, and remains, severe. It can result in significant financial loss, and losing an employment tribunal can be fatal for smaller businesses. This risk created a reluctance to employ a full complement of staff in order to limit potential exposure.  With the economic crisis a need to alleviate the pressure on struggling businesses became a priority for the government. Many businesses were not prepared to risk hiring additional staff for fear of unsubstantiated claims if they subsequently had to let them go.

Government has historically faced significant costs in operating the employment tribunal without any issue or hearing fees becoming payable. It is reasonable that some form of redress on the system should have taken place to strike a fair balance to all sides.

Was the regime introduced the correct one?

Since the introduction of fees for claimants the number of claims brought has dropped considerably. However, the proportion of successful claims has broadly remained the same. This raises questions about whether or not the introduction of fees has prevented spurious claims being brought, or has simply prevented individual’s with less financial clout from doing so. For high earning employee £1300 tribunal fee may not seem excessively high. However, for the employee on minimum wage such a sum is potentially insurmountable.

A fee remission process is in place with the aim of allowing better access to justice for all. However, for whatever reason fee remission has not been widely used. The result is that whilst the County court claims have become more accessible for members of the public, through the small claims track, employment tribunals are becoming increasingly difficult for employees without significant financial clout.

Many solicitors do not offer a “no win no fee” agreements for prospective claimants. In the cases where solicitors do consider this type of arrangement the prospects of success and a decent financial settlement are required. However, such an agreement  will not cover disbursements such as the tribunal fees. If a person cannot afford such fees then they may not want to enter into such an agreement. Most CFA’s will have a clawback option for the solicitor to recover their fees if the client pulls out of the agreement. In theory a claimant could face a difficult choice between paying a court fee they can’t really afford, or face a claim for significant fees from their own solicitor if they pull out. A realistic assessment needs to be made at the outset. This has created a disadvantage for potential claimant’s with little or no assets.

What about ACAS?

The introduction of ACAS early conciliation has provided some assistance for all parties. Whilst negotiation is ongoing the employment tribunal limitation period is placed on hold. This alone is a great assistance to many potential claimants as it allows greater time for them to factor in paying the initial issue fee. However, if potential claimants cannot afford employment tribunal fees, do not have legal expenses insurance or a union backing can face a difficult choice. If the business they are claiming against does not wish to negotiate they may risk financial hardship in order to bring a claim. If a derogatory sum is offered they may need to consider this in light of their inability to pay a tribunal fee, as opposed to the merits of their claim.

The valuation of claims can still be unrealistic

Under the current and previous system, inflated schedule of loss calculations have been an issue for employers. It is natural that a claimant will look to recover as much as they potentially can, and this is only right. However, in some instances the amount is unrealistic and can have a negative impact on any chance of settling a matter without a tribunal hearing. Given the relatively low risk of costs becoming payable by the losing party there is not a great deal that can be done to counteract such a tactic.

Under the proposed changes clause 56 of the criminal Justice and Courts Bill discrimination claims in the employment tribunal may be thrown out if the claim is held, on the balance of probabilities, to be fundamentally dishonest. This could mean in the future that inflated schedules of loss may be at risk of being thrown out.

Time will tell whether or not this bill will impact upon the employment tribunal

Is there a solution?

The current system has flaws and the implementation in the employment tribunal has not yet struck a balance between protecting employers from spurious claims and allowing claimants access to justice. However, this does not mean the concept of a tribunal fee is uncommon. A method of limiting the fees to the amount being claimed would be a better system. Claims at the lower end of the spectrum would be more viable if the tribunal fee reflects the value of the claim.  

Spurious claims face a greater risk of financial loss than they have previously. It is at the discretion of an employment judge to order a party to pay the other sides cost in cases where a party has acted unreasonably. The risk though is not usually a high one. For higher value claims an introduction of the loser of a tribunal paying costs may provide a better deterrent to take an unreasonable claim to the Tribunal hearing.

At the moment and unhappy balance exists and currently access to justice is not working for many potential claimants. However the return to the previous system would not result in a fair system, but would simply shift the injustice onto businesses.