On 29 January 2024 the government published a consultation paper on the introduction of fees for Employment Tribunals (ET) and appeals to the Employment Appeal Tribunal (EAT), says Adam Lambert.
The consultation period ends on 25 March 2024, and some have predicted that fees could be introduced by November, before the next general election.
The proposed scheme is simple. A flat £55 issue fee will be charged for bringing any kind of ET claim, and a further flat fee of £55 will charged for any appeal to the EAT. There are limited exemptions, for example where an individual is claiming payments from the National Insurance Fund, such as unpaid pension contributions or redundancy payments, where the employer is insolvent. Also, where individuals are assessed as having little or no disposable income, there may be a partial or full fees refund under a “Help with Fees” scheme.
The government’s stated rationale for introducing fees is to contribute towards the running costs of the ET, EAT and more indirectly the ACAS conciliation and arbitration service. However, is the contribution worth the trouble?
In 2022/23 the direct costs of the ET/EAT were around £80m, with ACAS funding at around £58m. This gives a total figure of £138m. The government estimates that the introduction of a £55 ET/EAT fee will raise between £1.3-1.7m from 2025/6 onwards (once the scheme is up and running). So on a good day the new fees represent a contribution of around 1 percent of ET, EAT and ACAS costs.
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However, this is not the government’s first rodeo introducing ET/EAT fees, and the (quite recent) first attempt was not a success.
The previous fees regime
In 2013 the coalition government introduced, for the first time, fees at the ET and EAT. These were far higher than those recently proposed. Briefly they divided ET claims into Type A claims and Type B claims:
- Type A claims were straightforward disputes such as unlawful deductions from pay, and breach of contract – they had an initial issue fee of £160 and a hearing fee of £230;
• Type B claims were more complex claims such as unfair dismissal (including whistleblowing) and discrimination claims – they had an issue fee of £250 and a hearing fee of £950.
• For both type A and type B claims, an appeal to the EAT required an issue fee of £400 and a hearing fee of £1,200.
These were relatively high, especially by comparison to the proposed new fees. The results of the new fees were drastic. In the first quarter after the introduction of the 2013 fees there was a 79 percent reduction in tribunal claims and in the first full year a 53 percent reduction. As the ET lists quickly cleared, practitioners found that cases were sometimes being scheduled in the next three months rather than in the next 12-18 months, possibly because Employment Judges had empty calendars to fill.
However, the new regime was short lived. Unison challenged the lawfulness of the scheme and, in 2017, the Supreme Court ruled that the legislation requiring fees to be paid was unlawful. It was held that the fees prevented access to justice and were in practice unaffordable. The fees paid between 2013 and 2017 had to be refunded by the government, to the tune of around £27m.
Why is the government re-introducing fees?
Bearing in mind the recent past, that is a good question.
The proposals have already met with a hostile reception in some quarters. TUC General Secretary Mike Nowak commented that the proposals show government siding with “bad bosses” and that the government is making it “…even harder for working people to seek justice if they face discrimination, unfair dismissal or withheld wages”.
The official government rationale is possibly best summed up by MP Mike Freer, who commented in the introduction to the proposals:
“The Ministry of Justice has carefully considered the 2017 Supreme Court ruling on the previous approach to fees in employment tribunals and has endeavoured to ensure that the fees proposed in this consultation are proportionate and affordable, in line with the judgment”
So the rationale seems to be that the fees were too high the first time round, and lower fees this time might keep the likes of Unison and the courts at bay. This is not quite consistent with the Supreme Court’s thinking in 2017 – the court did not focus on the level of fees, more the idea of fees per se.
However, we can speculate:
- The idea of the ET/EAT system being better funded by users is rational and in line with other legal forums, such as the High Court and County Court. However, as mentioned above, the proposed fees are so low they hardly touch the sides. A contribution of 1 percent seems barely worth the administrative costs of preparing the proposals, going through a consultation, and passing/implementing the legislation.
• It might be the case that the government, acutely aware of the 2017 Unison judgment, is trying to strike a balance between pitching the fees at a low level to avoid litigation, but at the same time creating a small contribution from users. Maybe this is the start of higher fees by stealth? Perhaps if the government can establish ET/EAT fees of £55 without a legal challenge (or without a successful legal challenge), then the fees can gradually be increased over the next 4/5 years and, allowing for inflation, return to 2013/17 levels. This is possible, but with the TUC and Unison watching like hawks, stealth is a tall order, and seems unlikely.
• When fees were introduced in 2013, there was an overall reduction in cases of just over 50 percent. Practitioners soon noticed that the numbers of unmeritorious claims reduced even more, and the overall quality of claims improved. Unmeritorious claims, even for relatively low sums and brought by litigants in person, can be expensive and difficult for employers to defend. This was good for respondents, who saved time and costs.
• However, the point raised above is red meat for the TUC and Unison, as the imbalance between wealthier claimants who can afford the fees and poorer claimants who cannot, only provides more ammunition for the union side, who can make the argument that poorer claimants are denied access to justice, the major finding of the Supreme Court in 2017.
• Ultimately, the reasoning could be very simple. The government could be introducing fees that, although low and not making a significant contribution to ET/EAT costs, are low enough to dissuade union litigation and at least give some small contribution to the running of the ET/EAT system – and in addition might make truly vexatious claimants think twice about bringing claims.
We shall wait and see whether the fees are actually introduced in a volatile election year and, if they are, whether Unison will bring another legal challenge.
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Adam Lambert is a Partner and Head of Employment & Labor – UK at BCLP.
David von Hagen is a development lawyer at BCLP.
