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Sow the Wind, Reap the Hurricane for UK Government in Tribunal Fee Fiasco

There was a great deal of entirely unfair schadenfreude directed at the Government last month over its abject failure to justify the Employment Tribunal fees regime in front of the Supreme Court. After all, apart from the report of its own Justice Committee, the views of everyone else from both sides of industry and all the statistics telling it consistently since 2013 that the fees were a deterrent to access to justice and were not weeding out weak claims, just little ones, how could it have known?

So now the fees have gone and already my inbox is filling up with desperate fliers from locum agencies heralding a “claims avalanche” and a surge in Tribunal case numbers back to pre-2013 levels.

They may be right, in which case the Tribunal infrastructure will shortly collapse unless urgent steps are taken now to rebuild the legal and non-legal staff complement so expensively shed since 2013 and to replace the premises vacated and merged into Combined Court Centres through under-use. This defeat will cost the Government far more than just the £32 million of fees which it is reported that it will now need to repay (ironically, in some cases presumably to the “bad” employers who were ordered to meet them as part of the compensation awarded).

Equally, those agencies may be wrong. This Court decision has no impact on the operation of the Acas Early Conciliation process which was introduced at about the same time. The 2016-17 annual report from Acas, out yesterday, shows that there were some 92,000 applications for Conciliation last year of which scarcely 6% were ruled upon by the Tribunal. Since 2013 the benefits of workplace mediation have also become a little better known and, for better or worse, it has become more apparent that you can lose your job and not necessarily need to do anything legal about it.

In addition, the Government may now try to salvage some shred of credibility in this respect by developing a replacement fee structure, but that approach would be misguided for at least three reasons. First, who is to say that any particular reduced level of fees would not be vulnerable to a similar challenge? Second, more prosaically, the lower the level of fees the less it becomes worth the administrative costs required to operate the collection system. Third, part of the Government’s purpose in introducing the fees in the first place was to weed out frivolous and vexatious claims, and any reduced fee level would have even less deterrent value in that respect than the current framework, i.e. none.

It has been suggested that the Government might impose a fee on the employer at the point where it lodges its defence. Really? So I have to pay for the privilege of being sued and if I win, then what? Does the Tribunal give me the money back, do I have to pursue the Claimant for it or do I just have to write it off as a cost of being in business and settle the next one irrespective of how malicious and baseless it may be (so encouraging exactly the sort of claim the fee regime was designed to inhibit)? Come on, BEIS/Treasury/Ministry of Justice, you have to be able to do better than that.

The way to deter frivolous and vexatious claims (and defences) requires no expensive or politically-charged changes in law and is the same as it has always been – to give Employment Judges more encouragement and freer rein to exercise their existing powers to make deposit orders and/or award costs against those acting unreasonably in the bringing or conduct of Tribunal proceedings. At present it is possible to behave fairly heinously in the conduct of Tribunal proceedings without effective sanction apart from (at worst) losing the case. There is decided authority, for example, that even overt lying in the Employment Tribunal will not necessarily lead to a costs order unless there was some connection between the lie and the costs incurred by the other party. However, if you bring claims or defend them without reasonable grounds to do so or if you behave dishonestly or obstructively then you should be put in a position where you realistically (rather than theoretically) have something to lose if you continue. That measure does not have to be fee-based.

Lessons for employers

Anyway, back to the avalanche. One obvious question here is how much of that would be made up of people who didn’t claim unfair dismissal in 2013-17, argue that the fee regime made it not reasonably practicable for them to do so and say that they should therefore be entitled to have a go now. After all, the Supreme Court has just accepted that fees have been a deterrent, hasn’t it?

This is a superficially attractive argument but not generally one for employers to fear.“Reasonable practicability” for those purposes means that the employee could not have brought the claim at any earlier point. As a result, not only does he have to show that he didn’t have the readies in the three months post-dismissal, but also that the fee remission scheme didn’t help (that part won’t be difficult) and that this has remained the position ever since. If he has found alternative employment since his dismissal then it was practicable for him to claim at that time notwithstanding the fee regime, and so he would now be out of time. For a discrimination claim, the question for the ET would be whether it was just and equitable to allow a claim now in respect of matters potentially up four years old. That would overlay the fee question above with consideration of the adverse impact of such a claim on the poor employer whose witnesses may long have forgotten, left or died. Again, a pretty tough one to get off the ground in the vast majority of cases.

© Copyright 2017 Squire Patton Boggs (US) LLP

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About this Author

David Whincup, Employment Attorney, Squires Patton Boggs Law Firm
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Following ten years at a Magic Circle firm, David has been Head of our London Employment practice since 1994. His expertise gained from twenty-five years as a specialist Employment Law practitioner covers a wide variety of employment-related issues, including in particular individual and team recruitment issues, policy and contract drafting, disciplinary and grievance procedures, individual and collective redundancies, the defence of employee discrimination and dismissal claims and other litigation, whistleblowing, employee health, data protection and matters surrounding...

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