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Employment tribunal fees wreak havoc

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15th Aug 2013
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Controversial new employment tribunal procedural rules came into force on 29 July which now require employees to cough up to £1,200 for unfair dismissal and discrimination cases.

The government’s purpose in introducing fees was to weed out the many vexatious claims that waste the valuable time of employers and that have no chance of success, as well as attempting to reduce the overall number of claims that are made. It insisted it was right to take some of the £74m cost of workplace disputes away from the taxpayer.

Business groups mostly came out in support of the changes, agreeing with the government that they will help reduce speculative or weak claims.

However employee bodies criticised the move as unethical and an attack on justice. They argued other first-tier tribunals do not require issue fees and that it will prevent people from exercising their employment rights.

AccountingWEB members, many of which have small business clients, came out on both sides of the fence in a recent Any Answers thread debating the new fee paying system.

On whether bosses would now be less likely to obey their legal duties because of the reduced risk of a challenge by staff, Maslins said he didn’t feel employers would act any differently. However he added that while it will diminish the number of ridiculous claims, it will also reduce the number of valid claims from people who have been poorly treated but don't have the funds.

Steve Kesby raised the issue of the reduction in legal aid funding, adding that while vexatious claims should be eliminated, he was against “making justice a luxury”.

Paul Scholes agreed that for most businesses this sort of extra obstacle to the employee was just unfair: “Surely, it would make sense for the tribunal to be able to charge for vexatious claims, only if they are vexatious?” he asked.

ShirleyM later agreed that making the instigators of vexatious claims liable for costs would do the job much more fairly.

However on the other side of the argument awoodj said that the previous “one sided costs” involved meant that employees could effectively blackmail employers for a settlement.

“Hopefully this change removes that option and only people with a valid claim will bring forward actions,” awoodj said.

Other support for this line or argument came from mr. mischief who referred to a tribunal case locally where an employee sued for unfair dismissal after one day on the job.

Glennzy also pointed out that the average cost of defending a claim was £12,000 – “a huge cost to a company in current climate”, he said.

“For me the problem is anyone can file the forms which start the ball rolling for the employer to defend. Someone within the tribunal service or ACAS should review the claim to see if it has any merit before it is allowed to progress nipping duff claims in the bud.”

Steve Kesby added that the way to protect employers would be to improve the procedures and to stream cases, as happens with tax tribunals.

Tribunal fees explained

As of 29 July, if an employee wants to issue a claim against an employer in the employment tribunal, they will be required to pay a fee first.

This involves payment of an issue fee both at the time the claim is lodged at the tribunal, and when it is brought to an actual hearing.

The fees for a single claim are:

Level 1 claims

  • Straightforward matters such as unpaid wages, payment in lieu of notice and redundancy payments
  • Issue fee £160
  • Hearing fee £230

Level 2 claims

  • All other claims, such as unfair dismissal, discrimination, equal pay and whistleblowing
  • Issue fee £250
  • Hearing fee £950

In addition further fees will have to be paid for any preliminary hearing (£100), EAT fees of £400 for an issue fee and £1200 for the hearing fees and any multiple claims will attract both higher issue and hearing fees.

There will also be a scheme for those on lower incomes where they can apply to have the fees waived.

The “without prejudice” discussions can still happen between employees and employers, but under the new rules, employers will be able to engage in “pre-termination negotiations” with an employee even where no formal dispute has yet arisen.

The new law also allows employers a free reign at any time to enter termination discussions with their staff without fear of it being used against them.

The changes also mean now the maximum compensation that can be awarded for routine unfair dismissal claims is the equivalent of 52 weeks' pay or £74,200, whichever is the lower.

This means that securing more than a year's salary is out of the question, no matter how long it takes you to find another job.

Do you agree or disagree with the introduction of employment tribunal fees?

Replies (12)

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By neiltonks
15th Aug 2013 15:20

Difficult

This sort of thing is always difficult because there are good arguments on both sides.

On one hand it will certainly reduce the number of claims and the cost to businesses. This is generally a good thing in the case of weak claims.

The problem with the changes, however, is that they'll also reduce the number of valid claims, which is less easy to justify.

The presence of the fees plus lower awards will make pursuing a claim not financially viable in many cases. In particular, people paid at or near the minimum wage will almost always find that the fees outweigh any award.

So, we have to consider  whether it's morally defensible to have a system of justice which is only available to higher earners. If this were tried in other parts of the justice system, most people would say it were wrong. For example most people would probably say it would be wrong to require the victims of a crime to pay a fee in order for the case to be taken to court by the CPS.

So overall I don't disagree with the concept of people making silly claims being made to bear at least some of the cost of their actions, but I don't agree with the current implementation of charges.

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By User deleted
15th Aug 2013 16:00

Before diving off at the deep end ...

... it helps to read thoroughly. Seems this part was overlooked:

There will also be a scheme for those on lower incomes where they can apply to have the fees waived

I would go further - if any employee is unable to have his fee waived in advance, there should be provision to waive that fee, regardless of income, if the Tribunal finds in his favour. And where the Tribunal finds in favour of the employer in vexatious cases (the difficulty being in defining such) the Tribunal should have the discretion to award costs against the plaintiff. That alone ought to make a huge dent in the number of silly claims.

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Replying to The Accountant:
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By B Roberts
15th Aug 2013 17:38

?

BKD wrote:

... it helps to read thoroughly. Seems this part was overlooked:

There will also be a scheme for those on lower incomes where they can apply to have the fees waived

 

What does "lower income" mean - how much is this ?

What is the "application" process ?

 

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By User deleted
16th Aug 2013 08:19

? back at you

What does "lower income" mean - how much is this ?

What is the "application" process ?

I've no idea. Ask Robert - he wrote the article.

The point I was mking was that some folk are only too ready to jump in with both feet and criticise without full consideration of the facts.

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By User deleted
16th Aug 2013 10:54

Not at all

The 'fact' in this case is that Robert referred in his article to a form of relief for low income employees. That is the fact that appears to have been overlooked, there is no need to consider it further.

How effective that relief may be is the subject of a separate discussion. I'm tired of this particular exchange - if you want to have another pop at me, feel free.

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By ShirleyM
16th Aug 2013 12:36

Legal Aid hasn't changed, as far as I am aware.

There will also be a scheme for those on lower incomes where they can apply to have the fees waived.

The article doesn't mention legal aid, it just mentions that a scheme will be introduced to waive the fees.

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By User deleted
16th Aug 2013 14:38

Still missing the point

Nowhere does Robert link the "scheme" to have fees waived for low income employees to Legal Aid.

(Although the amount of fee remission may depend on whether the claimant is in receipt of Legal Aid, the tests for detemining the amount of relief have otherwise got nothing to do with Legal Aid so it is therefore, as Shirley suggests, a red herring as far as this thread is concerned.)

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By ShirleyM
16th Aug 2013 14:29

Oh dear - you read more into my words than intended

Have I hit a nerve? The masses of bold type seems to indicate so!

I know about the April 2013 changes. We were discussing employment tribunals.

I hope you feel better now you have got it off your chest. I imagine many (most?) people agree with you, but your post is slightly off-topic as it refers to legal aid in general, rather than in respect of employment tribunals.

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Replying to DAW:
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By User deleted
16th Aug 2013 14:53

Basis of remission

Rob P wrote:

[As regards the fees being waived for low income employees which BKD refers to, This comes under the current regime for court fee remission, which (although slightly more complex) essentially boils down to only allowing fee remission for anyone on certain benefits and with under a fairly low amount of capital.  

You need to read the guidance - remission is not based on capital, it is based on benefits and/or income levels. One can argue about whether the levels are reasonable - personally, I think they are and with the partial remission for fees over the 100% income levels not unaffordable.

That said, I am still of the opinion that any fee should be subsequently waived in the event of a decision in favour of the employee - and with the discretion to award further costs against the employee in cases of vexatious claims.

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By ShirleyM
16th Aug 2013 14:44

Going well off topic now ....

... and Henry will probably shoot me ... but justice has NEVER been fair. It has always been 'fairer' to the wealthy who can afford expensive barristers and buy 'selected' expert witnesses.

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By jiatbanus
22nd Aug 2013 11:14

LAW and JUSTICE are not the same thing.

It would help employers if Job Centre staff were not trained to encourage ex employees to go to Tribunals, irrespective of the strength of a claim.  Recent example : an aggrieved employee was encouraged to apply for unfair dismissal. He was assisted by his Trade Union. On submission of the response from the Employer, the Solicitor for the Trade Union encouraged and succeeded in having the ex employee drop the case. It was cancelled - and then re-instated because the Civil Servant suggested there could still possibly be a case to answer. This was and is an on-going enormous cost in time and effort for everyone except the Civil Servant. For this reason I am in favour of substantial fees, not necessarily up front, payable by the claimant. Regretably, this would further encourage the many biased Tribunal Chairmen to find in favour of the speculative claimant resulting in further appeal costs.       

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By brifoz
22nd Aug 2013 16:47

Employment Tribunal Fees

I agree that spurious claims should be filtered out, but this legislation means only those on lower incomes will be barred. Surely any claim for unfair dismissal after one day would not reach a tribunal anyway.

I have experienced a tribunal from the employee's side first hand having been unfairly selected for redundancy at the age of 59. I won my case both for unfair dismissal and for age discrimination, but it was a long, drawn out process which took two years. The amount of compensation was pretty small, considering the amount of money I lost in the years following. The problems were these.

1. Although I never took the action purely for the money, but rather the principle, the amount I had to pay for for legal assistance was around £5,000, leaving me little left out of the compensation received. In Employment Tribunals, the claimant is not awarded costs if s/he wins.

2. I conducted the case at the Tribunal entirely by myself. The other side had a barrister. I had to go over every last detail of the case and face some pretty aggressive cross-examination by the barrister.

3. On the one hand the Claimant has to demonstrate that s/he has made an effort to earn a good income since being dismissed. On the other hand any earnings s/he manages to get are deducted from any potential compensation!

So I only managed it because I knew I had a strong case, kept very thorough records of everything, was very determined and had experience as a teacher of speaking to large groups of people.

In other words, the odds are are already in many ways stacked against the employee, so this recent legislation is very unjust, as anyone without these resources stands even less chance now.

 

 

 

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