On Monday 29 July 2013, fees were introduced in the employment tribunals and Employment Appeal Tribunal (EAT). All claimants in employment tribunal claims brought on or after 29 July 2013 (and appeals to the EAT) must now pay a fee to issue a claim and to proceed to hearing.
In this article, we explain the changes and we report on the judicial review challenges to the changes which have been lodged by UNISON in England and Fox & Partners in Scotland.
The case for introducing fees
The introduction of fees in the employment tribunals has been highly controversial, given that the principle of free access to justice for aggrieved employees and workers has not been changed since the introduction of the employment tribunal system in 1960.
The Government has stated that the aim of introducing fees is to transfer some of the approximate £74 million cost of running the employment tribunals and EAT from the taxpayer to those using the system who can afford to pay.
Employers will no doubt welcome any changes which may help to reduce frivolous or weak claims, but many believe that charging fees will disproportionately affect those who cannot afford to bring a claim, regardless of the strength of their case.
The Government has conceded that the introduction of fees may have the effect of deterring some claimants from bringing a claim, but it insists that the policy is not designed to reduce claims, only to transfer some of the cost from taxpayers. However, whilst the Civil Fee Remission scheme will enable low-earners and those in receipt of state benefits such as Jobseekers Allowance to obtain a full or partial waiver of fees, an individual with no income but as little as £3,000 in savings would be liable to pay the fee.
Judicial Review Challenge
Two judicial reviews of the new employment tribunal fees regime are currently progressing through the courts. UNISON and Scottish law firm Fox and Partners have both applied for judicial review of the introduction of fees. If either challenge is successful it will mean that fees across the whole of the UK would be declared unlawful. UNISON argues that fees would make it difficult to exercise individual rights conferred by EU law. It also argues that fees are discriminatory because they will disproportionately affect women on “average incomes” who will not be entitled to fee remissions. The union also submits that there has been no assessment of the potential adverse effect of introducing fees in relation to the proportions of claims brought by individuals with protected characteristics. On 29 July 2013, the application was given permission to proceed and it is due to be heard in the High Court in England in October.
Fox and Partners lodged their application in the Court of Session in Scotland. The firm argues that the introduction of fees will place unfair and potentially disproportionate financial burdens on employees. The full hearing will also take place in October and the Government has agreed that if the fees regime is found to be unlawful, all fees across Great Britain will be repaid with interest.
The fee structure
Pending the judicial review outcome, the new fee regime applies to all claims lodged on or after 29 July 2013. The fees are paid in two stages, an ‘issue fee’ payable on submitting the claim (or appeal) and a ‘hearing fee’ payable prior to the full hearing.
The level of the fee will depend on whether the claim is Type A or Type B. Type A claims comprise straightforward, lower value claims such as sums due on termination of employment (unpaid wages, redundancy payments and payments in lieu of notice). Type B claims comprise all other claims, including unfair dismissal, discrimination, equal pay and whistleblowing.
The fees for single claimants are as follows:
Tribunals will have the power (but not an obligation) to order an unsuccessful party to reimburse fees paid by the successful party. So it will cost an employee, who claims they have been unfairly dismissed or discriminated against, £1,180 to pursue their case through to a full hearing (subject to any application of the remission scheme). Different fees apply to group actions, ranging from issue fees of £320 to £1500.
The fee remission scheme currently allows claimants either a full or partial remission, based on their receipt of certain benefits, or their (and their partner’s) gross annual income, or their (and their partner’s) monthly disposable income. However, on 7 October 2013 a new eligibility test will be introduced based on receipt of certain benefits, a monthly income test, and a new disposable capital test. In short, those under 61 with a disposable household capital of between £3,000 and £8,000 will be required to spend up to one third of their disposable capital on fees, even if they are out of work.
The vast majority of trade unions oppose the fees, complaining that they are unjust when those bringing claims are likely to be out of work. UNISON and Unite have indicated that they will fund fees for their members, which may result in membership of a union becoming a more attractive option.
Only time will tell if the introduction of fees is an effective way of weeding out frivolous claims. There are those who believe a better way of reducing weak claims is to change the system for recovery of legal costs. In employment tribunals, costs awards are very much the exception rather than the rule, in contrast to the civil courts where, generally speaking, the unsuccessful party pays the winner’s costs. According to the last set of annual statistics, costs were only awarded in eight per cent. of tribunal cases.