Major employment tribunal reforms on the way

30/07/2012 in Employment

The Government’s confirmation of its plans to introduce employment tribunal fees in 2013 coincided with the publication of an independent, fundamental review of the Employment Tribunal Rules.

Charging fees for ET claims

Earlier this year, the Ministry of Justice conducted a public consultation on potential options for charging employment tribunal claimants fees in order to bring a claim. The response to the consultation has now been published, recommending that a regime of fees should be introduced from summer 2013.

Under the proposals, claimants would have to pay fees to in two stages - firstly to issue the claim and secondly to proceed to a tribunal hearing. The amount of the fees will depend upon the type of claim:

• Level 1 (straightforward claims such as deduction from wages or redundancy pay) will cost £160 to issue and a further £230 for a hearing
• Level 2 (more complicated claims such as unfair dismissal, equal pay or discrimination) will have a £250 issue fee and then cost £950 to bring to a hearing

Claims with multiple claimants will cost more: the fee for proceedings with two to 10 claimants would be twice the individual claim fee. This would increase to four times the individual fee for between 11 and 200 claimants, and six times the individual fee for over 200 claimants.

The consultation response is not, however, clear about what happens when an individual brings multiple claims. The consultation document suggested that where someone brings multiple claims, he or she should simply pay the fee for the most expensive type of claim brought rather than a fee for each claim. The response is silent on the issue, but most likely this is still the intention.

Judge-led mediation is generally going to be a cheaper option at £600, particularly for the claimant because it would be payable by the employer. There will also be a fee for various other applications, such as: an application to set aside a default judgement (£100); an employer’s counterclaim to a breach of contract claim (£160); an application for review of a tribunal decision (£100 for level 1 and £350 for level 2 claims).

The fee for bringing an appeal to the Employment Appeal Tribunal (EAT) would be £400 to issue it and £1,200 for the hearing.

There will be no exemptions from the requirements to pay the above tribunal fees. However, in order to protect access to justice, the remission system which currently excludes low-income applicants from paying fees for County Court and High Court actions would be extended to tribunal claims.

In addition, tribunals will be able to order the unsuccessful party to reimburse the fees paid by the successful party – although this will be at the judge’s discretion rather than automatic

Employment Tribunal Rules

Last November, the Government asked Mr Justice Underhill, a former president of the EAT, to conduct a “fundamental review” of the Employment Tribunal Rules, with a view to ensuring that cases can be managed proportionately, quickly and cost-efficiently. In addition, the review was targeted at making the rules simple and easy to follow, and the system as standardised as possible with like cases being treated alike. Underhill J has now come up with several recommendations and has supplied a new set of draft rules, which are around half the length of the existing ones.

Noteworthy changes in the proposed new rules include the following:

• Revised ET1 (claim) and ET3 (response) forms – Underhill J has not yet published these.
• A “sift” stage, where a tribunal judge considers the claim and response forms at the start of the proceedings in order to identify necessary directions (e.g. for further information) and to strike out weak cases.
• Allowing a request to present an ET3 late to be made after the original claim deadline has elapsed. (Currently, the request must be made before the original deadline has expired.)
• Combining “pre-hearing reviews” (in which a tribunal determines if a case is so weak that the employee has to pay a deposit to continue with it) and “case management discussions” (where the tribunal gives directions for the conduct of the hearing, such as preparing and exchanging witness statements) into the same hearing - to be called a “preliminary hearing”.
• Allowing tribunals to timetable oral evidence and submissions and enforce this by means of a “guillotine”.
• Enabling tribunals to assess cost orders of more than £20,000. (These currently have to go to the County Court to assess the amount recoverable.)
• Making the rules on restricted reporting orders and anonymity more flexible, giving tribunal judges greater discretion.
• Provision for the Presidents of the Employment Tribunals to issue non-binding guidance on good practice. This would be designed to inform users what they can expect at different stages and ensure consistency between judges.
• Streamlining the process for withdrawing a claim, so that the other party does not have to apply for the claim to be dismissed after it has been withdrawn.
• Simplifying the procedure for setting aside default judgements.

Certain of Underhill J’s recommendations would require changes in primary legislation in order to bring them into effect. These include:

• Giving tribunals power to apportion the damages between respondents, when more than one person is liable for discrimination. (Currently, both respondents will be liable for the full amount.)
• Allowing a winning party to recover the costs of instructing a lay representative. (This is not currently possible.)
• Providing that deposit orders can be limited to particular issues, rather than the full claim as at present.

The Government has broadly welcomed the proposals as “sensible” and said that a formal consultation on the review will follow later this year. Otherwise, the timetable for implementing the new rules remains unclear.

Commentary

The introduction of fees for employment tribunals is obviously hugely controversial, but the Government seems determined to plough ahead despite the widespread concerns and dissatisfaction evident in a large proportion of responses to the consultation. Ministers are quite open about the fact that the main purpose in introducing fees is to move some of the costs operating the tribunal system onto the users and relieve the burden on the taxpayer.

The Government also suggests that fees will encourage parties to try alternative methods of resolving disputes first, before resorting to litigation. But how likely is this to happen? Employers may take a harder line if they know a claimant will have to pay to issue proceedings and again for a hearing. Equally, once the hearing fee has been paid, claimants feel they have paid for their “day in court” and be less inclined to settle.

Whilst the focus of the fees proposal has moved away from the idea of deterring weak and “vexatious” tribunal claims, this will undoubtedly be one of the outcomes. But fees are a blunt instrument which will impact on meritorious and unmeritorious claimants alike. Even taking into account the extension of the civil courts remission scheme to tribunals, we may well see employee groups mounting legal challenges to the fees regime on “access to justice” grounds.

A more robust costs regime or more effective claims management of the type advocated by Underhill J would seem to be better targeted methods of dealing with unmeritorious claims. Yet arguably, tribunals already have significant powers under the existing rules to weed out weak and invalid claims but often fail to make effective use of them.