5 consequences of the decision to quash employment tribunal fees

Related Sector: Witness Familiarisation, Investigations

As the dust settles on the Supreme Court’s momentous decision in R (on the application or Unison) v Lord Chancellor Graham Watson, Bond Solon trainer and subject matter expert on employment law, considers the likely consequences of removing the requirement to pay fees in employment tribunal proceedings.

Most employers will now be aware that on 26th July 2017, the Supreme Court quashed the Employment Tribunals Order 2013 (the “Fees Order”) declaring it to be unlawful ab initio. Claimants to employment tribunals will no longer be required to pay a fee in order for their claim to be issued, or for their case to be heard.

Only time (and more statistics!) will tell what effect this will have, but some sensible predictions can be made as to the immediate future. Employers can expect to see the following:

1. A change in sentiments
   When the Fees Order was originally introduced, there were some who thought that it would provide much needed balance to a tribunal system bogged down by unmeritorious claims, populated by litigants who had little incentive not to sue. The Supreme Court’s decision changes that. It restates the social importance of employment tribunals, and derives that purpose from the imbalance of power in an employment relationship - where employer and employee cannot be equated with large organisations with each other on an arm's length commercial basis. Instead, Parliament intervenes to protect the less powerful party using employment legislation - for example, through the right not to be unfairly dismissed. Employers can expect to ‘feel’ this change from their employees during litigation, and perhaps in the workplace more generally.
   
   
2. An increase in claims
   When the Fees Order first came in, there were audible gasps from employment lawyers, fearful of its impact on their practice. They were right to be concerned. The number of claims fell in the region of 60-70%, a drop so substantial that employers were legitimately able to factor in this reduced risk when taking decisions about employees. This will now change. The number of claims will inevitably increase, and so will the risk profile.
   
   
3. A new fees regime
   The Supreme Court based some of its decision on a comparison between the fees payable for a small claim in the County Court, and the fees payable in the employment tribunal. The latter were higher, and could operate as a deterrent to bringing a claim. They clearly did. In particular, low value claims appear to have been hit hard. The Supreme Court did not however say that the requirement to pay a fee was in principle unlawful. It was only where the charging of a fee restricted access to justice, or rendered the point of bringing a claim futile, that it became unlawful. Employers can therefore expect to be consulted on the introduction of a new fees regime, where the proposed charges are less, particularly for low value claims. The news fees are likely to be less than or similar to those charged in the County Courts.
   
   
4. A focus on costs
   Until a few years ago costs have been something of an afterthought in the employment tribunal, available only where a party has behaved unreasonably. A successful party in the employment tribunal did not get their costs ‘as of right’, as they normally would in a civil case. That situation was changing, with the number of costs orders, and the amounts awarded both increasing. Employers can expect that trend to continue. With the ‘deterrent’ of fees removed, the award or the threat of a costs award against an unsuccessful Claimant is one way in which the system can protect employers against unscrupulous or vexatious litigants. Employers should still exert some caution in sending letters that warn of costs, and always take professional advice over how they are worded.
   
   
5.  A focus on value
   Anyone reading employment law literature, with its talk of “caps”, “limits” and “low value claims” could be seduced into thinking that the commercial consequences of a taking a wrong turn in the workplace are moderate at worst. This could not be further from the truth. Discrimination awards can run into millions of pounds, and even the most standard claim allows an employee to recover under numerous heads of damage. Compensation for loss of earnings, loss of pension, injury to feelings, ACAS uplifts, aggravated damages and interest at 8% are all financial consequences with which the unwary may become familiar. In the end, even if a quashed Fees Order results in fees being completely removed for the foreseeable future, most litigants before the Employment Tribunal will wish to maximise their compensation, especially where they will be left with legal bills to pay, win or lose.

If these predictions are even partly true, the landscape has just become more difficult and more fraught for respondents to ET claims. However, the aim of employment law has never been to punish employers or to restrict their dealings with the workforce. Generally speaking, employment law leaves management decisions to managers, and only intervenes to make the process fair, and to ensure that decisions are taken fairly and on the merits. Employers will now want to make sure that they get the procedure right, that their decisions are well-reasoned and even more importantly, that they are supported by evidence!

Bond Solon is the UK’s leading legal training company specialising in providing Witness Familiarisation and Investigative training. We offer:

• Employment Investigations training to help ensure investigators, line managers, and HR professionals carry out compliant internal investigations to best practice standards. The course is offered on a public basis or in-house for groups. Our next public course will be running on the 26th and 27th September 2017.

• Witness Familiarisation sessions for those who are due to give evidence in Employment Tribunals. The sessions provide an awareness of the processes involved in the hearing and gives practical guidance on how to present effective evidence.