Thin end of the wedge? The Government’s reintroduction of Employment Tribunal fees

Not content with attacking the collective rights of workers, the government is once again consulting on a proposal to reintroduce fees in employment tribunals (ET). The consultation, launched on 29 January 2024, seeks views on the level of fees and not whether fees should be introduced. It closes on 25 March 2024 and the intention is that fees will become payable from November 2024.

UNISON successfully challenged the previous fees regime which introduced a two-tier system of fees depending on the type of claim brought. Workers bringing type A claims such as for unpaid wages or holiday pay, the total cost of bringing claims in an ET was £390 (made up of an issue fee of £160 plus a hearing fee of £230) often more than the claim was worth. Higher fees were payable where a claimant pursued a type B claim, typically a claim for unfair dismissal or unlawful discrimination for a total of £1,200 (£250 issue fee plus a hearing fee of £950).

In UNISON’s legal challenge, the Supreme Court ruled on 26 July 2017 in R (on the application of UNISON) v Lord Chancellor that the requirement to pay fees in ET’s amounted to an unlawful interference with the right to access justice, was not justified in meeting the governments stated objective of ensuring those who used the service contributed to the cost of running it and was discriminatory in nature. As a result, the government had to reimburse those fees that had been paid between 2013 and 2017.

So, what’s changed?

In the consultation the government recognises that the level of fees had a huge impact on access to justice – the number of claims plummeted from 195,570 in the year before fees to 43,951 – a drop of 78% in the year after fees were introduced. However, the government remains wedded to the idea that it is the user – for which read claimant – who should be the one to pay towards the cost.

This time the government proposes to introduce a one-off issue fee which it claims is at a level which does not impede access to justice, and meets the aims of being simple, affordable, and proportionate as follows:

• A £55 issue fee pay payable by the claimant on bringing a claim in the ET. This fee would apply irrespective of the number of claimants or type of claim brought so it would apply to claims for unpaid wages as well as claims for unfair dismissal, discrimination, and trade union detriment.
• A £55 appeal fee payable by an appellant when lodging an appeal in the Employment Appeal Tribunal. The fee applies to each judgment, decision or order of an Employment Tribunal being appealed,
• There will be no requirement to pay an additional hearing fee in either the ET or the EAT.

There are some very limited circumstances when the fee will not apply. This is restricted to claims to the right to a payment from the National Insurance Fund such as claims for a redundancy payment and unpaid pension contributions.

What do we anticipate the impact will be?

Access to justice

While it is for a flat rate fee of £55 to be paid when lodging a claim, it is doubtful that it is either affordable or proportionate at a time when workers and employees are faced with having to make tough choices in a cost of living crisis. It also does not follow that just because a lower fee is payable it will not have an adverse impact on access to justice.

Even the government’s own impact assessment, which accompanies the consultation, estimates that there is likely to be a 20% reduction in the number of claims brought as a result of a fee being reintroduced. ^[1]

It is also highly likely that some workers and employees will find the fee prohibitively expensive particularly when the claim does not involve a monetary award or is of low value.

• Fewer claims are likely to be brought to enforce the right to receive a written statement of particulars under section 11 of the Employment Rights Act 1996 a right which was only recently extended to a wider group of workers  While the remedy for such a claim is limited to a declaration of the written particulars, the Supreme Court considered it “vital to the enforcement of other employment rights”.  .
• Similarly, women who are prevented from taking time off for antenatal appointments, are unlikely to pay a fee when the amount they can recover is limited to what they would have received had they been given time off to attend their appointment.

Once again, the most vulnerable workers will be prevented from enforcing their rights because of the prohibitive effect of the requirement to pay a fee.

Affordability

Workers inevitably have to balance the risk, of paying a fee when bringing a claim, as against the likelihood of actually receiving a financial award, even if they win. These are high stakes. The latest tribunal statistics available reveal that in 2020/2021 just 8% of all claims were successful. According to government figures[2] obtained before the last fees were introduced, 53% of claimants who were successful before the ET were paid only part of what they were awarded. A large proportion of claimants will therefore be required to pay a fee for a claim with no guarantee that they will receive the money that have been awarded. The requirement to pay a fee at the outset increases the risks for the worker while shifting the balance again in favour of bad employers.

The help with fees scheme will do little to alleviate that risk since it is only available to those on exceptionally low earnings.

Proportionality

The consultation states that the direct running cost of employment tribunals and employment appeal tribunals was around £80 million in 2022/2023 and estimates that the introduction of the £55 issue fee paid by Claimants is set to generate income of between £0.6 and £0.7million towards those costs in the first year (assuming they become payable in November 2024). The income they will generate appears to be “a drop in the ocean” when you consider the Supreme Court found that the previous regime of higher fees was lower than predicted.

In any event whether the level of the fee is proportionate cannot be measured simply in terms of the finances it will generate towards the cost of providing the service.

As the Supreme Court said:

“the value to society of the right of access to the courts is not confined to cases in which the courts decide questions of general importance. People and businesses need to know, on the one hand, that they will be able to enforce their rights if they have to do so, and, on the other hand, that if they fail to meet their obligations, there is likely to be a remedy against them. It is that knowledge which underpins everyday economic and social relations.”

Conclusion

Ultimately the most effective enforcement mechanism against poor employers is an employment tribunal services that is free at the point of use. Worryingly the consultation states it “would welcome views on the potential to introduce higher levels of ET and EAT fees.”  This proposal does very much feel like the thin end of the wedge.

[1] This is consistent with the findings of the ACAS Research Paper “Evaluation of ACAS Individual Conciliation 2019” published in September 2020 paragraph 16.6.

[2] See “Payment of Tribunal Awards- 2013 Study” by the Department for Business Innovation and Skills