The potential impact of the introduction of employment tribunal fees
Author: Darren Newman
Consultant editor Darren Newman explains why the introduction of fees in the tribunal system could result in many less well-off individuals being denied their basic workplace rights.
It has been two months since the biggest single change to the employment tribunal system in its history - the introduction of fees. Already there are rumours swirling of dramatic falls in the number of tribunal applications - but it is still too early to judge the impact. A fall in claims in August and September is inevitable because many of the claims that would ordinarily have been brought in these two months will instead have been rushed in towards the end of July in order to avoid payment of a fee. We will, however, begin to see the true impact of the change in the run-up to Christmas.
One of the key questions for any potential claimant is whether he or she will have to pay a fee at all or qualify for what is known as "remission", the system under which no fee is payable by those on a low income. A new remission scheme that applies across the civil court system, including the employment tribunals, came into force on 7 October 2013. It focuses on two tests. To qualify for remission an individual must first pass the "disposable capital" test. If he or she has more than £3,000 in savings or has, for example, a second car or home, he or she will have to pay the full fee (although the threshold is £16,000 where the individual is 61 or older). If the individual has less than this, there is a second test based on gross income. Claimants who are in receipt of one or more specified benefits such as income support will not have to pay a fee; nor will those whose gross monthly income falls below the specified amount (ranging from £1,085 for a single person with no children, to £1,735 for a couple with two children). Individuals who earn slightly more than this will have to pay the fee on a sliding scale, contributing £5 for every extra £10 earned.
This should mean that many unemployed claimants (a sizeable proportion of those bringing employment tribunal claims) will not normally have to pay a fee - unless they are sitting on, for example, a redundancy payment of over £3,000. Nor will claimants working on little more than the national minimum wage. However, all potential claimants will have to apply for remission and submit original documents such as payslips or letters setting out benefit entitlement as evidence of their eligibility. They may find the two-page remission application form rather daunting. Luckily the form comes with 29 pages of explanatory notes to help them steer their way through it! It is hard to escape the conclusion that what the introduction of fees has really done is wrap the process of bringing an employment tribunal claim in so much red tape that many potential claimants will decide that it is not worth the trouble.
The Government no doubt genuinely believes that the introduction of fees is a fair way of ensuring that the system is adequately funded, and many employers will feel that the process of bringing a claim is still less complicated and time consuming than the process of defending one. However, I think we have lost sight of what an average employment tribunal is like in reality. On the news we see high-profile and high-stakes claims being brought with the potential to result in tens of thousands of pounds of compensation, but most claims are much more modest.
Let us take the example of someone who used to work for a small building firm and whose last wage packet was £100 short. That sum may be absolutely crucial to the individual and, until recently, under the right not to have unlawful deductions made from wages introduced by the Wages Act 1986, the wronged employee would have been able to bring a tribunal claim without any question of paying a fee.
Now a claimant in that position will have to navigate the fee system. It may well be that he or she will not ultimately have to pay a fee, but the process of applying for remission and providing the appropriate evidence may well be enough to persuade the individual that it is simply not worth the effort. And if a fee does have to be paid, will the claimant get value for money? To recover a £100 unlawful deduction, the claimant will have to pay an issue fee of £160 and a hearing fee of £250. It surely cannot be right that to recover £100 of unpaid wages - and there are more of those cases than one might think - a claimant has to shell out over £400 in tribunal fees.
This is especially shocking when you consider that tribunal decisions are not easily enforced against employers that are not willing to pay up. Before any enforcement measures can be taken, the decision has to be converted into a county court judgment. There is another form to fill in - and another fee to pay.
Rather than pay a tribunal fee, rational claimants seeking to recover unpaid wages would do better to go straight to the county court. For claims under £3,000 the fees are lower and the judgments issued by the court are more easily enforced.
This cannot be a sensible way to run the tribunal system. Indeed, there are two separate judicial review claims being brought attempting to get the Regulations introducing the fees struck down. The arguments in those cases concentrate on the discriminatory impact of the fee regime and the fact that a right introduced to comply with a European Directive (such as the right to receive holiday pay) should not be more expensive and difficult to enforce than an equivalent domestic right (such as rights in relation to breaches of contract).
I am not very good at predicting the outcome of high-profile cases, but I think most employment lawyers would be surprised if the courts ruled that the fee system is unlawful. However, judicial intervention aside, the impact of introducing fees will need to be carefully monitored. It may have the (one hopes) unintended consequence of denying basic workplace justice to some of the country's most vulnerable people.
