Government confirms “slightly lower than originally proposed” approach to tribunal fees

As proposed by a Ministry of Justice consultation process earlier this year, parties will have to pay an upfront fee to raise a claim with a further ‘hearing fee’ once the case is referred to a tribunal. The fees, as set out in the Government’s response (86-page / 318KB PDF) to the consultation, are “slightly lower” than those originally proposed by the Government, to “strike a fair balance” between the interests of businesses and those with genuine claims.

The amount payable to refer ‘level 2’ unfair dismissal or discrimination claims will be £250 with a further hearing fee of £950, making a total of £1,200; while a full hearing for an administratively simple ‘level 1’ claim will be £390.

“It’s not fair on the taxpayer to foot the entire £84 million bill for people to escalate workplace disputes to a tribunal,” said Justice Minister Jonathan Djangoly. “We want people, where they can, to pay a fair contribution for the system they are using, which will encourage them to look for alternatives. It is in everyone’s interest to avoid drawn-out disputes which emotionally damage workers and financially damage businesses.”

The Government said the remission system which operates in the courts system would operate in relation to fees, and that in many cases this would exempt people on low incomes from having to pay the full fees. The Government intends to consult on the future of this system later this year.

Fees will be payable in advance by the person bringing the claim, however the tribunal will have the power to order the unsuccessful party to reimburse any fees and cases which are settled will likely deal with the issue as part of any settlement agreement.

There is currently no charge to an employee to take a claim to an employment tribunal or appeal to the Employment Appeal Tribunal. During financial year 2010/11 218,000 claims and 2,048 appeals were made at a total cost to the taxpayer of £84.2m, according to Government figures, although the number of claims received by employment tribunals fell by 15% during 2011/12.

Employment law expert Stuart Neilson of Pinsent Masons, the law firm behind Out-Law.com, said that the Government’s decision to press ahead with tribunal fees would be “broadly welcomed” by businesses.

“Whilst the Government’s main aim might well be to raise revenue to offset the cost of running the tribunal system the imposition of fees is likely to make claimants with frivolous claims at least think twice before lodging,” he said. “However, the actual impact may be limited by the fact that those on limited means may not be required to pay at all.”

The decision to introduce fees, he added, brought tribunals into line with “other areas of justice” where access to the courts already requires the payment of court fees.

“Whilst many commentators representing the interests of claimants have decried the imposition of fees it is difficult to see in principle why the employment tribunal system should be different from other areas of the civil court system,” he said.

“The two-stage approach to fees is likely to lead to claimants being more receptive to settlement offers just before they need to pay the more substantial hearing fee, so clearly the fees are going to have an impact upon the tactics of settlement,” Neilson said. “And as a successful claimant will be entitled to recover their fee from the employer, one potential downside is that in settlement discussions claimants will inevitably want their fees covered.”

The introduction of tribunal fees is one of a range of measures being promoted by the Government to encourage businesses and employees to look at alternative methods of resolving their disputes rather than going straight to a tribunal. From April 2014, workplace disputes will have to be referred to the taxpayer-funded Advisory, Conciliation and Arbitration Service (Acas) for potential early conciliation before disputes can be referred to the Tribunals Service. In addition, under the new fee structure mediation by a judge will cost £600 from summer 2013 - half the cost of taking an unfair dismissal or discrimination claim to a full hearing.

The Government has also been considering ways to simplify the tribunal system, and last week  former president of the Employment Appeal Tribunal Mr Justice Underhill published his recommendations for reform of the existing rules and procedures. In addition the Enterprise and Regulatory Reform Bill, which is currently before parliament, contains measures aimed at improving the employment tribunal system.

As part of his draft revised rules (47-page / 319KB PDF), Mr Justice Underhill recommends the introduction of an initial paper ‘sift’ stage once the claim and response has been received. A judge would review the case based on what is set out in these papers with a view to making directions or, if appropriate, considering whether a claim should be ‘struck out’ due to it lacking a reasonable prospect of success. He also recommends merging the existing Case Management Discussion and Pre-Hearing Review stages of a claim, to be relabelled a ‘Preliminary Hearing’, and allowing tribunals to award costs above £20,000 where appropriate without further referral to the county court.