Employment Tribunal Fees: A brave new world?

Monday 10 June 2013

HM Courts and Tribunal Services (‘HMCTS’)  has finally announced that the much anticipated introduction of fees into the Employment Tribunal system will take effect from Monday 29 July 2013. From this date, any claim presented to the Employment Tribunal will be subject to the new fee regime.

This means that Claimants will now have to pay an initial fee to issue their claim and then pay a further fee to have it listed for a hearing.  In addition, parties will also have to pay fees for making certain applications during the litigation.

When the scheme comes into effect, there will be two fee levels depending on the type of claim that the Claimant wants to bring. As my colleague Tom Moyes commented in his recent blog, Level 1 claims will deal with straightforward matters such as unlawful deduction from wages, claims for holiday pay and redundancy payments.  Level 2 claims will be the more complicated claims and will usually relate to unfair dismissal and discrimination.

The fee levels are as follows:

Level 1 claims:

• Issue fee            £160
• Hearing fee        £230

Level 2 claims:

• Issue fee            £250
• Hearing fee        £950

The introduction of fees is a major shift given that the Employment Tribunal has traditionally been a fee free arena.  Whilst the absence of any upfront fees has undoubtedly allowed claims with little merit to proceed, it has also given many people the opportunity to pursue genuine claims in circumstances where they may not be able to afford legal representation.

Recognising that many litigants will not be able to afford the fees, HMCTS will operate a remission scheme which will allow those Claimants with low incomes to apply to have them waived.

There has been a lot of comment as to whether the introduction of fees will have any effect on reducing the number of spurious claims issued in the Employment Tribunal given that Claimants will now have to pay to lodge their claim rather than simply submit a claim form on line for free. Even if the merits of a claim may be poor, a determined Claimant will often find a way to afford the fee (and they may even qualify for a remission).  Irrespective of this, some take the view that the introduction of fees is overdue as the Tribunal is an expensive organisation to run and those making claims should be made to “put their money where their mouth is” in order to access its services.

The obvious flip side to this is that unless they qualify for a remission, requiring a Claimant to pay up to £1,200 to see a claim through to a final hearing will undoubtedly deter many with a strong claim but who are unable to pay the fees.

There are also likely to be some unintended consequences of the new fee structure:

• Claims will be less likely to settle at an early stage as employers will wait to see if the Claimant can afford the issue fee before throwing money at the problem.  Even if the Claimant does pay the fee they still have to find the hearing fee later on (unless they qualify for a remission), which gives the employer little incentive to do a deal until the Claimant can demonstrate that they are serious and the matter will proceed.

• The parties will now have the additional issue of fees to argue about as Claimants will want to recover their Tribunal fees on top of any settlement extracted from the employer.  Understandably, the employer will be reluctant to pay any more than they have to, especially in respect of fees that have been paid to bring a claim against them.  You can see that the effect of this will be to push the parties’ negotiating positions further apart, making a settlement harder to reach.

• Finally, if a Claimant is entitled to a fee remission, what is their incentive to find another job and mitigate their loss during the course of the litigation if they would then be required to fund a not insubstantial hearing fee?  How are the Tribunals going to deal with this when addressing the issue of remedy?

Fees in the Employment Tribunal are an alien concept and employment practitioners will be watching with anticipation to see how the new system beds in.

Whatever your view on the issue of fees, one thing is clear, the employment litigation landscape is changing, however, whether this is change for better remains to be seen.