December 01 2023

All in this together

All in this together

My blog here last week on the Government’s proposals for an employment tribunal fees regime generated a fair bit of comment (Pass the Ibuprofen).  Much of the response was supportive of my call for an alternative fees regime based on the ‘polluter pays’ principle, with respondent employers found by a tribunal to have acted unlawfully or unfairly bearing the burden, rather than claimants.  But some of those commenting also raised two key questions.

Firstly, some queried how a regime based on fees for ‘losing’ employers differs from the Government’s proposal, on which it consulted last year, for the imposition of financial penalties on ‘employers found to have breached employment rights’.  Well, the answer is that, in response to the consultation, the Government decided not to proceed with ‘automatic’ financial penalties of up to £5,000 (with the penalty based on the amount of the award).

Instead, it intends to create a discretionary power for judges to impose such a penalty only where ‘the [employer’s] breach involves unreasonable behaviour, for example where there has been negligence or malice involved’.  The final impact assessment suggests that this could be in 25% of all cases disposed of at a hearing, but I suspect even that is something of an over-estimate.  My guess is that, in practice, judges will use the power much more sparingly – not least because there will be an appeals mechanism.

Secondly – and as the final line of my blog implicitly recognised – my proposed alternative fees regime would not address the concern of ministers (and the employers’ lobby groups) that ‘the current system can be a one way bet against [employers], with [claimants] inadequately incentivised to think through whether a formal claim really needs to be lodged’.  The problem, of course, is how to address that concern without creating a barrier to justice.

So … another alternative would be to share the fees burden between claimants and ‘losing’ respondent employers, by charging a nominal fee to claimants.  For example, using the ‘base case’ figures for ‘steady state’ claims and disposals set out in paragraphs 3.2 – 3.15 of the Ministry of Justice’s impact assessment, a nominal, flat-rate issue fee of £100 would raise £5.4 million of the £9-10 million that officials say must be raised by the fees regime.

Whilst even a fee of £100 would create a barrier to justice, it would not be anywhere near as substantial a barrier as that which would be created by the considerably higher claimant fees – of up to £1,500 – proposed by the Government.  And it would be possible to exempt entirely the generally straightforward and low-value claims relating solely to unauthorised deductions from wages (i.e. former Wages Act claims).

I haven’t been able to find any figure for the number of such claims each year, but in 2010-11 ‘unauthorised deductions’ made up 18 per cent of the total count of 382,400 jurisdictions covered by the 218,000 claims (both single an multiple).  So let’s assume a figure of 10 per cent of cases – thereby reducing that £5.4 million to £4.9 million.

That would mean raising another £5 million from the 8,400 ‘losing’ employers, two-thirds of whom would ‘lose’ at a hearing, and one-third in a default judgment.  A flat-rate fee of £600 would raise just over £5 million, as would a fee of £700 for ‘losing’ at a hearing and a fee of £400 for a default judgment.

That would be simpler, easier to understand, and less difficult to administer than either of the Government’s two options for a purely claimant-based regime.  It would meet the Government’s objective of transferring ‘some of the cost burden from the taxpayer to the user’s of the system’, would incentivise would-be claimants to ‘think through whether a formal claim really needs to be lodged’, and would ‘encourage employers to have greater regard to what is required of them in law and, ultimately, lead to fewer workplace disputes and employment tribunal claims’.

How’s about that then, girls and boys?