To fee, or not to fee?

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To fee, or not to fee?

In recent weeks I’ve been pondering the Labour Party’s inability to say what, if anything, it plans to do about the Coalition’s employment tribunal fees if elected in 2015.

A number of shadow ministers, including Yvette Cooper and Gloria De Piero, have publicly highlighted the gross injustice of asking women who have been forced out of their job by pregnancy or maternity discrimination to pay up to £1,200 – the equivalent of nine weeks’ statutory maternity pay – to bring a tribunal claim against their former employer. And backbenchers Diana Johnson and John Cryer have each raised the issue at Prime Minister’s Questions. But none of them have been able to say whether they would abolish or otherwise reform the fees regime.

No doubt this is partly due to the rigid discipline on making any policy commitment that comes with a price tag – abolishing the fees would leave a hole in the new Justice Secretary’s budget of up to £10 million (the sum the Ministry said in 2012 it expected to reap in fee income). However, it may well be that the Ministry underestimated the impact of its eye-wateringly high fees on the number of claims, which appears to have fallen off a cliff since the introduction of fees in July. So the actual loss of fee income from abolition could well be much less than £10 million.

More importantly, abolition is by no means the only option. Back in 2012, when the Ministry was consulting on its proposed fees regime, I suggested an alternative way of generating £10 million of fee income, based on a nominal issue fee for claimants (including each claimant in a multiple claim case) and a more substantial ‘loser’ fee (or penalty) for losing employers – the ultimate ‘users’ of the tribunal system.

That suggestion did not meet with universal approval – the TUC and unions strongly resented any suggestion that their members should pay the same as an individual tribunal claimant for bringing a multiple claim case.

So, here’s another alternative regime: a nominal issue fee for claimants, together with a nominal fee for employers to defend a claim (payable when submitting the ET3 response to the claim). That would meet the concern of employer lobby groups that would-be claimants need to be ‘incentivised to think through whether a formal claim really needs to be lodged’, without creating a significant barrier to justice. And, if there are to be fees, it is entirely fair to charge employers to defend a claim. Because, with the introduction of ‘early conciliation’ of all potential claims by Acas from April 2014, any employer who fails to resolve the claim (for free) through Acas is from that point on as much a ‘user’ of the tribunal system as the claimant.

Using the ‘steady state’ figures for claims and disposals set out in paragraphs 3.10 – 3.13 of the Ministry’s final impact assessment, I calculate that a flat-rate issue/defend fee of just £50 would generate £4.8 million. Which could be topped up to some £6.5 million by imposing a ‘loser’ fee/penalty of say £200 on the 8,000 losing employers. And such a simple, transparent and fair fees regime would obviate a fee remission scheme, thereby saving some £1 million in administration costs.

This basic model could of course be tweaked in any number of ways. For example, the one in five claims that are straightforward (and mostly low-value) claims for unpaid wages could be charged a lower fee, or exempted altogether (my preference). And the claimant and respondent employer could each be charged a nominal hearing fee if the claim proceeds that far.

But the essential point is that the price tag attached to restoring access to the employment tribunal system could be very small indeed. Which means there really is no excuse for Labour’s reticence on the issue. And, if shadow ministers don’t speak out soon, they might find themselves beaten to it by the Liberal Democrats, looking to differentiate themselves from their erstwhile coalition partners in the run-up to 2015.



2 responses to “To fee, or not to fee?”

  1. […] In recent weeks I’ve been pondering the Labour Party’s inability to say what, if anything, it plans to do about the Coalition’s employment tribunal fees if elected in 2015.  […]

  2. Darren Newman says:

    There are lots of different ways in which a fee system could be structured that would be much fairer and more effective than the one that has actually been introduced. I doubt the Government would go for a charge on employers though!

    I can understand why an opposition party can’t announce a policy on this and I think we should concentrate on asking the Government to justify the policy that it has actually adopted. I think it is a mistake to concentrate on £1,200 for a pregnancy dismissal case. That after all can be a high value and complicated claim. What often gets neglected in this discussion is the many claims for small amounts of money brought by vulnerable workers who have not been paid their wages. I cannot for the life of me see how it can be justified to charge those workers more for using the ET system than for going to the County Court. Has any Government minister actually commented on this aspect of the fee system?

    As for the number of claims falling off a cliff, that is certainly what I am hearing from around the country. However we should be prepared when the figures are published for the number of claims to appear to be holding steady. As ever the figures will be distorted by multiple claims, which are likely to increase significantly as a result of large-scale claims for zero-hours workers and the inclusion of overtime in holiday pay. We will have to make sure that this does not allow the Government to muddy the waters as to the effect that the fee system is having on individuals.

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