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Employment Tribunal Claims Continue to Rise Following Abolition of Tribunal Fees

The Employment Tribunal (ET) is an independent judicial body established to resolve disputes between employers and employees in relation to employment rights. The ET will hear claims about employment matters; such as unfair dismissal, discrimination, wages and redundancy payments for example.

There have been two fundamental changes to the workings of the ET over the past 12 months, which both employees and employers should be aware of:

• The abolition of ET fees on the 26 July 2017; and
• The introduction of the ET refund scheme in October 2017.

Both of these changes understandably have a significant effect on both prospective litigants seeking access to the tribunal system, and the potential exposure of employers to ET claims, along with litigants who have brought claims and paid fees under the old fee system since 29 July 2013.

Abolition of ET fees

ET fees were abolished on 26 July 2017 following the decision in R (on the application of Unison) v Lord Chancellor [2017].

Prior to the decision in UNISON, the Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013 ("the Fees Order") prescribed various fees a claimant must pay when bringing or pursuing a claim in the ET and/or EAT. UNISON sought judicial review of the Fees Order on the ground that it unlawfully prevented or restricted access to justice. The Supreme Court unanimously held that the Fees Order was unlawful ab initio and must therefore be quashed.

The Court held that there was a real risk that employees would effectively be prevented from having access to justice, and that the degree of intrusion was greater than justified by the objectives which the Fees Order was intended to serve.

Unsurprisingly, the abolition of ET fees has led to an increase in claims. From April to June 2017 (prior to the abolition of ET fees), single claim receipts numbered around 4,300 claims per quarter, mirroring previous quarters where fees were payable. However, since July to September 2017/18 this trend has changed, with single claim receipts more than doubling to 9,252 in the most recent quarter. This is almost certainly due to the abolition of ET Fees.

There were 16,272 multiple claims received this quarter, down 40% on the same period last year. Multiple claims tend to be more volatile as they can contain a high number of claims against a single employer, which can skew the national figures. The multiple claims received this quarter related to 537 multiple claim cases (an average of 30 claims per multiple case), which is an increase on the 241 cases (average of 112 claims per case) in the same period a year ago.

The ET disposed of 10,343 claims during January to March 2018, down 9% on the same period in 2017. This was driven by a 36% decrease in multiple claims disposals, offsetting a 43% increase in single claim disposals. The multiple claims disposed of this quarter relate to 441 multiple claim cases, up from 187 in January to March 2017.

In January to March 2018, 29% of jurisdictional complaints disposed were Acas conciliated settlements, 17% were withdrawn, 16% were dismissed upon withdrawal, 14% were struck out (not at a hearing) and 10% were successful at hearing. The most common jurisdictional complaint disposed of between January and March 2018 was 'unauthorised deductions (formerly Wages Act)', in the same quarter a year ago, this was 'Equal Pay'.

At Forbes we have seen our employer clients exposed to a greater number of threatened and actual ET claims. The abolition of fees has meant that there is less of a disincentive for employees to bring claims in the ET, increasing the potential and actual exposure of employers. This increased exposure makes it increasingly important for employers to ensure that any matter that has a potential to turn litigious is dealt with efficiently and pro-actively, and legal advice should be sought as soon as possible. With early intervention by Forbes Solicitors to manage the legal aspects of employee disputes, our clients can minimise their exposure by ensuring that they have acted within the confines of the law and by providing clarity to employees that any potential claim may be misconstrued and futile to pursue. Essentially, there is a greater need for employers to nip matters in the bud before they escalate to avoid long, drawn out claims in the ET.

ET Fee Refund Scheme

Following the abolition of ET fees, on 15 November 2017 the Ministry of Justice (MoJ) and HMCTS rolled out a full refund scheme allowing litigants to reclaim any ET and EAT fees they paid between 29 July 2013 to 26 July 2017, provided they were not paid a costs order covering their tribunal fees. This means that any party to a claim that incurred a fee resulting from the Fees Order from the date of its initial application (including those who had to reimburse their opponent for a fee incurred by the opponent pursuant to an order) can seek a reimbursement.

The scheme is also open to representatives and sponsors who paid a fee on behalf of a party to a claim and who have not previously been reimbursed.

Where applicants are successful in their claim for reimbursement, they will receive a full refund of the fee that they paid, as well as interest at the rate of 0.5%, calculated from the date of the original payment up until the refund date.

On initiating the refund scheme, the government estimated the total refund costs, including interest, would amount to £33 million. However, between the introduction of the ET refund scheme to the 31 March 2018 there have been only 9,500 applications for refunds and 7,700 refund payments made, with a total value of £6,555,600.

Of the applications received between January and March 2018, 75% (3,520 applications) related to cases initially brought forward in England and Wales, down from 93% in the period to 31 December 2017. The remaining 25% of applications received this quarter (1,152 applications) related to cases initially brought forward in Scotland.

In the quarter January to March 2018, 4,397 refund payments were made by the MoJ, with a total monetary value of £3,799,530. Of these 4,397 refund payments made:

• 83% (3,629 refunds) related to England, 14% (619 refunds) to Scotland and the remaining 3% (149 refunds) related to Wales.
• 4,019 refunds related to single claims and 339 related to multiple claims. As each refund payment may relate to several fees paid by the claimant across a number of cases, there are also 29 refunds which relate to both single and multiple ET claims.

In April 2018, the Lord Chancellor reported that there had been low numbers of applications for refunds and that the MoJ would therefore write to potentially eligible people to promote awareness and encourage refund applications.

On devising the scheme, the government worked with trade unions who supported large multiple claims potentially involving hundreds of claimants, and ahead of the full launch litigants were invited to pre-register their interest in applying. It continues to work with the unions to ensure those who are eligible are encouraged to claim a refund.

Whilst it may appear at first glance to mainly benefit individual employee claimants, the scheme is relevant also to employers taking the respondent role in ET claims. For example, not only can reimbursement for respondent's fees be requested, but an employer who has lost a case and has been ordered to pay the claimant's ET fees can claim a refund in respect of those fees under the scheme.

It is not only issue fees that can be reclaimed; fees for judicial mediation, employer contract claims, reconsideration of judgment, and dismissal following withdrawal can also be claimed for example. The scheme does not, however, cover payments under a settlement agreement designed to compensate a claimant for a fee that they might have paid. In that instance it is the claimant who remains eligible to apply for a refund under the government scheme. Employers who were involved in any ET claim during the applicable time period are advised to establish whether they incurred any ET fees that could be reimbursed. For large employers who have dealt with a significant number of ET claims over the time period the Fees Order applied, the potential reimbursement could be considerable.

For advice relating to an employee dispute or ET claim, or further information or support regarding the refund scheme, please get in touch with a member of our Employment & HR team by telephone on 0333 207 1135. Alternatively, send your enquiry to us through our online contact form.

Learn more about our Employment & HR department here

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