Where’s the justice in the new Tribunal proposals?

Partner and employment law specialist Paul Statham explains why the Government’s money-saving proposals to introduce fees for claimants in employment tribunals will ‘tramp roughshod’ over individual employment rights… 

The Ministry of Justice has just published its response to the consultation on introducing a fee regime in employment tribunals. Justice Minister Jonathan Djanogly said:

“It’s not fair on the taxpayer to foot the entire £84m bill for people to escalate workplace disputes to a tribunal. 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’s in everyone’s interest to avoid drawn-out disputes which emotionally damage workers and financially damage businesses. That’s why we’re encouraging quicker, simpler and cheaper alternatives like mediation.”

In summary, claimants will pay an initial fee to issue a claim, then a further fee if the claim proceeds to a hearing. There will be two ‘levels’ of claims. For ‘level one’ claims – which are generally for sums due on termination, such as unpaid wages – the issue fee will be £160 and the hearing fee £230. For ‘level two’ claims (all others), the issue fee will be £250 and the hearing fee £950.

What these proposals will really mean

They’re likely to lead to a substantial reduction in the number of claims. But for all the wrong reasons. Because it’s not going to be economically worthwhile for employees to bring a claim, however justified. These examples show why…

1. A building sub-contractor doesn’t receive his 7 days accrued holiday pay worth £350 (in breach of the Working Time Regulations). To issue a claim, he’d have to pay £160, plus £230 for a hearing – a total of £390. And there’s no guarantee that the contractor will pay any judgment. As a shop steward said to me, the claimant would be better off putting his fee on the favourite in the 3.30 at Kempton Park!
2. An employer closes overnight without paying notice, wages or holiday pay. The employee can recover the unpaid sums from the state redundancy payments fund… but only if the employer becomes insolvent. The Redundancy Payments Office insists on the employee taking tribunal proceedings. Since there’s little prospect of any fee being paid by the employer, it’s only worth the employee taking proceedings if the sum outstanding is more than £160 (or £390 if the employer puts in a response so the case goes to hearing).
3. There are many important employment rights where there’s no compensation available, or where the maximum award is less than the total fees payable by the claimant. For example, where the employer fails to provide written terms and conditions of employment, an employee can apply to the tribunal for a determination of terms. But there’s no set remedy for breach, and it’ll cost the employee £390 in fees for the privilege. Or where an employer fails to allow an employee to be accompanied at a disciplinary or grievance hearing, the remedy is 2 weeks’ pay up to a maximum compensation of £860. Yet the fee to a hearing is £1200.

No-one will bring claims under these provisions when tribunal fees are introduced.

There are also potential Equality Act and Human Rights Act implications. Charging fees will have a disproportionate effect on disabled people, considering that 22% of those bringing ET claims and 40% of those bringing equality claims are disabled.

The government seems to think that bringing a tribunal claim is more a life style choice than a matter of seeking to recover entitlements guaranteed by statute.  Employment laws are seen as an obstacle to taking on staff not a benefit to the economy.  But upholding employment rights which guarantee minimum fair employment conditions doesn’t just benefit the individual, it benefits society as a whole.

Good employers with good standards of terms and conditions generally have better productivity, which is good for the economy. Dismissals lead to unemployed workers who can’t afford to spend money, worsening the recession.  A motivated, secure workforce that can depend on fair treatment will be more productive. But if workers can’t enforce their statutory rights, terms and conditions will be cut to ‘lowest common denominator’ levels.

This new scheme will prevent employees enforcing their rights, and tramp roughshod over their access to justice. That’s bad news for everyone.