Ministry of Justice consultation paper CP/22/2011
The Government has decided to introduce a system of fees in Employment Tribunals. A consultation exercise asking for views on different options has just concluded. Paul Statham of Pattinson & Brewer solicitors, who co-chaired a committee of the Employment Lawyers Association, summarises their response.
MINISTRY OF JUSTICE CONSULTATION PAPER CP/22/2011:
CHARGING FEES IN EMPLOYMENT TRIBUNALS AND THE EMPLOYMENT APPEAL TRIBUNAL
SUBMISSION BY PATTINSON & BREWER SOLICITORS
Pattinson & Brewer (“P&B”) are a firm of solicitors that act for claimants. Our primary areas of practice are personal injury, clinical negligence and employment mainly for claimants referred by trade unions under various legal assistance schemes. We also act for claimants in employment matters on a private fee-paying basis. We do not currently undertake employment cases on a contingent fee basis.
Summary of principal conclusions
P&B notes the Government’s decision to introduce a fee regime for ETs and the EAT. We note the Consultation Paper does not seek views on the principle of introducing fees but we wish to make it clear on behalf our clients at the outset that we totally oppose the introduction of fees as they are likely to severely restrict access to justice and we do not consider they will achieve the Government’s expressed objectives in any event. They will create greater burdens on claimants, employers and the tribunal service and cause a distraction for all parties at a crucial time (just before the expiry of very short time limits) when the parties should be concentrating on attempted internal dispute resolution processes, to see if it is possible to resolve the matter through the employer’s internal grievance/ appeal procedure.
Producing a further bar to claimants’ ability to enforce their employment rights, which are already being eroded, is likely to lead to more industrial rather than legal solutions, increasing the burden on both business and Unions and removing the dispute from the jurisdiction which was invented to deal with it. In addition, the concept that the cost of the service should be funded by the people that use it, fits with the service being provided by the tax-payer. By their very nature in their status as employees/ workers and employers, the parties have generally been contributing to the public purse by way of tax and national insurance contributions. To treat the parties as having “chosen” to use the employment tribunals underestimates the potentially devastating financial and personal impact breach of employment laws can give rise to.
Any employer or worker can suddenly need the tribunal to resolve a dispute between them, and the treatment of ET users as some kind of consumer, there by choice, is a misleading and dangerous misconception to support. Claimants and Unions are not “shopping” for their employment rights, they are enforcing what is legitimately theirs and by doing so encouraging good standards of behaviour and employment practice which is also good for business. The government’s treatment of claimants as the major users of the system who bear the brunt of the cost/ initial outlay reinforces this mistaken impression. Consideration should be given to making employers with the greatest number of successful claims against them contribute more, as it is their actions/ inaction which lead to more strain on the system.
The ability of claimants to enforce their employment rights and employers to have an independent body to decide on issues, increases the potential for trust in the employment relationship, to the good of both business and those who work for them. Rights and obligations do not really exist unless they can be properly enforced. This is an extremely regressive step.
The proposed fees will create a layer of complexity in tribunal procedure which we fear an under-resourced tribunal service will not be able to cope with, will produce satellite litigation and uncertainty which will increase not decrease the number of cases and is arguably a breach of our obligations under various EU Equality Directives because they will prevent there being an adequate remedy in discrimination cases.
The changes would also further disadvantage some of the most vulnerable groups, namely those with English as a second language and those who are unwell/ disabled by adding further hurdles to the submission of the claim process.
If pressed to express a preference we would prefer Option 2 but with fees only payable after a Case Management Discussion and a decision of an Employment Judge.
The responses below seek to highlight what we have identified as problems likely to be caused by the adoption of one option or the other, and the steps we have identified which we consider would avoid or mitigate the adverse consequences identified.
P&B have serious concerns as to how the fee regime (under either option) will work in practice, in particular with regard to the following points:
- We consider that the practical difficulties claimants (many of whom have no realistic prospect of obtaining advice prior to commencing ET proceedings particularly after the withdrawal of Legal Help from employment cases) will have in identifying the category of fee applicable to their claim, assessing their eligibility for full or partial remission of the fee and providing documentary evidence to support their application for remission have been seriously underestimated.
- P&B consider that the fees proposed compared with the Civil Courts are disproportionate and will in many cases amount to a denial of access to justice. An extreme example is that the higher fee proposed under Option 2 for claims for more than £30,000 (£1,750) exceeds that incurred for obtaining permission to appeal to the Supreme Court and that Court’s Hearing fee combined (£1,600).
- We consider that the levels of fees proposed are such that fees will present an inappropriate and potentially unlawful deterrent to claims.
- One consequence of the level of fees to be charged will be to drive some of the lower value ET cases (particularly breach of contract/non-payment of wages) into the Small Claims tracks in the County and Sheriff Courts, despite these Courts being less well equipped to deal with such cases.
- A further concern is that the levying of a hearing fee on the Claimant under Option 1 will reduce the opportunities and incentives for Respondents to settle cases early, and thus prove counter-productive on the Government’s own measures of the success of the policy.
- We consider the approach to the charging of fees in multiple cases has not been adequately thought through and is likely to produce unintended and unfair outcomes.
- We consider that the administrative burden on the ETs in dealing with payment of and remission of fees has equally been seriously underestimated.
- We are concerned that there is considerable potential for satellite litigation on time limits, and risk of the unjustified exclusion of legitimate claims, if time runs against claimants who fail to pay the correct fee or complete an acceptable application for remission at the time of presenting their claim.
- The introduction of a fee regime for the ETs and EAT will raise expectations of users of a standard of service that the ETs are unable, through insufficiency of resources, to provide. E.g hearings that do not take place because the ET lists too many cases on the same day.
- P&B consider that the charging of a fee for judicial mediation will end the use of this service which saves the ETs (and hence the taxpayer) considerable sums and provides a viable alternative to a trial, very much in line with the Government’s desire to promote Alternative Dispute Resolution.
- P&B considers that in the draft Equality Impact Assessment, the Government has underestimated the degree of disadvantage likely to be suffered by members of some protected groups (within the meaning of the Equality Act 2010), particularly those with disabilities, and women (especially those about to go on or just returning from maternity leave).
Responses to specific questions
Question 1: Are these the correct success criteria for developing the fee structure? If not, please explain why.
1.1 No. P&B consider access to justice, fairness, the right to have your employment dispute judicially determined and the promotion of equality of opportunity for minority? groups should be the correct success criteria. Early but fair settlement of disputes should be promoted but P&B consider the fees proposals will in fact encourage late settlement of claims. P&B also recognise that some claims are brought for reasons other than monetary compensation or as test cases or on behalf of a group of workers. Transferring costs from the taxpayer should be a low priority. If workplace disputes are not resolved judicially, in our experience, they have a tendency to manifest themselves in different ways such as through industrial action, high labour turnover and reduced productivity through sickness, absence and working slowly or to contract.
1.2 P&B considers that if ETs charge fees in a similar way to the ordinary courts, and in some cases significantly in excess of those charged by the ordinary courts, then ET users will understandably expect a higher standard of service than they currently enjoy.
1.3 Further, if the ET system does not become more efficient and effective, this will simply lead to more employment related litigation being brought on the Small Claims track in the County Court or Sheriff Court where fees are in many cases lower than those proposed for ETs and litigants have a better chance of having a trial listed which will actually take place. We note that a full refund of the hearing fee is available under the Small Claims Track if the court is notified of settlement or discontinuance at least 7 days before the hearing. Nothing similar is currently proposed in the ET system.
1.4 In P&B’s view, the introduction of fees payable by the Claimant is unlikely to encourage the parties to settle. A more likely way of encouraging early settlement would be extend time limits and introduce a requirement for parties to act reasonably in exchanging information with a view to resolving any dispute without the need for proceedings. In our view the current time limits of three months are too short, especially because they do not take into account the time taken up by internal appeals. If there were longer time limits, for example 6 or even 12 months, then parties would have more information available to them before they had to issue proceedings, fewer claims might be brought and there would be more time available before proceedings were started to explore settlement, resulting in more settlements.
1.5 Turning to the suggested criteria, we do not think that they are the correct success criteria. The suggested criteria assume that settlement is the best outcome for any litigation. This ignores the fact that some litigation is necessary in order to have judicial interpretation of new legislation. Further, some litigants wish to have a judicial determination of their rights and are not interested in financial reward. Finally, employment legislation offers employees a range of non-financial remedies including declarations and recommendations which can apply to an entire workplace. These statutory remedies would be rendered ineffective if settlement, particularly on purely financial basis was always the ultimate goal of litigation. In addition claims are also sometimes brought as ‘test cases’ affecting a much wider constituency than the actual parties. This can be to the benefit of both employees and employers if it provides a resolution and prevents industrial unrest as set out at 1.1.
1.6 The government’s aim should be to maintain access to justice for all – not just for those on limited means, although it should specifically maintain access to justice for those on limited means. Indeed, any other aim would be inconsistent with the government’s obligations under Article 6 of the European Convention on Human Rights.
1.7 P&B note we are responding to this consultation when the Government’s proposals on referring all claims first to ACAS have not been formulated. We believe that the suggested criteria of improving efficiency should be expanded to become “contribute to improving the effectiveness and efficiency of the system by encouraging users to resolve issues as early as possible by way of settlement, not least through ACAS”, with an expected rise in ACAS settlements signifying success in this area.
1.11 We also consider that the Government’s suggested purpose and success criteria should include a commitment to making a measurable improvement to the services offered by HMCTS and the ETs. This is the corollary of charging users for the service.
Question 2 – Do you agree that all types of claims should attract fees? If not, please explain why
2.2 Firstly it is not clear what the position would be, for example, in the case of claims involving large numbers of multiple claimants (such as equal pay claims). Although there are some initial proposals on how these are to be dealt with (explored in paragraphs 82 to 95 of the Consultation Paper in relation to the Option 1 fee structure), the administrative burden of calculating the fee involved (including, for example, what would happen if more claimants join a particular set of proceedings as it progresses through the system after the claim has been issued, or if claimants drop out of a set of proceedings) would appear to defeat any benefit generated by the fees. In such cases, a simpler approach would be to exclude them from the fee system altogether.
2.3 With regard to collective claims involving protective awards (in redundancy cases or cases involving a failure to comply with the information and consultation obligations under TUPE), P&B questions whether the application of fees to such claims is appropriate given the particular characteristics of this category of claims. Awards made in such cases are essentially punitive, not compensatory. Further, only a limited class of persons have the right to issue such proceedings, in most cases only unions or employee representatives. It would be particularly unfair to charge employee representatives who are bringing claims on behalf of those they represent (the latter being excluded from bringing the claims themselves) a fee for doing so. It is also difficult to see how a fee could fairly be calculated without reference to either the numbers of prospective beneficiaries of the claim or their means, and whether the representatives bringing the case would themselves qualify through lack of means for fee remission would appear to be purely a matter of chance.
2.4 Although P&B notes the Government’s point regarding the possibility of users seeking redress under an exempt route perversely increasing demand for it, it is of the view that there are some claims where it would seem disproportionate to apply a fee and that the possibility of having an exempt category of claims (a new “Level 0” category under the HMCTS categories) should be explored. Further examples of claims which could fall within such a category are those which have such a low value that payment of a fee would be disproportionate (e.g. where the value of the claim is less than the fee payable to issue the claim). We note from the Government’s recent response to the consultation on “Resolving Workplace Disputes” that they are considering further a proposal for the rapid resolution of certain employment disputes.
2.5 Similarly, it might be better to exclude claims (or at least claims for sums below a fixed value) involving clearly quantifiable sums (akin to a debt) e.g. for holiday pay, unpaid commission etc. These categories of claim are more likely to be brought by lower paid workers, and are often disposed of by default judgment or after a brief short-track hearing, and are the kind of claim that we are concerned would increasingly be brought in the County or Sheriff Court rather than the ET
Consideration should be given to the exclusion of fees for claims involving health and safety representatives, in claims for automatic unfair dismissal. The importance of such claims and for such representatives to exist and feel able to act to safe-guard employees rights should not be under-estimated. Also, whistle-blowers who make disclosures regarding health and safety should be exempt from fees in claims for detriment or unfair dismissal in circumstances where they agree in the form to send the claim form to the regulator. This would have the effect of ensuring that only claimants who were serious enough about the disclosure and their motives for making it, would be exempt from the fee.
2.6 In relation to claims involving the National Minimum Wage, given the fact that such claims will be brought by individuals claiming to have received less than the NMW, we consider fairness requires such claims to be excluded from fees. Very little revenue is likely to be generated by charging fees in cases where most claimants will qualify at least for partial remission of fees. Although it is noted that there will be a fee remission system in place, given the amount of the proposed fees, it is questionable whether individuals would be in a position to pay the relevant fee and bring their claim “in time” pending the outcome of their application for remission.
2.7 Further, many persons bringing such cases do not understand the complexity of the law, for example in relation to piece work schemes. To incur a fee where a party believes they have not been paid the minimum wage but are mistaken would be unreasonable.
2.8 As to claims brought by HMRC Compliance Officers, P&B cannot see any advantage in one agent of the state charging another agent of the state to use its facilities to enforce the law.
2.9 A further category of claims we consider should not be subject to a fee is claims against the Secretary of State (effectively the Insolvency Service) to enforce rights to payment where the claimant’s employer has become insolvent. Such claims tend to involve the claimant’s actual legal entitlements and limited determination of fairness/ findings of fact are necessary. The reimbursement of fees by the losing party would also seem to run counter to the stated aim of the proposals to reduce the burden on the tax-payer.
Question 3 – Do you believe that two charging points proposed under Option 1 are appropriate? If not, please explain why
3.2 We would propose a single hearing fee split between the 2 parties payable only after a Case Management Discussion (“CMD”) when an Employment Judge has assessed the claim and listed it for hearing. As well as making it more simple to understand (than a host of different charges at different stages for different cases), keeping the cost of administration down and encouraging settlement during the process, a single fee, payable after the CMD, would enable funds to be received by the HMCTS in a simple and workable way.
3.3 This has the following advantages:-
- an Employment Judge is able to assess whether the case has been allocated to the correct category and can assess the length of hearing and so likely final cost to the Tribunal Service if the case proceeds to hearing;
- the correct fee is more likely to be paid;
- the CMD provides an opportunity for the parties to meet/have contact over the phone and try to settle the case particularly if an ACAS conciliation officer is present at the CMD- we understand such a practice is being piloted at present in some tribunals;
- there is an incentive to the parties to settle as they would not have to pay a fee.
- Whilst the Employment Judge’s role would not be to conciliate or mediate, by identifying the issues to be determined at the final hearing, the strengths and weaknesses of each side’s case would inevitably be highlighted, providing a further incentive to settle.
3.4 The disadvantages of such a proposal include
- An additional requirement for the use of judicial resources, as CMDs are currently not normally listed in unfair dismissal claims;
- the Government’s expressed intention of relieving pressure on the taxpayer by transferring part of the cost onto users will only be met by some not all users;
- the Government’s expressed intention of resolving disputes early and encouraging parties to think more carefully about alternative options may be undermined as progress to settlement at or soon after the CMD may become the norm;
- vexatious and unmeritorious claims cannot currently be dealt with at the CMD without a rule change allowing for strike outs at the CMD.
3.5 P&B do not support the suggestion for charging fees at more stages in the process, as outlined in paragraph 30. There would in our view be logistical and practical hurdles to this, for the reasons mentioned in the Consultation paper, resulting in increased administration charges, and difficulty in choosing at what level to impose the charges and what charges to impose at each level. Satellite litigation is likely to result if this option is pursued. In addition, frequently the party making the application has been forced to do so by the inaction of the other. Conversely, the parties may sometimes agree that a certain way forward is appropriate and to make the party who expends the time, effort and cost also pay the initial outlay on the fee would be unfair. Litigants in person may be exploited in this respectvby employers more aware of the timings and consequences of when to make applications.
3.6 In relation to the two stage approach under Option 1, one of the questions not addressed by the Consultation paper is at what point the fee for a hearing is to be paid. As to this we make two points. The first is that it would be impracticable to link the fee to the listing of the case for hearing, since this would prevent the practice of tribunals listing short track cases for hearing at the time the claim is notified to the respondent. Moreover the costs incurred by the ET in providing a hearing are almost entirely attributable to the hearing itself (i.e. the salaries and fees of the panel, the use of premises and the time of the tribunal clerk), and the ETs routinely over-list in the expectation that most cases will settle after listing, or hearings will be postponed. There is therefore no administrative reason for requiring payment significantly in advance of the hearing. In addition, often settlement may be more likely following exchange of witness evidence.
3.7 Another question which needs to be addressed is if a Claimant, having paid the issue fee, is unable to pay the hearing fee would his or her claim be struck out? Alternatively would they be allowed time to pay up to the actual hearing date, or thereafter, or be allowed to apply for the fee to be remitted? It is P&B’s understanding that the question of eligibility for remission of the hearing fee would have to be addressed by reference to the claimant’s means at the time of application for remission (usually, when payment is due). We envisage complications arising if an application for remission is refused and there are delays in dealing with any appeal, and respondents will need to know sufficiently far in advance if a hearing is not going to happen because the payment of the hearing fee has not been resolved. A further complication will arise if, as we propose should be considered, the liability for the hearing fee is divided between claimant and respondent. If these considerations lead to an early deadline for payment of the fee being set, it will be all the more important that the fee is refunded if the hearing is then taken out of the list before the costs of providing it are incurred by HMCTS.
Question 4 – Do you agree that the claims are allocated correctly to the three levels (see Annex A)? If not, please identify which claims should be allocated differently and explain your reasons.
4.2 P&B’s response is:
- The three levels may appear rational. However, direct comparisons with the Court system could be misleading as particularly in Court cases involving debt recovery/breach of contract the value of the claim is usually known, whereas it can often be difficult to quantify an ET claim particularly at the outset where the full extent of a Claimant’s loss of earnings may be unknown and where the Claimant has no representation and has not received any legal advice.
- The three levels create difficulties for claimants (and administrative staff dealing with the receipt of fees) in knowing precisely how their claim fits within a lengthy and complex list of causes of action.
- It is a blunt instrument for identifying which claims are most likely to consume judicial resources: many unfair dismissal claims, for instance, result in longer hearings than quite a few discrimination claims.
- No consideration is given to what fees should be charged if claims are amended or additional claims are brought through amendment or consolidation
- No consideration is given to what happens when the Employment Judge orders the amendment or consolidation of claims.
Question 5: Do you think that charging three levels of fees payable at two stages proposed under Option 1 is a reasonable approach? If not, please explain why.
5.2 We agree that complex claims and multiple claims will, on the whole, require a higher amount of case management and consequently, a greater administrative burden. In addition, charging higher fees for claims which may, at face value, appear to offer higher compensation may deter applicants from bringing vexatious or otherwise misconceived claims for discrimination or whistle-blowing purely to force higher settlements from their employers.
5.4 P&B have the following concerns:
- The ET system was designed with the intention that claimants may represent themselves. It may be difficult for claimants who do not have resources to access legal assistance to identify correctly the nature and category of their claim and which fee is applicable. In order for claimants to be able to identify the nature of their claims, some form of coherent explanation of the legal issues will need to be provided prior to issuing proceedings so that they can correctly identify the applicable fee; failing this, some form of judicial assessment of poorly pleaded claims may be required to identify the claims and the applicable fee. This may incur further administrative costs and result in satellite litigation.
- It may not be possible for unrepresented claimants to identify whether their claim has any legal merit on the basis of the facts. It is more difficult for claimants to assess the merits of their case where the legal issues are more complex. Consequently, claimants may make a claim which falls into a higher fee category without appreciating that it cannot succeed. While this is less of a consideration at the issue stage, if such a claim progresses to a hearing, the claimant will make a more substantial loss. The Government should therefore consider how claimants can have access to pro bono services, ACAS advice or at least basic legal advice, in order to avoid claimants without access to advice incurring fees for claims which are unlikely to succeed. In this respect we note with regret the current proposal in the Legal Aid Bill to withdraw Legal Help in employment cases. The proposed system is likely to lead to Claimants needing more not less advice.
- It is not clear how the fee charging process will operate in the event that a claim is amended. Would this incur a further fee in terms if the amended claim fell within a different category?
- We are concerned that claims which have fundamental public policy objectives as well as provision for personal remedy, such as discrimination and whistle-blowing claims will attract the highest level of fees. While it is possible that such claims will attract greater administrative costs than other claims, this may also serve to deter genuine claims where there is a wider public policy issue at stake from being brought, particularly in cases where an applicant is unable to afford representation.
- We consider that these proposals are inconsistent with the UK’s obligations under the various EU Equality Directives to provide an effective means of redress.
- As there is very limited provision for legal aid in ET cases, there is a risk that genuine, meritorious claims of this nature will not be pursued due to the higher fee levels. Consequently, employers will be less vulnerable to such claims and discouraged from adopting robust policies and procedures in respect of the same.
- Applying differing fee levels according to the complexity of a claim will cause confusion to employment tribunal users, particularly those with poor English comprehension skills, and that this may in turn impact on the ethnic diversity of employment tribunal users.
- We fundamentally disagree with any fee being payable on the issue of the claim. In a forum which is intended to be quick, simple and which operates with very short time limits, frequently expiring before an internal appeal has even been heard much less decided upon, for the acceptance of a claim or otherwise to hinge on a payment of a fee to a separate centralised body or completion of a complex form and provision of evidence will render an already daunting task more difficult for claimants. The consequent satellite litigation is likely to make the process longer, more cumbersome and less certain for employers as well.
Question 6 – Do you agree that it is right that the unsuccessful party should bear the fees paid by the successful party? If not, please explain why.
6.1 Yes, as a general principle, the unsuccessful party should bear the fees paid by the successful party.
6.2 This is the general rule in the civil courts where costs including disbursements such as court fees “follow the event”. However, in the civil courts there is a general discretion and the court may make a different order (CPR 44.3(2)).It is considered appropriate that the general principle can similarly be departed from in the employment tribunals at the discretion of the tribunal where justice and fairness so dictate. It is noted that paragraph 46 of the Consultation Paper states:
“… it is proposed that the tribunals will have the power not to order reimbursement in any case where it considers that it is not appropriate given the circumstances”.
This proposal would be in line with a discretionary “just and fairness” caveat. However we have identified a number of points that will require consideration and clarification as to how this approach will operate in practice.
6.3 As to the definition of “success”, it is considered appropriate that the tribunal considers the definition given the facts and circumstances of the particular case, rather than adopting a prescriptive statutory definition. This is the approach adopted in the civil courts (CPR 44.3(2)), where “the successful party” has been interpreted to mean “which party has really won at trial” (see Fleming v Chief Constable of Sussex Police Force  EWCA Civ 643). This is often not an easy determination in the civil courts and likewise, it may not be straightforward for employment tribunals. The employment tribunals should however be equally equipped to make such a determination. The tribunal may determine that a finding of 100% Polkey deduction or a finding on liability on a small part of the claim would not warrant an order against the respondent for reimbursement. The tribunals should be open to arguments to make percentage or proportionate orders instead of purely issue-based orders on reimbursement of fees. If a claimant has been discriminated against but his claim fails after a full hearing due to time limits issues it would be unfair to have a straightforward “costs follow the event” determination of reimbursement issues.
6.5 Further to the comments above regarding the definition of “success”, in cases where a claimant succeeds on liability but remedy is dealt with separately, it would be appropriate for the issue of fee reimbursement to be dealt with as part of the overall assessment of success by the tribunal based on the facts and circumstances of the particular case. We anticipate that if there is a separate remedy hearing the issue of fee reimbursement would be addressed at that stage. However we anticipate the matter being more difficult to assess by the tribunal where the parties are left to deal with remedy following a liability hearing. The parties may seek to address the issue of fee reimbursement as part of their dealings on remedy without an order from the tribunal, but where agreement is not reached we anticipate this could result in more cases requiring a remedy hearing.
6.6 If Option 2 is chosen and a claimant who has paid the enhanced fee succeeds on liability but is awarded less than £30,000 , under the general principle proposed the respondent would be required to reimburse the claimant for the enhanced fee.
6.7 On settlement, it would be for the parties to agree who should bear the fees. It would be for the parties to determine whether they wanted to go to tribunal purely to receive a determination on fee reimbursement. However, the tribunal would be able to award costs if they consider a party has taken an unreasonable stance in litigating the issue of reimbursement of fees.
Question 7: Do you agree that it is the claimant who should pay the issue fee and (under Option 1) the hearing fee in order to be able to initiate each stage? If not, please explain why.
7.1 No. We consider the fee should be shared equally.
7.2 If a separate fee is to be paid for the hearing, this is especially so. We are concerned that employers may in some cases adopt an intransigent attitude to settling meritorious cases (and especially those in the higher categories but where the value of the claim is relatively modest) because they believe the claimant will not be able or willing to pay the hearing fee. This could lead some claimants to be deprived of justice.
7.3 There is no good reason why it should be the Claimant only who pays the hearing fee, as it is equally possible that the employer has caused the hearing to take place by taking the unlawful action complained of or disputing/ defending points it should not be contesting. They would be disincentivised to make settlement offers if they thought the hearing fee might deter the claimant from proceeding to a full hearing.The governments stated aim is that the cost of the tribunal service should be borne by those who use it. Respondents use it more than Claimants.
7.4 We note the comments about the administrative cost of seeking fees from both parties but note that the administrative costs only appear to be taken into account where to do so would benefit Respondents rather than claimants. Were it to be shared between the parties, as opposed to falling solely at the door of the claimant the tribunal service would be more likely to actually receive this fee from the Respondent, rather than the administrative burden of dealing with an application for fee remission which may result in no extra payment to the tribunal service. Pursuing an unpaid fee from an employer is likely to be less administratively difficult than chasing one from an employer.
7.5 We therefore consider that there is a legitimate case to be made for the fee to be payable by each party equally. We would also refer back to our previous proposal of levying fees after a CMD. Such a proposal would be a more effective incentive to settlement if liability for the fee were split between the parties.
7.6 If this approach is adopted, there would have to be a sanction for non-payment by either party; in the claimant’s case, subject to a reasonable opportunity to pay and judicial consideration of any reasons for non-payment, this would be the striking out of the claim (possibly with an order for repayment of the respondent’s share of the fee). In the case of default by the respondent the sanction would be the striking out of the response (again subject to judicial consideration of any representations by the respondent, and consequential orders for repayment of the claimant’s share of the fees).
Question 8- Do you agree that specific applications should have separate fees?
8.1 Yes except for written reasons and reviews . The first two applications listed are a counterclaim in a breach of contract case and an application to set aside a default judgment. It is consistent with the principle of charging fees that both of these applications should also have separate fees.
8.2 It is also proposed that there will be a fee for requesting written reasons for a decision. We are strongly opposed to this proposal. It is already the duty of the ET to give reasons for its decision, in compliance with Rule 30(6). Reasons may be given orally at the end of a hearing, when the decision is announced. Often, there is not enough time for this on the day, and reasons are reserved; so too if the ET requires time to consider its decision. This is most likely in longer cases, where the time needed to produce written reasons is likely to be greatest.
8.3 For these reasons it is effectively little more than chance whether written reasons have to be provided without a request; and the cases in which requests are needed are typically not the cases where the cost of complying is most significant. The fairness of charging a fee in these circumstances is not apparent to us.This is also likely to have a disproportionate impact on litigants-in-person or parties whose first language is not English.
8.4 Moreover, it is frequently the practice in England and Wales to give oral reasons dictated into a tape recorder recorded by the judge. The only further cost of written reasons is the cost of typing them up and having the judge check and sign them. This hardly merits an additional fee beyond that already paid for a hearing.
8.5 The entitlement of parties to litigation to know why a decision has been made is fundamental. Charging parties for written reasons is disproportionate given that entitlement. Moreover the written reasons are a public document of record, and although not binding in other cases, are often referred to, particularly judgments in cases dealing with relatively new jurisdictions where there is as yet no higher judicial authority by those advising clients as to their rights and responsibilities under new legislation. The availability of such documents is a public benefit which should not depend on the willingness of a party in the litigation to pay a fee.
8.6 As a final point, written reasons are required for an appeal to the EAT; where a request has to be made, charging a fee for this would add to the already significant cost of taking an appeal to the EAT. We would refer you further to our answers to questions 30 on fees in the EAT.
8.7 The last step for which it is proposed that a fee will be charged is applications for a review. We consider no fee should be charged. The very short time in which an application must be made (14 days) may be an issue where a party does not have funding. This could be addressed by allowing the applicant for a review time to pay (or obtain remission), or by extending what is in our experience an artificially short time limit, or both.
Question 9-Do you agree that mediation by the Judiciary should attract a separate fee that is paid by the respondent? If not, please explain why.
9.1 No. We consider charging a fee will stop all applications for judicial mediation. almost immediately. The following observations are to assist the Government if they reject our primary contention.
9.2 Our principal concern is that the fee would be a real deterrent to using a service which in our experience has been a very useful addition to the range of means for resolving employment disputes without the cost and inconvenience of a full hearing. Successful mediations save the ETs (and hence the taxpayer) the cost of what would otherwise often be lengthy hearings. Respondents are in our view much more likely to agree to mediation if it is a free service, since it is inevitably a matter of some uncertainty whether the claimant is intending to attend in a spirit of compromise, or the mediation will prove to be a waste of time; for it to be a waste of time and of a substantial fee would add considerably to the deterrent effect of that uncertainty.
9.3 We note that in the Impact Assessment no value is given to the income expected to be received for fees for mediation, presumably on the basis that there will not be any significant use of the facility. We are amazed that the Government should be contemplating a step which, for no financial gain, will jeopardise a service performing exactly the kind of diversion of cases from full hearings that is central to its approach to employment disputes.
9.4 The comments which follow address the position if, contrary to our primary position, the Government decides that a fee will be charged. The fee of £750 per case seems disproportionately high for a judicial mediation. Mediations take up the time of a judge for a day, with some, but not very much, time for pre-reading and modest administrative support. £750 comes close to the full cost of these resources (in contrast to the overall level of recovery of costs proposed, which is only 1/8 of the total cost of the service). The figure given in the Impact Assessment of the cost of a mediation, at £2,650, bears no relationship that we can identify to the likely cost of judicial time and the use of tribunal premises. In our experience the Employment Judge is not fully utilised during the day and so credit could be given for time spent dealing with matters on paper.
9.5 Where one party pays for private mediation outside the judicial mediation scheme it is usually entitled to or asserts entitlement to a greater degree of control as to the choice of mediator and timing of the mediation. We assume that respondents will not have a choice of judicial mediator; this may encourage, at least in higher value claims, the use of private mediation. We question whether this is a gain for the ET system.
9.6 The proposal also does not provide for multi-party litigation, e.g. with several respondents, possibly including individual employees for whom vicarious liability is not admitted. It is entirely unclear who in these circumstances would pay the fee, or how it might be apportioned.
9.7 A further situation not addressed in the Consultation Paper is where the mediation takes place after the fee for the hearing has become due. If there is agreement to hold a judicial mediation, we consider that this should automatically lead to deferral of the hearing fee at least until a reasonable time after the mediation has taken place; if the mediation is successful, the fee will not then need to be paid.
9.8 There is also no provision for cases where the mediation fee is paid, but both parties, or one party decides not to proceed before the mediation takes place (in many cases this will be because the case has been settled privately). We considers that if the decision not to mediate is notified to the ET 3 days before the mediation takes place, the fee paid should be refunded.
9.9 In the event that mediation is successful, so that no hearing is required at all, there is an argument that the paying parties should obtain at least a partial fee rebate reflecting the saving in court time. This could act as an incentive to mediate and to resolve the dispute at that stage.
9.10 Where mediation takes place and fails, due to the unreasonable conduct of a party, and the same party fails at the substantive hearing, and the other party has paid the mediation fee, that party may well feel that they should be able to recover the mediation fee; however it would not be possible to base any recovery on the unreasonable conduct of a party in the mediation without destroying the essential confidentiality of the mediation process. We regard this as a further consideration against the charging of any mediation fee.
Question 10: Do you agree that HM Courts and Tribunals Service remission system should be adopted for employment tribunal fees across Great Britain? If not, please explain why.
Question 11: Are there any changes to the HM Courts and Tribunals Service remission system that you believe would deliver a fairer outcome in employment tribunals?
10.1 These two questions can best be addressed together.
10.2 P&B consider that it is essential, in order to preserve the principle that ETs are accessible to anyone with a legitimate case within the ET’s jurisdiction, and given the Government’s decision to introduce fees for ET claims, that there should be provision for the remission of fees for those who cannot reasonably be expected to afford the fees, and partial remission for those who cannot reasonably be expected to meet the full fees. Without provision for remission, the right of access to an impartial tribunal to determine the civil rights and obligations of less well-off claimants, in accordance with Article 6 of the European Convention on Human Rights, would be jeopardised.
10.3 The principle of remission of fees based on an assessment of means is therefore fully accepted. P&B also accepts the categories of eligibility for fee remission, and the levels of income currently used, as broadly appropriate for the task of protecting those unable to pay whilst not exempting those with the means to pay, subject to the important qualification that the rates of gross and disposable income need to be indexed to average earnings to ensure that the proportion of claimants eligible for remission does not decline through inflation. This is subject to the important points made in our response on the Equality Impact Assessment as to the disproportionate adverse impact of fees on certain minority and disadvantaged sections of the community. We also raise in the second part of the response to these questions a number of points about the precise criteria for remission and how they should be applied.
10.4 We have a number of practical concerns as to the way that the HMCTS remission scheme would apply and be operated in the rather different context of employment tribunals. We consider that there are significant differences between the civil courts and the employment tribunals relevant to the operation of a fee regime, and in particular the remission of fees:
- A significantly larger proportion of claimants are not professionally represented, and many do not have ready access to professional advice.
- Most claimants will have recently lost their job, resulting in a significant change in financial circumstances immediately prior to the point at which remission would be assessed.
- Tribunals operate under much shorter time limits for presenting claims, and a strict regime for the application of time limits.
- We also note that it appears to have been assumed by those drafting the proposals that the HMCTS scheme applies equally in Scotland. However it does not. The equivalent does not provide for partial remission. This leads to severe concerns that such important have not been thought through to the extent that they should.
10.6 A significant number of claimants simply do not have the documentation that would be needed to prove financial means, either because of failures by employers to provide payslips or because payslips have not been retained; in addition, in an appreciable number of cases the termination of employment was preceded by a period of non-payment or erratic payment of wages, making it particularly difficult to establish an accurate picture of annual earnings. The provision of sufficient documentary evidence of means for fee remission claims is often problematic, even with the assistance of a professional adviser. This will simply make a daunting process more complex and claimants in even more need of advice.
10.7 The existence of different levels of fee for different categories of case, will inevitably confuse many unrepresented claimants and add to the proportion of cases where claims are not accompanied by the correct fee. It is not uncommon that errors are made by tribunal staff in the initial coding of claims by jurisdiction, so it should not be a surprise that lay litigants will make similar errors.
10.8 This leads us to anticipate that a significant proportion of claims will initially not be correctly supported by the fee or a properly documented claim for remission. We are concerned that the estimate of the cost of administering the fees regime given in paragraphs 4.53-4.57 of the Impact Assessment has been significantly understated. We consider it essential that the tribunals’ administration is sufficiently well resourced to be able to deal promptly and efficiently, as well as fairly, with errors and disputes over fees.
10.9 We consider it will generate satellite litigation in a number of areas. In particular, if claims which are not accompanied by either the correct fee or a duly documented and valid claim for remission are not accepted and registered as claims, we foresee that there will be significant numbers of cases where the claim is initially presented just in time, but is out of time when validly re-presented, leading to a requirement for a Pre-hearing Review to determine whether time should be extended; this would not only add to the burdens and costs of the tribunal system (and thus run directly contrary to one of the main stated policy aims behind the introduction of Tribunal fees) but also incur avoidable costs for respondents having to attend the PHR to argue against an extension of time. We would also question the justice of denying a claimant the right to have his or her claim adjudicated when the claim was originally presented in time, and either the relevant fee has since been paid or an entitlement to remission has been demonstrated.
10.10 A further concern is that claimants will have a perverse incentive to delay presenting their claims to the last moment because this will enable them to rely on being in receipt of an exempting benefit or reduced annual income, following dismissal, to avoid liability for the fee for presenting a claim. It is in the interests of both claimants or respondents, that tribunal proceedings, if unavoidable, are delayed no more than necessary. We consider that the details of the fee remission scheme should so far as practicable be based on this consideration.
10.11 We consider that the following specific points need to be addressed for the HMCTS remission scheme to work fairly and efficiently in the context of employment tribunals; these points are additional to our proposal that consideration be given to extending the primary time limits for the most common ET claims, for reasons developed in our answer to Question 1.
- Claims presented with neither the required fee nor a duly supported and valid application for remission, should nevertheless be treated as received by the tribunal on the date of actual receipt, and recorded as such, so that the running of time will not affect the tribunal’s jurisdiction to hear the claim if the fee issue is subsequently resolved (by payment or grant of remission).
- Such claims should then be made the subject of an immediate stay for such period as necessary until payment or a valid remission application has been received, or (failing either) a decision on whether the claim is to be struck out has been taken.
- Respondents should be notified of claims treated as received on this basis and should be sent a copy of the claim form at that stage to allow them an opportunity to respond within 28 days. If they do not contest the claim any fee should be paid by them or this gives them an opportunity to seek to settle the claim. If they do contest it the claim should be listed for a CMD to determine the issues to be decided at which point decisions on fees can be made. Alternatively, if the introduction of fees at issue stage is a certainty the respondent could be sent the claim form but informed no response is required unless and until they are so notified.
- Claimants should be required by the tribunal administration to pay the fee, or provide whatever documentation to support an application for remission may be specified, within 28 days of being sent notification to the effect. The letter informing them of these requirements should make it clear that the claim may be struck out if there has not been compliance within the 28 day period.
- Once a claimant has complied with the requirement to pay a fee, or been granted remission, (or the Respondent has indicated that it does not intend to defend the claim) the case should proceed in the usual way.
10.12 Different considerations will apply, if Option 1 is adopted, where an initial fee has been paid and the Hearing Fee becomes due. Claimants who are not eligible for remission, or full remission, may nevertheless quite legitimately need time to raise the money to pay. Whilst a claim would not proceed to a hearing without the fee having been paid (or remission granted), we consider that the only proper grounds on which a claim could be struck out for non-payment of the fee would be either that it is not being actively pursued or that the claimant’s conduct of the proceedings is scandalous, vexatious or otherwise unreasonable; before an employment judge could strike out a claim on any of these grounds the claimant would have to be given an opportunity to make representations (in writing, but subject to the right to ask for a hearing, with a judge deciding whether a hearing is required in the circumstances).
10.13 P&B also wish to comment as follows:
- With regard to appeals. We note that the HMCTS scheme provides for two levels of appeal, both on paper and each to a more senior level of official within the HMCTS administration. We make no comment on whether this is acceptable within the context of the civil courts, where we believe that disputed decisions on fee remission are relatively rare. There will be many more appeals in relation to ET claims, and the issues are likely to be more complex, both in cases where documentary evidence is lacking and because of the complications created by having different categories of fee for different causes of action and in relation to multiple claims. The consequence of an unsuccessful appeal will be that the claimant is denied the right to pursue a claim to have his or her civil rights determined, and therefore an infringement of the claimant’s Article 6 rights that requires justification. Such justification can more readily be provided, if an employment judge decides the appeal, or at least the second appeal, if two stages of appeal are provided.
- The second point is the disposal of those cases where a claimant has not paid the fee or demonstrated an entitlement to remission, either initially or on appeal. We consider that the claim should remain stayed until any rights of appeal have been exhausted. Thereafter, or if there is no appeal, the case should be referred to an employment judge to determine whether it should be struck out.
Specific points about the criteria for remission
10.14 P&B agrees that receipt of any of the benefits covered by the HMCTS remission scheme should lead to full remission of the fee. However, we have a number of concerns about whether this will be effective to ensure that those most in need of remission are granted it.
10.15 Employees who have the required record of NI contributions are entitled to contribution based Job Seeker’s Allowance on losing their employment. This is awarded without a means test, but it does not indicate that the particular individual would not qualify for Income-based JSA. The question is simply not considered. P&B are concerned that those recently unemployed and in receipt of JSA may be disadvantaged by the fact of having a good record of NI contributions.
10.16 Additionally, employees who are dismissed for misconduct are liable to be disqualified from JSA for a period extending beyond the deadline for presenting a claim to the ET in relation to their dismissal. The issue whether there was misconduct (at least sufficient to justify the termination of a claimant’s employment) may be the very issue the subject of the claim. Appeals against disqualification from JSA may not be resolved until after the deadline for presenting a claim to the ET (and indeed such appeals are often deferred until the outcome of the tribunal claim is known). Fairness to claimants requires that fees paid to HMCTS should be refunded if there is at any later stage a determination of the Social Entitlement Tribunal that the claimant should have received income-based JSA for the period including when the fee was incurred. In this respect no time limit should apply for a claim for a refund of the fee.
10.17 A further concern is that if an employee is dismissed with pay in lieu of notice, eligibility for benefits which would attract exemption from fees under the HMCTS scheme may be affected. For longer serving employees payment may be for up to 12 weeks, almost the length of the period within which a tribunal claim must be presented. We consider that special consideration should be given in the scheme for remission to such cases, and that there should be at least an express discretion to remit fees where the claimant has met the conditions for entitlement to one of the qualifying benefits (Income Support or income based JSA or Employment and Support Allowance) but only from the expiry of a period covered by pay in lieu of notice. If this is not provided for, employers will have an incentive to use payment in lieu of notice to create obstacles to employees presenting claims which would distort the balance of fairness between the parties.
10.18 We also consider it very important that the assessment of a claimant’s means is based on his or her current means, particularly where these will have been significantly affected by recent loss of employment, as will be the case for very many, probably a significant majority, of claimants. It is our understanding that disposable income is assessed on a monthly basis, and on the basis of the most recent evidence. This will mean that any claimant whose circumstances have been adversely affected by loss of his or her job will have a financial incentive to delay making a claim to the ET until he or she can provide evidence of means over a full month post-dismissal.
10.19 The position with regard to remission based on gross annual income is potentially more significant. We note from the worked examples at pages 81-2 of the Consultation Paper that the assumption appears to be that gross annual income is calculated on a current, rather than historic basis, but the information about supporting documentation in the HMCTS leaflet EX160A appears to indicate that historic documentation over a period of at least three months will be required. If the remission scheme is to work fairly in assessing gross annual income it will need to be made clear that it is the rate of income being received at the time of the application that matters, and the documentary evidence to be required will need to be tailored to this end (eg by requiring evidence of gross income for the last complete calendar month before the date of application).
10.20 It should be made clear, that where a second fee becomes payable under Option 1, or for an application in the course of the proceedings, entitlement to remission will depend on the claimant’s means at that point, and means will therefore have to be disclosed and assessed again, leading to further administrative burdens on the claimant and tribunal.
Claimants with legal expenses insurance
10.21 In response to the supplementary question at paragraph 81 of the consultation document, we consider the assumptions made about claimants who rely on legal expenses insurance to fund their representation may not be correct. Insurers may meet the cost of fees charged to claimants in the ETs whose claims they cover in the same way that they do in civil actions, but they may not. Given the insurers bargaining power, it will be relatively easy for insurers to exempt such fees from the cover provided. They may exclude the payment of fees or insist that claimants who qualify apply for a fee remission. We note that in many civil claims the defendant is also insured and so if a claim is won there is no risk that the court fees as a disbursement as part of the costs award will not be paid. The same is not true in many employment cases where the numbers of awards that cannot be enforced are substantial. Further, we anticipate that, particularly for relatively low value claims, insurers may impose rather stricter criteria for funding the claim, leading to a reduction in the number of legally represented claimants. This would not be welcomed by respondents, as dealing with litigants in person is often more time consuming and costly than dealing with professional representatives; and it would place a greater burden on the tribunals for the same reason.
Question 12 – Do you agree with the fee proposals for multiple claims under Option 1? I not, please explain why.
12.1 No. We consider such claims should be excluded from the fees regime. There are too many complexities to the current proposals and there is a substantial risk of a challenge for a breach of the requirement for the provision of an adequate remedy in claims that result from EU Equality Directives.
12.2 We are concerned that the level of fee is to be determined by reference to whichever is the highest category of any of the claims made by any of the claimants within the multiple. It will produce unfairness to those claimants who have not brought the higher category claims, particularly, under Option 2, if only one or a handful of claimants has a claim for more than £30,000.
12.3 It is important that a fee structure is not created which provides a perverse incentive for individuals to present their claims individually, rather than as a multiple, for instance so that full remission can be obtained for claimants with limited means. That would add considerably to the cost to HMCTS of the case management of multiple claims, possibly to the extent of exceeding net revenue from multiple fees. If that is at all likely, the simpler option of not charging a fee at all for multiple claims, or only charging the same fee as for single claims, would become much more attractive.
Also, to make it possible for the whole of a claim to be struck where one of a number of claimants does not pay the fee/ remission is likely to lead to injustice and further inter-claimant satellite litigation.
Question 13 – Do you agree that the HM Courts & Tribunals Service remission system should be adopted for multiple claims? If not, please explain why.
13.1 There is a strong public interest in encouraging litigants whose claims arise from the same or similar circumstances and are against the same respondents to combine their claims as multiples, since despite these factors, multiple claims are more cost effective to deal with what could otherwise have been a large number of single claims covering the same or similar issues. Therefore the fee structure, including remission criteria, should not act as a disincentive to claimants bringing their claims as multiples. There is merit in either excluding multiples from the fee regime altogether or limiting the fee to that charged for a single case or asking the employer to pay any additional fee necessitated by the fact that a case involves multiple claimants.
By having the employer pay any additional fee this minimises the administrative burden both in terms of the number of parties to be pursued and the likelihood of fee remissions.
Further views are sought as to what further rules might be needed to act as safeguards. The recognition in paragraph 104 that the fee should not become a consideration in the process of deciding whether claims should be consolidated or not demonstrates the problems with introducing fees at all. They should not be a factor in considering whether to/ how to bring/ defend/ run a claim.
13.2 In paragraph 89 views are invited on what we see as the role and responsibilities of unions and representatives in paying fees in multiple claims. For those represented by trade unions, we consider the same assumptions made about claimants who rely on legal expenses insurance to fund their representation may not be correct. Trade unions or their lawyers may meet the cost of fees charged to claimants in the ETs whose claims they cover in the same way that they do in civil actions, but they may not. They may exclude the payment of fees or insist that claimants who qualify apply for a fee remission. We note that in many civil claims, for example for personal injuries, the defendant is also insured and so if a claim is won there is no risk that the court fees as a disbursement as part of the costs award will not be paid. The same is not true in many employment cases where the numbers of awards that cannot be enforced are substantial. We do not accept that the fact of either legal or union representation should deprive needy claimants of a right to remission of their share of the fee: it cannot simply be assumed that the legal or trade union representative will meet the cost and there is therefore no need for a scheme of remission, particularly in the absence of any evidence that trade unions in particular are willing, or in a position, to bear this additional expense as well as providing free representation to their members. They may decide to rewrite their terms to exclude fees from Legal Scheme cover. Generally the right to advice and/or representation under union legal schemes is expressed to be discretionary. They may insist that members who qualify should seek a remission. The remission system is based on the Claimant’s means and does not therefore make sense for the Union to be responsible for paying the fee. In this difficult economic climate placing further burdens on Unions is likely to be counter-productive to the government’s stated aims. Unions may be forced to advise their members to make their own claims and only take over conduct of the claims as and when a fee remission has been granted. This would mean that claims would be issued without the benefit of advice they may otherwise have had, making applications to amend claims more likely and leading to further costs and administrative burdens as the Tribunals struggle to ensure that the appropriate fee is paid. This would also have the effect of making it even less likely for a Claimant to be in a position to make any kind of accurate assessment as to the potential value of their claim. By forcing Unions to potentially have less rather than more involvement at an early stage the benefits gained by employers. Tribunals and Claimants would be lost, as well as valuable advice as to whether or not a claim is likely to be meritorious.
13.11 In cases where some but not all claimants are represented, or there are different representatives for different groups of claimants, the responsibility for payment of the appropriate share of the fee, and submitting claims for remission if applicable, would have to lie separately with each representative (and each individual claimant if applicable) since there is no mechanism for directing otherwise.
13.12 In situations where there are multiple claimants this is frequently due to serious failings in employer’s obligations towards its employee such as failure in consultation obligations under TUPE or in respect of redundancy. By making Claimants in multiple claimants pay higher fees than a single claim would cost this incentivises employer to deny that the Union is recognised for the relevant category of employee as this could lead claimants in a TUPE consultation claim to have to pay greater fees and go through significant information for each one. This could also apply to failings in the employer’s redundancy consultation obligations.
13.13 In view of the increased burdens on Unions at a time when significant numbers of members are vulnerable and needing advice, it is proposed that any additional fee which is found to be necessary in a multiple claim should be met by the employer, rather than the Claimants. The fact that more than one Claimant is making a similar claim acts as a kind of safe-guard against such claims being entirely unmeritorious or vexatious. As set out at paragraph 92 of the consultation document multiple claims benefits employers too so it seems just that they should shoulder some of the burden of the initial outlay.
13.14 It is too complex to ask a Claimant for a further fee if this becomes necessary and would disincentivise them from requesting this even in situations where to do so would be in accordance with making best use of the Tribunal’s time and resources. The layout of the form and the administrative difficulties of submitting claims of very different types on behalf of multiple claimants is a sufficient safe-guard against any perceived risk that Claimants will deliberately try to bring claims that should not be considered together as one claim.
Question 14-Do you agree with our approach to refunding fees? If not please explain why.
14.1 No. It is unreasonable, likely to produce injustice and also counter-productive in discouraging settlements in the period after fees have been paid covering the hearing. Specifically, we consider that both fairness and the interests of efficiency require that refunds be available where:
- The fee is for the hearing, and no hearing takes place, provided that reasonable notice has been given of the withdrawal or settlement of the case: we propose a minimum of 7 days before the date scheduled for the start of the hearing.
- The fee has been incurred because of an error by the ET.
- The wrong fee has been charged to the party due to an error of the ET staff
- The party paying the fee has incurred unnecessary cost due to the last minute cancellation of a hearing.
- As a matter of discretion, there are cases where a claimant presents a weak case, or a case in a higher fee bracket, and then, before significant costs are incurred on the case by the ET, withdraws. Refunds should be available in such cases.
- There should be discretion to refund fees incurred in pursuing successful claims where the compensation awarded cannot be recovered from the respondent (typically because it has become insolvent).
14.2 If the hearing does not take place, either because of a settlement or withdrawal of the claim, virtually none of the costs to be covered by the hearing fee are in fact incurred. The proposal may not therefore be compatible with Treasury Guidelines that fees should not exceed the cost of providing the service. This is implicitly recognised within the fee structure for the High Court and County Court, where refunds are given if the hearing is removed from the list a reasonable time before it is due to take place.
14.3 As noted in our response to Question 8, there may be occasions where a fee has been incurred through an error of the Tribunal. The example given there is where a default judgment turns out to have been entered because the Tribunal mislaid the response form, as can happen, or the ET served the claim form at the wrong address, leading to it not being received by the respondent in time to respond. A Respondent (or Claimant responding to a counterclaim) might then have to pay a fee to apply to set aside the judgment, when it turns out the default judgment does not arise from their error.
14.4 In our response to Question 1 above we draw attention to the burden on parties caused by the unacceptably frequent practice of last minute cancellation of hearings and cases being assigned as “floaters”. Remission of the hearing fee, on evidence that costs have been thrown away because of the failure to provide the scheduled hearing, would be a start toward compensation for the party which has paid the fee. A more consumer-focussed approach, under which users are entitled to expect the service for which they have paid, at least necessitates that failure to deliver what is legitimately expected should necessitate a reduction in the price. The introduction of fees for ET claims entails precisely that shift in focus.
14.5 It will be inevitable that those litigants in person who do not have access to the internet, or ability to pay on-line, will have to be able to pay fees in person at Tribunal offices. It is possible that Tribunal staff may request the wrong fee from a litigant in person, requiring a refund. A blanket policy of no refunds would operate unfairly in such situations.
14.6 The current nature of Tribunals and the difficulty of obtaining legal advice in such cases, mean large numbers of litigants in person start cases in the Employment Tribunals, without the benefit of prior legal advice. Claimants subsequently receiving legal advice that their claim is weak on the merits in whole or in part, may have an incentive to withdraw in good time, when a mechanism for refunding fees, or a proportion of fees is available. Withdrawals save the Tribunals costs. Where there is no such a mechanism, some Claimants may be more inclined to continue with all claims, or to proceed all the way to hearing, taking the view that as they have paid an issue fee and, if relevant, hearing fee, they may as well proceed.
14.7 Claimants may bring applications including both level 2 and level 3 claims. If they can get subsequent legal advice, they may be advised to withdraw claims, if they are unmeritorious at level 3 and continue only with the level 2 claims. They will have paid a fee at the higher level for level 3, but the proposal will not allow a refund of the extra level 3 fee, even though the decision was made without the benefit of legal advice and even though the Tribunal will not have to undertake work at level 3, but only at level 2. This will cause injustice and may result in satellite litigation. There should in these circumstances (and those outlined in paragraph 14.6) at least be a discretion to refund all or part of the fee, or the additional element of the higher band fee, on application, following a timely withdrawal of the claim or higher level claim, as the case may be.
14.8 There is a particularly high incidence of non-payment of Tribunal awards by a number of Respondents. In many other cases the Respondents are insolvent already, or go insolvent. For many Claimants in such circumstances, who have to proceed without legal advice and assistance and who may be on low incomes, or vulnerable through disability or language problems, this can result in considerable injustice, in that they have had to incur a fee, which will never be recovered. Their position is very different from a commercial litigant. A discretionary power to refund fees in such situations would be just.
Question 15: Do you agree with the Option 1 Fee Proposals? If not, please explain why
15.1 No. There are a number of matters, as explained in our earlier responses which will require consideration in implementing legislation to make these proposals work in practice:
- Whether and how to provide access to legal advice services or resources in order to assist applicants to understand the type of claim they have and the applicable fee structure.
- Whether and how public policy considerations arising from the institution of higher fees for discrimination and whistle-blowing cases should be addressed.
- Whether there is a conflict between the targets set for employment tribunals to list cases within a narrow time frame and the principle of a two stage hearing fee to allow time for a case to settle. In recent years, we have noted the increasing time pressure to conclude cases within a short time-table, even where the cases are complex and involve substantial preparation. If a hearing fee is also to be introduced, consideration will need to be given to the extension of existing time-frames, and the abandonment of the artificial and often counter-productive 26 week hearing date target. Consideration should also be given to a provision, as in the case of the civil courts, for an automatic stay for a period of one month on request by either party to allow for conciliation or mediation, thus potentially avoiding a hearing (and a hearing fee being incurred).
15.2 While it is in principle sound that the unsuccessful party should pay the court fee, consideration should be given to how this should be enforced, to avoid unrepresented applicants having to pursue the fees through enforcement proceedings where the respondent refuses to pay, or becomes insolvent.
Time limits and miscellaneous points
15.3 Other issues which these aspects of the proposals raise, which are not the subject of specific questions but which P&B consider require to be addressed, include:
- It is our understanding that “hearing” does not include Pre-hearing Reviews Will the introduction of a second fee for the hearing impact on the use of PHRs?
- Default judgments will not attract a further fee but in most unfair dismissal and discrimination cases default judgments are limited to liability with a short hearing listed to determine remedy. Will such hearings be classed as “hearings” for fee purposes? If so, should they attract any fee? It is P&B’s view that there should be no fee in such cases. To require a claimant to pay a full hearing fee, possibly as much as £1,250, in such circumstances would be grossly unfair (and would almost always represent more than the cost to HMCTS of affording the hearing). Any such fee should be met by the employer, as the losing party
- Claims including an application for interim relief should not involve payment of a fee. The time limit for such claims is only 7 days, and we consider it would be oppressive to expect payment at the time of presenting such a claim as a condition for accepting the claim.
- Should Calderbank offers be taken into account by the tribunal in deciding whether to order the fee to be repaid? If so is there a risk that more remedy hearings will be necessary, particularly when the decision on liability is reserved?
Question 16: Do you prefer the wider aims of the Option 2 fee structure? Please give reasons for your answer.
16.1 No. The wider aims attributed to Option 2 in the Consultation Paper (Claimants making informed judgments as to claim values and greater employer certainty as to liability) will not be achieved by Option 2. The introduction to the impact assessment cites high figures in the press influencing employers’ concerns over their potential liabilities. Better informing employers would therefore appear to remedy the perceived fears employers have about the levels of tribunal awards.
16.2 It is doubtful whether the aim of “giving greater certainty to employers over their likely level of liability” is an accurate description of the Option 2 fee structure. What is currently offered to employers is certainty as to whether a claim value is above or below a £30,000 threshold. Apart from the threshold valuation, employers are unlikely to rely on Claimants’ own assessments of their claims.
16.3 It is noted that a key aspect of achieving Option 2’s wider aims is the provision of guidance and support to Claimants; the Impact Assessment suggests that this will be via web-based information and a calculator. Given the sometimes complicated nature of tribunal compensation, much will depend on whether a web-based solution is capable of helping Claimants to determine whether their claim is above or below the threshold. Some claimants may have a tendency to hope/ expect that they will find work sooner than they in fact do, meaning they may value their claim too low and such claimants should not be penalised for this, In addition, the question arises as to the extent to which Claimants have access to the internet.
Question 17: Do you think one fee charged at issue is the appropriate approach? Please give reasons for your answer and provide evidence where available.
17.1 No. We think a single fee which should be split between the parties should be paid after the CMD. The comments that follow are on the basis that the Government ignores our primary contention. The Impact Assessment and Consultation Paper already highlight a number of advantages and disadvantages resulting from this approach. Most of the advantages appear to benefit the State, for example, it is simpler to administer and less costly. Whilst this is important, we suggest that both employers and claimants will value the existence of more incentives to settle, not less.
17.2 There are also practical difficulties associated with Option 2’s one-fee approach, specifically the timing of it, in particular, the difficulty that Claimants and their lawyers will encounter in knowing the value of the claim at the time they pay the issue fee (please see our response to Question 28 for further discussion of this point).
17.3 We note that the MoJ proposes that there will be no refunds of fees by HMCTS. However, if the hearing does not take place, either because of a settlement or withdrawal of the claim, virtually none of the costs to be covered by the fee are in fact incurred. We doubt whether this is compatible with the Treasury Guidelines relied on by the MoJ i.e. that fees should not exceed the cost of providing the service.
Question 18: Do you think it is appropriate that a threshold should be put in place and that claims above this threshold attract a significantly higher fee? Please give reasons for your answer.
18.3 No. The tribunal statistics show that only 191 cases in a year (less than one for every thousand claims presented) led to an award of over £30,000. Employers’ concern that they face ruinous litigation is entirely misplaced. The apparent mischief this proposal is intended to prevent can be prevented by educating both parties rather than penalising the claimant.
18.4 It should be recognised that awards made by ETs may not have matched the Claimant’s expectations at the time of issue. It should also be noted that only 40% of claims for unfair dismissal reaching a hearing before the ETs in 2010/11 were successful.
18.5 Not all claims over £30,000 are more complex or use more resources than claims under £30,000. The bulk of claims resulting in awards of over £30,000 are for unfair dismissal. Higher quanta in those claims are likely to be due to the higher salaries of the claimant or poor prospects of finding alternative employment. The resources of the ET used by such claims are less likely to have a correlation with the value of the claim than the type of claim.
18.6 In discrimination claims the complexity and demands on the resources of the ET may have a correlation with the value. Awards for unfair dismissal are based on the earnings of the claimant, whereas compensation in discrimination claims are often higher due to having to add awards for injury to feelings and, potentially, damages for injury to health, aggravated and/or exemplary damages as well as loss of earnings including pension. Injury to feelings and aggravated damages awards are based on the incidents of discrimination, which can be numerous, complex and lengthy.
18.7 Since claims for more than £30,000 are more likely to be made in unfair dismissal cases, the proposed threshold is unlikely to meet the wider objective of passing the cost of administering the ET to those who use most resources.
Will a threshold encourage settlement or provide greater certainty to businesses as to their maximum liability?
18.8 A threshold set at £30,000 has the potential to self limit claims to a maximum £30,000. The threshold therefore provides no real certainty to a business save to allow it to set a maximum reserve for the business. Taking into account our response to Question 19 below, if the ET is allowed to make an award in excess of the threshold or in excess of the value placed on the claim by the claimant at the time of issue, then any certainty that might be created will be undermined.
18.9 If the desired outcome of the introduction of a threshold is to give employers a better idea of the claim value at issue then the introduction of the requirement for a schedule of loss to be provided at issue of the claim would assist achieving this aim without the need for a threshold. However, if respondents are to be expected to rely on Schedules of Loss, unrepresented claimants in particular will need assistance in calculating the value of their claim. It will be extremely difficult to produce a mechanism for calculating awards for injury to feelings, or for loss of earnings where there is a requirement for mitigation. Pension losses are an extremely complicated calculation, which many claimants may not understand. Any loss calculator will have to be extremely sophisticated to take account of these factors.
18.11 The fact that ET claims have, in the main, to be issued within 3 months of the dismissal or act of discrimination, gives Claimants/their advisers relatively little time to calculate a claim’s value compared to claims brought in the civil courts where the claimant often has, between 3 to 6 years to issue a claim. . In discrimination claims, the act of discrimination has, more often than not, already occurred prior to the claimant leaving any employment or obtaining legal advice. This often leaves less than 3 months for claims to be valued and issued. This may be seen as a further reason for relaxing the time limits for presenting claims.
18.12 This question also asks whether claims involving more than £30,000 should attract a “significantly higher” fee, the amount proposed being £1,750. The Impact Assessment records that 90% of claimants are expected to qualify for at least partial remission of this fee. If that is correct it calls into question the purpose of imposing such a fee. It appears to be an attempt to frighten claimants away from making large claims, there is a danger of the opposite outcome in cases brought by impecunious claimants entitled to a full remission of fees: they will have every incentive to claim more than £30,000, at no cost, to “raise the stakes” with the respondent. This however will make it more difficult to settle such cases, leading potentially to hearings that could have been avoided if a perverse incentive to over-value claims had not been created.
Question 19: Do you think it is appropriate that the tribunal should be prevented from awarding an award of £30,000 or more if the Claimant does not pay the appropriate fee? Please give your reasons and provide any supporting evidence.
19.1 No. There are various situations that might lead to a change of circumstances that would increase the value of a claim from that considered at the date of issue:
- Expectations of alternative employment being found not being realised in practice.
- Loss of the alternative employment that had been found.
- Prognosis of psychiatric injury changing.
- Claimant receiving advice which was not available at the time of presentation
19.2 The value of a claim, particularly for claims involving dismissal, is directly linked to a claimant’s ability to mitigate their loss. It is impossible for claimants to calculate their loss of earnings accurately when the calculation has to be based on an estimate of how long it will take to obtain alternative employment and what will be their level of pay. In addition, there are instances where a Claimant obtains alternative employment fairly quickly after dismissal but is then quickly made redundant from that job, or is only employed on a temporary basis. If claims are calculated at a time when the claimant has alternative work the estimate of loss of earnings will be lower. However, if they then lose that alternative employment, and continuing loss can still be attributed to the dismissal, the value of the claim will increase. This would not necessarily have been foreseeable, or foreseen, by the claimant when issuing the claim.
The proposals do not seem to give either party particular certainty about the potential value of the claims, rather they seem to penalise a claimant for misunderstanding the true potential value of their claim by limiting their compensation to under £30,000 if they have not been aware that their claim might exceed that. Often at the outset of a claim it is unclear what the true value will be, as the claimant may not know when they will be able to find a job, through no fault of their own. Why a claimant who has suffered loss through breach of employment legislation, for which a tribunal has agreed their (former) employer should be liable, should not be entitled to their full losses due to their having not had the funds (or the gumption) to take an expensive gamble at the outset (and at a time when they are likely to be vulnerable and worried for their financial future) is not clear or reasonable.
19.3 In light of the above and in the interests of fairness we consider that Claimants should be able to amend the value of their claim, on payment of the balance of the higher fee, during the course of proceedings. Without this facility, it is arguable that this proposal, as far as it effects discrimination, could be in breach of EU legislation because it prevents claimants obtaining an effective remedy – see Marshall v Southampton & SW Hants Area Health Authority (No.2)  IRLR 445. We note that in the civil courts there is the facility to re-allocate a case between the fast track and multi-track when the value of the claim increases.
19.4 The Employment Tribunal system was set up for employees to be able to assert their contractual and statutory rights and capping the level of compensation, in the manner currently proposed by Option 2, potentially limits the ability of employees to do this. Furthermore, there is a risk that claimants will be driven to paying a lower fee solely on the basis of cost saving without a true understanding of the value of the claim and the limitation placed on them by paying a lower fee. Current plans do not take into account how such a limit could impact on the recoupment of social security benefits, or how that would interact with any £30,000 limit nor do they consider the fact that tribunal awards can save the taxpayer money by taking claimants outside of eligibility for state benefits if the award means that their capital exceeds certain levels. They therefore underestimate the extent to which the tribunal process can actually operate to give something back to the taxpayer from the employer who has breached employment laws leading a vulnerable claimant to need to rely on the welfare state.
19.5 We have considered how claimants might be enabled to access higher compensation, not having claimed it (and paid the fee) when issuing their claim. We suggest that Case Management Discussions should be used to identify any potential issues as to the valuation of a claim at an early stage, and this issue should form part of the standard agenda for CMDs. If the matter is not dealt with at a CMD or PHR, but arises at the hearing of the claim, and the ET considers that making an award in excess of the limit, the ET could ask the Claimant if he/she wishes to amend their case, and invite representations from the Respondent. The Employment Tribunal could then take into account the relevant circumstances in reaching a decision whether to permit an amendment, for example:
- That the claimant is, or was, not legally represented.
- That the claimant had, or has, a disability.
- Evidence that has been adduced at the hearing (or in late disclosure) that changes the nature and/or value of the claim, e.g. leading to aggravated and punitive damages.
- Default by the respondent that prevented proper calculation of the claim prior to the hearing.
19.6 The ET could require the payment of an additional amount to bring the fee paid to the higher level. The ET could also decide which of the parties should pay that additional amount. As the Claimant will have won their claim and demonstrated substantial losses, the Respondent should be the most appropriate party to meet that fee. The ET, as an extension of the power to order that issue fees be paid by the respondent, could have the power to order that the respondent repay to the claimant both the issue fee and any additional fee required to enable the ET to make a higher award.
Question 20: Fewer than 7% of ET awards are for more than £30,000. Do you think £30,000 is an appropriate level at which to set the threshold?
20.1 The proposed threshold has been put forward on the basis that these cases:
- involve highly paid claimants who are therefore more likely to be able to pay the additional fee; and
- use much more of the ET’s resources.
For reasons already set out in our response to question 18 above, we do not agree that the above assumptions are necessarily correct.
20.2 In our experience, claims involving discrimination (either as a stand alone claim or together with other claims e.g. unfair dismissal) are those most likely to make heavy demands on the ET’s resources. In such cases a CMD is now always held to clarify the issues and set down a timetable for the future conduct of the case; in most, but by no means all, cases, hearings last longer than for all but the most complex of unfair dismissal cases. What is not established by any evidence of which we are aware is that claims which lead to (or are likely if successful to lead to) awards in excess of £30,000 necessarily take longer to hear, or are more demanding to case manage, than other cases.
20.3 The tendency for discrimination and Public Interest Disclosure Act cases to be lengthier is already factored in
Question 21: Do you agree that Option 2 would be an effective means of providing business with more certainty and in helping manage the realistic expectations of claimants?
21.1 No. Option 2 would provide businesses, in cases where Claimants take the option not to pay the highest fee so that they can claim compensation over £30,000, with some indication of what their maximum exposure was. However, if Claimants are permitted to pay an increased fee at a later stage in the proceedings so that they can seek compensation over £30,000 as we recommend, then there will be a degree of uncertainty for business. In addition the fee proposal will not provide certainty as to how much the business will need to allow for the cost of defending the claim; nor will it give any certainty as to how much, below the relatively high threshold of £30,000, will be awarded if the claim succeeds (and should be provided for accordingly).
21.2 As stated previously in our response, whether Option 2 helps to manage the realistic expectations of claimants will likely largely depend on the quality of advice they receive in order to assist them in valuing their claim. In some cases even the clearest advice will not dissuade claimants from their own sense of the worth of their claim. The proposal to remove Legal Help from employment is likely to impact negatively on the government’s stated aims and lead to more inaccurate valuations of claims and more reliance on the services of ACAS, also funded by the tax-payer. By removing guidance and introducing a further bar more confusion is caused to claimants at a time of extreme vulnerability, stress and confusion. Forcing them into this decision is likely to distract them from the important matter of potentially seeking to make use of any internal procedure of the employer, seeking to resolve the dispute pre-issue and/ or clearly expressing their claim in the claim form (to the benefit of both parties).
Question 22: Do you agree with our view that it is generally higher income earners who receive awards over £30,000? Please provide any evidence you have for your views.
22.1 As a generalisation this is only partially true. The compensatory award for unfair dismissal is made having regard to the claimant’s loss of earnings in consequence of their dismissal, which will be higher for a given period for higher earners. The basic award is more a factor of the claimant’s age and length of service; the cap on a week’s pay is some way below the average full time wage. Awards for discrimination claims are also based on the loss the claimant has suffered, but there is usually an additional injury to feelings award. This figure can reach £30,000 by itself in the most serious cases. As a general rule, the longer the claimant has been out of work, the higher the award they receive, but a major factor in awards, which has no obvious correlation with level of earnings, is whether there should be a Polkey reduction and/or a reduction for contributory fault. Rising levels of long term unemployment are likely to have an impact on the level of awards made by ETs to claimants whatever their previous level of income. The further impact of the current state of the economic climate on claimants’ health as their prospects of obtaining alternative work are further diminished may also lead to increased awards for injury to health. Low earning claimants may suffer career-long loss of employment prospects and are therefore the most vulnerable who should not be forced into making such a decision/ initial outlay of fees.
22.2 There are no statistics of which we are aware which shed light on the level of earnings of those receiving awards in excess of £30,000, and P&B’s experience does not support the suggestion that most awards are made to high earners (whatever the definition of this category might be).
Question 23: Do you agree that we should aim to recover through fees a greater contribution to the costs of providing the service from those who chose to make a higher value claim (and can afford to pay the fee).
23.2 Whether these principles justify charging higher fees to those who choose to make a claim with a higher value attributed depends at least in part on what kind of claimant makes such claims. “High value” claimants broadly fall into the following categories:
- Those on lower incomes, but whose total loss will be high as a consequence of complexity of the case and/or the length of time they have been or will be out of work;
- Those on higher incomes, that in turn lead to higher losses;
- Those in either of the above categories whose low or modest loss of earnings claim is augmented by an injury to feelings award, a high basic award reflecting long service, an uplift for the respondent’s procedural failures and/or a protective award; and
- Those with misconceived expectations (with all manner of financial resources) whether as a result of little or no legal advice or otherwise.
- Those benefiting from fee remission with a claim that may only speculatively go over the threshold but as they do not have to pay, make the higher value claim anyway.
23.3 There is no data to connect higher value claims with wealthier claimants, whatever the definition of wealthier might be.
23.4 As outlined above a higher value claim can be justifiably made by those on low, average and higher incomes. However one should bear in mind that in cases of unfair dismissal at least, most claimants will have lost, and may not yet have replaced, that income while still trying to meet their household’s expenditure.
23.5 The main justification for Option 2 appears to be that a higher value claim is more likely to use more of the ET’s resources. However, there is no evidence offered in the Consultation Paper, and we know of none, establishing how much, if any, more of the ET’s resources are used as the value of the claim increases.
23.6 In cases of unfair dismissal the difference between an over the threshold award and one which comes under, may just be a matter of the number of weeks the employee has been out of work. All other facts might be exactly the same and take no longer to determine. The issues of legal complexity which instinctively do use more of the ET’s resources and that of claim value are independent. Each will have its own impact on ET resources.
23.7 The fact that the question raises the issue of Claimant’s ability to chose, assumes that the Claimant has the financial freedom to do so, and is encouraged by the increased fee to make a realistic assessment of the claim. As already indicated even higher earners who are dismissed and are no longer in receipt of their salary may not have that freedom to choose.
Do you have any views on impacts you think [increasing the issue fee in step with the increase in level of compensation claimed] would have on Claimants or Respondents? Please provide any supporting evidence for your statement.
23.8 Only those Claimants who qualify for fee remission or are independently wealthy will be unaffected by being charged higher fees at the outset under Option 2. While it is assumed that the number of independently wealthy Claimants will be relatively small in number, the numbers of claimants that could be in receipt of at least partial fees remission benefit is potentially very large indeed. Paragraph 143 of the Consultation Paper puts this at 90% for a fee of £1,750. However full remission would only be available to a minority of claimants.
23.9 All other categories of claimants are likely to be adversely affected by Option 2 more than Option 1, and there is a clear risk that the substantially greater fee associated with making an unlimited claim, at a time when a salary is no longer being paid, may lead to an economically forced sub-threshold claim being made.
23.10 Option 2 also impacts on claimant at the outset when they may have little time properly to assess merits and quantum (particularly given the short limitation period), and may be forced into a protective position to claim the maximum rather than lose out; or conversely, for financial reasons take a conservative approach and give away what they might otherwise be entitled to. A reliable assessment of the merits and likely quantum of the claim may not be able to be accurately undertaken:
- until at least after disclosure, given that very often the majority of the documents are in the possession of the respondent. This point is acknowledged in the conclusion to the consultation document with regard to pay history in equal pay claims (page 50). It also arises with pension loss documents which must normally be obtained from the pension fund provider via the employer;
- at the outset when a claimant will not know how long s/he will be out of work
- when there is a wide range of possible awards e.g. the Vento bands for injury to feelings, and between one and 13 weeks’ pay for a protective award.
23.11 In P&B’s view, to meet these difficulties, at least in part, standard Directions issued by the ET could and should include a direction that the Claimant has a number of days after disclosure to pay an additional fee and increase the value of the claim. Given the wide discretion ETs have in making awards of compensation, Respondents do not really get certainty on quantum until the determination of the claim.
23.12 From the respondent’s perspective Option 1 or Option 2 may be more or less attractive depending on what level of claim it faces most and its ability to pay an award or costs order. As with claimants, respondents come in all shapes and sizes and will be impacted differently.
Q24 Do you agree with the Option 2 fee proposals? If not, please explain why.
24.1 No. For the reasons stated above.
Question 25: Do you agree with our proposals for multiple claims under Option 2? Please give reasons for your answer.
25.1 No. We repeat the points made in answer to Question 12 above.
25.2 We also note that individuals have the option to submit a single claim if they are part of a multiple and they, but not the other claimants in the multiple, seek an award above £30,000. This is likely to lead to a duplication of proceedings, where single claims run alongside multiple claims, and an increase in the costs both of pursuing and defending the claims and of the ET administering the process.
25.3 If the claim is funded by a Union or Legal Expenses Insurer, the claim may also be considered “disproportionate” (one element of the irreducible minima required by insurance companies when considering whether to provide cover) on the grounds that it would be more expensive to pursue the claim individually. This may lead to claimants agreeing to stay with the multiple and paying the higher Level 4 fee. This is an example of the kind of situation where, even in a relatively small multiple, a huge increase in the applicable fee would be incurred if one claimant seeks higher compensation (in a five claimant multiple, the difference between level 3 and level 4 is £3,450).
25.4 The proposal is silent on the cost-critical issue of the point at which Claimants will be required to commit to making a single claim join the multiple. Claimants may voluntarily wish to amend their claim to seek more than £30,000 in the event that disclosure or other information suggests a higher claim is appropriate, or they may wish to reduce the value of the claim if changing from multiple to single claim. In multiple claims the likelihood of additional Claimants being joined (whether by application to the ET or under the ET’s own case management powers) increases with the size of the multiple. The Consultation Paper offers no indication of how the complex problems arising from claimants being added to multiples, or seeking to amend to claim higher compensation within a multiple, are to be dealt with.
25.5 In our view the sort of problems highlighted above can only be avoided if the fee structure for multiples does not include an enhanced level 4 fee. If that view is not accepted, at the least one individual claiming more than £30,000 should not cause the total fee for the multiple to increase by more than the difference between the level 1, 2 or 3 fee (as the case may be) and the level 4 fee, in a single case.
Question 26: Do you agree with our proposals for remissions under Option 2? Please give reasons for your answer.
26.1 No. See our responses to Question 10 and 11 above..
26.2 As an additional point, since the fee payable on presentation of the claim is much higher under Option 2, we consider that a much greater proportion of claimants will fall within the category of entitlement to partial remission of the fee than if Option 1 applies; this will therefore increase the amount of work involved for the administration in assessing entitlement, and in all probability the number of disputed cases. This makes all the more important our proposals to avoid the prejudice to claimants, the cost to the tribunal system of additional jurisdictional disputes, and the risk of respondents incurring costs opposing extensions of time, which would flow from a provision that claims presented without the correct fee or documentation are not accepted.
Question 27: Do you agree with approach to refunding fees under Option 2? If not please explain why
27.1 No. Not to refund fee is totally unacceptable. A blanket refusal to refund fees will be counterproductive and unfair, and likely to result in breaches of Treasury guidelines on fee charging.
27.2 Option 2 requires the claimant on issue to assess on issue the value of their claim within series of bands, depending on the type of claim first and then whether the value of the claim is up to £29,999.99 or unlimited. The Tribunal system deals with large numbers of litigants in person, usually acting without the benefit of prior legal advice. Litigants in person will rarely be able to assess quantum accurately. If Claimants assess the band wrongly, but receive subsequent legal advice to amend the claim to bring it within a lower band, or into a different level, the proposal allows no mechanism to refund the higher element of fee paid. This is likely to result in injustice and may result in satellite litigation.
27.3 In discrimination cases involving personal injury, it will usually not be possible to assess the level of quantum accurately on the issue of the claim, given the very short limitation periods for lodging ET claims and given that medical evidence will need to be obtained in order for quantum for personal injury to be assessed. It is highly unlikely that such evidence will be available at time of issue of the claim. Again no provision is made to refund the higher fee element of the claim, in the event that the claim is amended to come within a lower band. This may also be subject to challenge through satellite litigation.
27.4 In the same way as under Option 1, a policy of never refunding fees is likely to operate unjustly in other situations. If a hearing does not take place, either because of a settlement or withdrawal of the claim, virtually none of the costs to be covered by the hearing fee are in fact incurred. Since the Option 2 fee is intended to cover the claimant’s contribution to the cost of providing a hearing, P&B consider it unreasonable that no part of the fee is to be refundable in such circumstances. We are concerned that the absence of any provision for even partial refunds is not compatible with Treasury Guidelines that fees should not exceed the cost of providing the service. Moreover, the policy would be counterproductive. Withdrawals save the Tribunals costs. Where there is no mechanism for refunds, some claimants may continue with all claims, or to proceed all the way to hearing, taking the view that as they have paid the required fee, they may as well proceed.
27.5 In addition, we consider that where an error on the part of the ET has resulted in a fee/too high a fee being paid, it would be unjust not to provide for refunds.
Question 28: What sort of wider information and guidance do you think is needed to help Claimants assess the value of their claim and what issues do you think may need to be overcome?
28.1 The problem of claimants’ inability to assess accurately the value of their claims is not one that can be solved by the provision of better information; it is inherent in the litigation process and will depend on the different strands of some claims and/or the different heads under which the claims are argued. Leaving aside the simpler cases in which the only claim is for unpaid wages or holiday pay, claimants and their advisers will in most, cases not be in a position to calculate the value of their claim in advance of presenting it and paying the relevant fee, for two reasons.
28.2 Firstly, at the point of issue the claim is often at a formative stage. Claims must be issued within three months of the event triggering the claim, typically dismissal. Multiple heads of claim may be pleaded initially to protect the claimant’s position. Heads of claim will often then fall away as the claim progresses and the likely success and associated value of those claims becomes clearer through receipt of the Response, disclosure, further discussion and consideration.
28.3 Secondly, as ETs make awards of compensation so far as possible on the basis of actual loss, many claimants will be denied compensation because they anticipated greater success in their efforts to mitigate their loss than was borne out in reality. Although the Consultation Paper suggests that claimants will be more focused in their expectations, and therefore more satisfied with the outcome, there will be many who will be most dissatisfied that they limited their claim to £30,000 and thus potentially denied themselves many thousands of pounds in compensation. This is a more likely scenario in discrimination claims, which can be both factually and technically difficult. This in turn could lead to satellite litigation on the issue of claimants being deprived of an effective remedy (see our response to Question 19).
28.4 Even if more professional advice is made available to claimants (which we regard as improbable at a time when services provided by such bodies as Law Centres and the CAB are under exceptional pressure and suffering declining funding), it is difficult to envisage how these fundamental difficulties can be overcome. This is made worse by the Government’s proposal to withdraw all Legal Assistance in employment cases and severely limiting access in discrimination cases. Claimants and their lawyers will naturally gravitate to an assessment of a claim’s value which is at or nearer its highest, precisely because it will be too early to make any really accurate assessment. Information and guidance is therefore unavailable and will not prevent the problem; longer time limits for submission of claims might assist here, as well as assisting the parties attempts to resolve disputes internally without the need to resort to the tribunal process.
Question 29: Is there an alternative fee charging system which you would prefer? If so, please explain how this would work.
29.1 We refer to our suggestion, above, that fees are first levied after there has been a CMD, with the fee being split between claimants and respondents.
Question 30: Do you agree with the simplified fee structure and our fee proposals for the employment appeal tribunal
30.1 No. We would like to make the following observations:
30.2 Paragraph 152 states that just over 2,000 appeals were received by the EAT in 2010/11. We note however that of the 2,000 appeals that were received, only 600 or so cases a year proceed to either a preliminary hearing or a full hearing. The vast majority are rejected, struck out or withdrawn prior to registration. This information is evident from the statistics published by HMCTS.
30.3 Paragraph 155 states that appeals nearly always take one day to conclude at hearing. We disagree. Firstly there is not one type of hearing in the EAT, but four.
- Rule 3(10) hearings (effectively appeals against the rejection of a Notice of Appeal on the sift).
- Preliminary Hearings.
- Directions Hearings (these are rare, but the Practice Direction (para 6.5) does provide for them;
- Full Hearings.
30.4 Rule 3(10), preliminary and directions hearings are unlikely to last more than two hours. Indeed many rule 3(10) hearings last only a few minutes, as a judge may announce at the start of a hearing that s/he has been persuaded by a skeleton argument that the appeal has reasonable prospects of succeeding and that is the end of the matter. It is routine practice for both Rule 3(10) and preliminary hearings to be listed in batches of three or sometimes more before the same bench on the same day. Even full hearings are not uncommonly only listed for half a day.
30.5 Paragraph 155 states that there are very few applications for written reasons in the EAT. This is misleading. The only reason why there are very few applications is because many judgments are reserved, and many extempore judgments are transcribed at the direction of the judge so that they can be posted on the EAT website; a written judgment is always ordered if the outcome of the appeal is remission to the ET, since the ET to which the case is to be remitted needs to know the EAT’s reasons for allowing the appeal. In Scotland all judgments in the EAT are reserved. There is therefore rarely any reason to request written reasons in the EAT.
30.7 In P&B’s view an issue fee should only be charged if an appeal is accepted as correctly constituted and treated by the EAT as a valid appeal. Pursuant to the EAT Practice Direction, unless a Notice of Appeal is in accordance with Form 1 and has the correct documentation attached to it, it is not validly lodged.
30.8 We do not think it would be responsible, or fair, or in accordance with the government’s stated objectives, to charge litigants £400 to lodge a Notice of Appeal which is then refused as incorrectly constituted. We note that decisions on the validity of appeals at this stage are made by the Registrar and her staff, and not Judges, and any cost to the taxpayer is modest. Further, we note that technically an issue fee can only be charged in respect of claims which are “issued”, and a Notice of Appeal which is not properly constituted is not regarded as having been “issued”. Accordingly, in our view the issue fee should only be incurred once a Notice of Appeal has been accepted as validly lodged.
30.9 We also consider that the issue fee should be per appeal, rather than per appellant. As the matter involves issues of law, the number of appellants will rarely impact on the cost to HMCTS of the appeal.
30.10 The issue fee should cover the cost of the sift and any preliminary hearing and interim applications. Appellants should have six weeks from the date the Notice of Appeal is lodged in which to pay the issue fee. Those appellants who are employees will in many cases have been out of employment for a significant period and would otherwise only have a very limited period to raise the required funds following receipt of the ET’s decision.
30.12 For the reasons given at paragraph 30.5, the need for a request for written reasons will arise so infrequently that to charge a separate fee for this is an unnecessary complication of the fee structure. Moreover the judgments of the EAT are important public documents, not least because decisions are binding on ETs; we consider that it would be contrary to the fundamental principles of open justice to make the publication of reasons for EAT decisions dependent on the willingness of litigants to pay for the transcribing of the oral judgment in their case.
30.13 We also note that the government proposes to charge parties for requesting written reasons in the ET. Anyone who wishes to appeal needs to obtain written reasons. That is a further reason for not charging a fee for requesting written reasons in the ET: that would effectively be a further hidden cost for a party who wishes to appeal, effectively raising the cost of appealing to £1850 if the appeal proceeds to a hearing.
30.14 In our view, the fees charged should reflect the length of any hearing. In our view the fees should be based on the length of time the matter is listed for, with a half-day hearing costing less than a full-day hearing. We consider that there is little risk that parties will provide unrealistic listing estimates, because such estimates would be held against them by the judge case managing the matter and the parties will be concerned that the time estimate is sufficient to do their case justice.
30.15 It is our understanding that the proposal for a hearing fee is that it would apply if, but only if, the appeal proceeds to a full hearing. That accords with our view. We do not consider that it would be fair to charge appellants a hearing fee in respect of a rule 3(10) hearing, when permission to appeal is sought.
30.16 We also do not consider that it would be fair to charge a hearing fee in respect of a preliminary hearing or a directions hearing. Nor should a hearing fee be charged in respect of a review application. In relation to preliminary hearings, as with decisions to reject appeals on the sift, ELA members have experience of very different approaches by different judges sitting in the EAT to whether a preliminary hearing is ordered.
Discretionary Waiver of Fees
30.17 From time to time the parties are faced with a decision by an ET which falls far below the standards one could expect from an ET. In those circumstances it is the fault of neither party that the matter has to proceed to the EAT. Accordingly, we consider that it would be only right for the EAT to have a discretion to order that fees for the appeal are reimbursed to the party paying them by HMCTS.
30.18 Further, in our view, a judge should have a discretion to waive fees if an appeal raises matters of public importance. A judge should be able to exercise this discretion either at the time of the sift, or at the final hearing. P & B considers that it is paramount that the introduction of fees in the EAT does not discourage parties from pursuing challenges in relation to important points of law. This would assist business, claimants and the tribunal service itself by providing greater certainty in the law and the application thereof.
Discretion that Respondent pays the Fees
30.19 In our view, the EAT should have a discretion to order a respondent to pay the issue fee and hearing fee if the appeal succeeds. In our view this would be an effective incentive for respondents to concede appeals that have merit at an earlier stage and/or would avoid respondents defending plainly indefensible ET decisions.
30.20 The EAT is able to remit a matter to the ET, typically where the ET has failed to adjudicate upon an issue or erred in law. We do not believe that any further fees should be payable for further proceedings in the ET if the EAT has either ordered the matter to be remitted or ordered a rehearing of the entire claim. As set out above, we also consider that in such cases the EAT should have a discretion to refund any fees incurred.
Question 31: What ways of paying a fee are necessary e.g. credit/debit cards, bank transfers, direct debit, account facilities? When providing your answer please consider that each payment method used will have an additional cost that will be borne by users and the taxpayer.
31.1 We consider that it is essential that there should be as few restrictions as possible to access to the ET for any individual with a legitimate case, regardless of their financial arrangements or their location. In recognition of the fact that some claimants may not have access to a credit/debit card, or even a bank account, and may reside a significant distance from their nearest tribunal office, it is important that a range of payment options and payment locations are available. Specific payment options are explored further below.
31.2 If Option 1 is selected, we suggest that all payment options recommended below should be available for both stages of fee payment. Our comments also apply equally to payments of the fee for instituting an appeal to the EAT.
A. Online payment
31.3 This provides an opportunity to make the fee payment process straightforward and simple for the majority via an instantaneous online transaction, which could be completed simultaneously when a claim is presented. Where the Claimant is able to make payment online using their credit/debit card details and they do not intend to apply for a remission, we do not see a problem with payment being made online at that stage.
31.4 We propose that there should be a facility available for the claimant to make an instantaneous payment via an online transaction at the same time as submitting the online claim form, in the same way as in most online shopping transactions. It is difficult to predict how most users will choose to make their payments but we expect that online payment will become the preferred method for most claimants and, it is hoped, will create the least administrative and financial strain on the tribunal service.
31.5 This will not be appropriate if the claimant wishes to be considered for a fee remission. It is unclear at this stage what proportion of candidates are likely to qualify for a remission. We consider it important that the system for online submission of claims should equally be available for claimants claiming remission of fees and therefore not including payment details.
31.6 We note that the HMCTS offers a Money Claim Online and a Possession Online service in the High Court and County Court. There is a reduced fee for using these services, presumably to encourage users to opt for this method instead of more costly local paper-based methods. A similar reduced fee could be offered to users who lodge ET1s online. However, we would recommend caution as such a discount may give rise to issues of indirect discrimination towards disabled users.
31.6 A significant minority of our clients who are ET claimants will have no access to a credit/debit card, or a bank account. These individuals are also likely to have limited access to the internet. It is vital that they have the opportunity to submit their claim and make payment in person. In many cases, the only straightforward method of payment available will be cash.
31.7 We recognise that payment of fees in person is likely to be more problematic for claimants in the ET than in County Courts. Given the geographical location of tribunal offices, Claimants are less likely to have a tribunal office within a short distance from their home than a claimant in the County Court (a point applying with much greater force to the EAT). This creates obvious difficulties where cash is their only available method of payment or in circumstance where they do not have access to the internet.
31.10 We suggest therefore that claimants should be able to make a payment at their local Post Office (but not lodge their claim there) and should be issued with a receipt/reference number which can be quoted on their claim form.
31.11 Although the use of cheques is likely to continue to fall, they are also likely to remain the preferred option of payment for many individuals due to the perceived level of security, control and convenience they offer. In the light of the decision not to go ahead with the planned abolition of cheques, we believe it will remain a convenient and trusted method of payment and so consider it important that it should be included as a payment option.
Question 32: What aspects should be taken into account when considering centralisation of some stages of claim processing and fee collection?
32.1 The overriding objective of the ET is “to deal with cases justly”. This does not simply relate to the fair outcome of individual cases but also, we submit, requires a fair claim handling system which is transparent, accountable, accessible and responsive to the needs of its users.
32.3 We suggest that, in order to protect the level of service experienced by users, all interlocutory stages of the tribunal process should remain in the hands of the designated tribunal office which has conduct of the claim. We believe that the principle that a user is able to speak to an individual caseworker who has the conduct of a file within a particular office is an important one that should be maintained. We have seen the central online process for issuing claims create some issues for unions and their members where the claim is received by the central service (and therefore presumed by the claimant to have been accepted) but not forwarded to the relevant tribunal office. Increasing centralisation creates further potential for problems in this regard. While predictability and consistency are important, there are more important issues regarding treating individuals in accordance with the overriding objective and ensuring that the system does not act as a deterrent to the pursuit of legitimate claims, particularly for unrepresented parties. The approach we advocate is also consistent with the emphasis in Government policy on a localism agenda.
Response to questions about the equality impact assessment
Q1 – What do you consider to be the equality impacts of the introduction of fees both under Option 1 and Option 2 (when supported by a remission system) on claimants within the protected groups?
1.1 The comments made in this section of our response are based on the proposals as set out in the Consultation Paper. In our responses above, we identify a number of elements in the proposals with which we do not agree, and we make a number of alternative proposals. Adoption of these would significantly reduce the adverse impacts of the proposals which we identify in our comments below.
1.2 Workers with a gross annual income of as little as £13,000 a year (the minimum wage for a full-time job) or couples with a joint income above £18,000 a year could have to pay the highest fees under both Options 1 and 2 to pursue discrimination cases.
1.3 At paragraph 4.2 of its Initial Equality Impact Assessment the MoJ has accepted that
“as some of the equalities groups are disproportionately represented in lower income brackets, they would therefore be disproportionately affected if it were it not for the remissions scheme which mitigates the effects on those with the lowest incomes and ensures that no one is denied access to justice through the introduction of fees.”
1.4 It is also accepted at paragraph 3.9 of the Initial Equality Impact Assessment that it is
“possible that these proposals impact on the duty to advance equality of opportunity if potential claimants with protected characteristics are put off from taking forward discrimination cases due to the introduction of fees.”
1.5 We do not accept the assertion that the remission system will necessarily provide justification for adverse impacts of the proposals on the various “equality groups” identified in the Initial Equality Impact Assessment. Many claimants, especially those with on-going discrimination claims and who are still employed will not be entitled to any form of remission. Likewise those who have been dismissed or whose employment is at an end may also find it difficult to satisfy the conditions for having fees remitted. Time limits for presenting claims are very short; in most cases three months from the time of the incident or discrimination in question. Many claimants will not have the means to pay the initial fees whilst they are, for example, waiting to see if they are entitled to state benefits. Many claimants will not be entitled to benefits for some months and therefore will not satisfy the rules on remission of fees before the three month time limits expire. This will prevent many worthwhile cases being brought in the ET particularly ones that might serve to (by highlighting issues and leading to recommendations that benefit the whole workforce) reduce discrimination in the workplace for the good of both employees and employers. This undermines any potential justification of the acknowledged adverse impacts that the MoJ may seek to establish.
1.6 At paragraph 7.3 of the Initial Equality Impact Assessment, it is stated that an average of only 31% of all types of employment tribunal claims are currently settled through ACAS. This appears to be a low rate of success. It suggests that a likely consequence of the introduction of Option 1 is that both lodging and hearing fees are likely to be incurred in the majority of cases not settled through ACAS. The proposals in Option 1 and Option 2 do not appear to do anything to encourage early settlement of claims, other than discourage potential claimants from bringing claims. Further ACAS only becomes involved with conciliating employment claims once they have been lodged. If, as is currently proposed, there will be no refunds of fees once claims are lodged, there will be no guarantee that those fees will be recovered by claimants, even with the assistance of ACAS. The involvement of ACAS therefore provides little capacity to resolve claims without recourse to the tribunal or incentives for claimants to avoid litigation.
1.7 At paragraph 12.2 of the Initial Equality Impact Assessment, it is suggested that claimants who are represented by trade unions or no win no fee lawyers, or have legal expenses insurance, will not suffer any equality impacts. This assertion is not supported by any substantive evidence. It is not clear whether trade unions will be prepared or able to cover their members’ tribunal fees in every case. They may decide to rewrite their terms to exclude fees from Legal Scheme cover. Generally the right to advice and/or representation under union legal schemes is expressed to be discretionary. In any event ET statistics show that claimants represented by trade unions consistently make up only around 5% of the total numbers of claimants and it is completely unsatisfactory to rely on Unions to meet the deficiencies of the government’s scheme.
1.8 Lawyers act in around 65% of all claims. The ET statistics do not identify lawyers or other representatives who act under a no win no fee agreement governed by the Claims Management Regulation scheme. Anecdotally, it is the experience of many lawyers that no-win, no-fee solicitors currently only act for claimants in a small range of ET jurisdictions (most notably multiple equal pay claims) and do not generally offer representation on a no win no fee basis for claims such as breach of contract, wages and other such claims. Further, it is common for no win no fee agreements to exclude disbursements such as counsel’s brief fee for a hearing. It can be anticipated that agreements will be modified to exclude ET fees.
1.9 It is not clear how insurers will respond to the introduction of fees but one potential outcome may be an increase in premia or an erosion or removal of cover for employment claims. It is possible that policies will exclude payment of fees so the insurer can insist that claimants who otherwise qualify for a remission of fees have to apply for a remission. Unions/staff associations and no win no fee lawyers and representatives governed by the Claims Management Regulation scheme may do likewise.
1.10 The gender pay gap has recently been widening. Given the significant additional barriers to bringing equal pay claims that either Option 1 or Option 2 would create (given that such claims will fall into categories of case which attract the highest level of fees), one of the consequences could be an acceleration of differences in pay between the sexes. If potential female claimants are deterred or prevented from bringing worthwhile claims through lack of funds or if they fail to qualify for remission, this could mean that employers no longer have an incentive to ensure that their pay systems are free of sex discrimination. This could lead to a legal challenge being made by way of judicial review. This would be on the basis that fees act as a disincentive or barrier to an effective remedy in discrimination cases. This would be a breach of the requirements in the relevant EU Directives that UK legislation provide an effective remedy for breaches.
1.11 Most if not all claimants in equal pay claims remain in employment or are in employment when the claims are commenced. Most of these potential claimants are unlikely to satisfy requirements for remission of fees. Most of the equal pay claims currently lodged with tribunals are large multiple claims many with more than 200 claimants; each with many different classes of worker in them. At paragraph 25.5 of its Initial Equality Impact Assessment it is suggested that in a multiple claim where some of the claimants are entitled to remission and others are not, those who are not will be required to pay the full fee between them. Most if not all of these claims will attract the highest rate of fees. The remission policy therefore will have no effect on a great number of the current equal pay multiple claims other than to shift the burden of fees disproportionately onto the shoulders of those who are above the income limit for remission, but who may be earning well below the average wage (and who may already be suffering from lower pay than they deserve, due to discrimination). This calls into question the basis of the Ministry’s justification of the acknowledged adverse disparate impacts on female ET Claimants; particularly those with equal pay and sex discrimination claims.
1.12 Additionally in multiple equal pay or sex discrimination claims where some of the claimants are entitled to partial or full remission of fees, the system will create a substantial administrative burden for both claimants’ representatives and ET staff to establish who is and who is not entitled to remission of fees and if so, by how much. This is particularly so in cases where some claimants may be entitled to remission in part or wholly and other in the same multiple are not. It may be that the additional burden outweighs the potential savings in fees and parties and representatives are better off just paying the full fees, again undermining the suggested justification for the acknowledged adverse impacts on equality groups.
1.13 It is clear from Section 14 of the Initial Equality Impact Assessment that both Options 1 and 2 will have a profound adverse impact on disabled people, perhaps more so than any other equality group. The authors acknowledge that a significant proportion (22%) of those bringing ET claims of all types including 40% of those bringing discrimination claims are disabled: proportions well in excess of the incidence of disability in the adult working population. Disabled people are therefore over twice as likely to be bringing such employment claims as the population as a whole, and over three times as likely to be bringing discrimination claims (which attract the highest level of fees). The effect therefore is that disabled ET claimants are three times more likely to be charged the highest level of fees under the current proposals.
1.14 Other than the general statistics set out at paragraph 25.4, the Initial Equality Impact Assessment contains no evidence or analysis of how the remission system might mitigate the acknowledged adverse affects both Options 1 and 2 will have on disabled people. On the MoJ’s own measure, only 26.4% of ET claimants will be entitled to full remission. The authors acknowledge at paragraph 4.13 that information on claimants’ incomes is not routinely collected and instead they rely on an adjusted analysis of the Family Resources Survey from 2008/2009 – i.e on data collected before the impact of the recession, public sector wage freezes and inflation can have been fully reflected in the survey results. Further, changes to eligibility for state benefits have been introduced since the survey period and these too may well have had an effect on incomes. In the absence of reliable primary data, it is therefore difficult to see how much weight can be attributed to the analysis advanced or the speculative assessments of the effects of Options 1 or 2 on rates of available remission.
1.15 Further, the analysis does not assess the personal circumstances of disabled people presenting employment claims and whether they are more likely or not to be in employment or otherwise entitled to remission of any kind. In the absence of reliable information it cannot be said with any certainty that the remission system will have the purported effect of mitigating the acknowledged and significant adverse impact of Option 1 and 2 on disabled people.
It follows again that the MoJ’s proffered justification for the acknowledged adverse impacts on disabled people is no more than an assertion, not founded on reliable evidence. If employees are still in employment (and therefore less likely to be eligible for fee remission due to their earnings), they are more likely to simply accept an employer’s failure to make reasonable adjustments or discriminatory practices, thus rendering legislation on reasonable adjustments somewhat toothless when its aim should be to assist in retaining disabled people in employment. The retention of disabled people in employment is clearly a legitimate aim and one which would operate for the good of all of society by enabling them to contribute to society and the public purse, and preventing them from being reliant on benefits.
1.16 It is clear from the ET statistics that the incidence of employment claims based on pregnancy and maternity is rising. In the absence of any data whatsoever on household income and pregnancy it is difficult to say how Options 1 or 2 will affect pregnant claimants. However we draw attention to the point that women who take or have just returned from maternity leave will experience a drop in income, at a time when outgoings are increased by the arrival of the child, and are therefore particularly unlikely to be in a position to pay significant fees. A full Equality Impact Assessment will need to address how this particular disadvantage is to be mitigated. We would refer you back to our suggestion at paragraph 2.6 following that there should be an exempt category of claimant.
Mitigation and justification
1.17 For the reasons set out above, it is not accepted that the fees remission regime can be relied on to provide justification for the acknowledged adverse effects of these proposals on equality groups.
1.18 In relation to the other mitigation and justifications advanced:
(i) whilst it is accepted that charging fees at a level that does not fully recover costs can be seen as a form of mitigation, it cannot be said to provide justification. As outlined above, the ultimate effect of the introduction of Options 1 or 2 will be to prevent worthy claimants from bringing claims in ETs. This will have a direct effect on equality groups, especially women and disabled people.
(ii) ACAS conciliation facilitates settlement in a relatively low proportion of cases, and usually only after the claim has been brought. This cannot therefore provide justification for the adverse effects on equality groups prevented from bringing claims by the introduction of the fees regimes in either Option 1 or Option 2. Thus the barriers to justice will remain for the majority of employment claimants and the existence of ACAS cannot be said to provide justification.
(iii) Giving the ET powers to order the respondent to refund claimants’ fees at the end of an successful case cannot provide mitigation or justification to those claimants from equality groups who are prevented from bringing or continuing with claims in the first place through lack of funds. Moreover there will be no guarantee that the fee will actually be recovered, given that in a significant minority of cases the compensation awarded is not recovered by the claimant.
(iv) There is also the issue of claimants who bring claims where the intention is to recover from the Redundancy Payments Office because the respondent is insolvent. There is no right to recover the fee as part of the debt payable in insolvency and the fee would not be a preferential debt in any insolvency situation.
Q2 – Could you provide any evidence or sources of information that will help us to understand and assess those impacts?
2.1 We are not in a position to answer this Question.
Q3 – What do you consider to be the potentially positive or adverse equality impacts on employers under Options 1 and 2?
3.1 This question is unclear but in general terms the changes under both options are likely to make it more likely that discrimination in the workplace will occur. Rights are only rights if they can be enforced. The changes will create further uncertainty for employers as to what their obligations are. It may also have a disproportionate impact on employers whose first language is not English
Q4 – Do you have any evidence or sources of information that will help us to understand and assess those impacts?
Q5 – Do you have any evidence that you believe shows that the level of fees proposed in either option will have a disproportionate impact on people in any of the protected groups described in the introduction that you think should be considered in the development of the Equality Impact Assessment
5.1 Please see our response to Questions 1 and 2 above.
Q6 – In what ways do you consider that the higher rate of fees proposed in Option 2 for those wishing to take forward complaints where there is no limit to their potential award (the Level 4 fee) if successful, will be deterred from accessing justice?
6.1 The consultation paper makes it clear that the policy behind Option 2 is to provide businesses with greater certainty over their maximum liability of award by asking claimants to specify if their claim is above or below £30,000. This in practice is almost impossible for a claimant to determine as it is not the claimant who can make a full assessment of the value of the claim but rather the ET after hearing all the evidence in taking evidence from both parties.
6.2 This is particularly so with discrimination claims. If claimants are to try and work out the potential value of their claim they will have to take professional advice at an additional cost in order to assess the likely value of the claim. Even if professional advice is obtained (itself increasingly difficult for those without the means to pay for a lawyer) the best legal advisers can do is to use the guidance given by Vento and Da’Bell to assess into which band the Tribunal will place their case for the purpose of compensation for injury to feelings. No one can predict with any certainty what the Tribunal will determine until all the evidence has been heard.
6.3 Moreover, the relatively small proportion of discrimination awards in excess of £30,000, must make many legal advisers very cautious about committing their clients to paying a very substantial additional fee at the start of proceedings, typically before replies to a statutory questionnaire have been received, and before disclosure. “Access to justice” in the Question must include access to full recovery of the compensation assessed by the ET as due for the respondent’s unlawful acts, but it cannot be known whether that will necessitate payment of the additional fee to put the claim into the unlimited compensation bracket at so early a stage as when the claim is presented.
6.3 It is for these reasons that we propose that if the higher fee for claims over £30,000 is introduced, claimants should have the opportunity to apply to amend their claim to place it in the higher bracket, on payment (subject to remission ) of the additional fee.
6.4 The consultation paper acknowledges that discrimination claims derive from European legislation and therefore it is not possible to set a fixed cap on discrimination awards. Given the points made above about the barriers that would be created by the proposal to charge an additional fee to access the possibility of compensation over £30,000, we consider that that proposal imposes a cap, which would place the UK in breach of EU law.
6.5 The Consultation Paper refers to the remission scheme and suggests that the likely level of remissions for the Level 4 fee of £1,750 proposed under Option 2 will result in approximately 90% of claimants being eligible for full or part remission. This calls into question the purpose of introducing such a high fee. The figure of 90% is in any event only part of the picture. Annex 5 of the Regulatory Impact Assessment shows that only 43.6% of the adult population would have to pay less than £1,000 under remission category 3; most if not all of those entitled to full remission under category 1 or 2 would presumably be within that 43.6%, so that some 50% of the population would face a fee of at least £1,000. That is a significant barrier to accessing an award of full compensation for losses valued by the ET as exceeding £30,000.
Q7 – Are there other options for remission you think we should consider that may mitigate any potential equality impacts on people with protected characteristics while allowing us to keep the levels of fees charged under either option to the level we propose?
7.1 We would propose the following:
- There is an imbalance in the proposed fee structure in the context of discrimination claims, where claimants are required to bear the highest level of upfront cost (under option 1 – £1,500 and under option 2 – £1,750), when there is to be a power only for ETs to order that the unsuccessful party reimburse the fees paid by the successful party. The imbalance is demonstrated starkly by looking at the ET statistics; these show that only between 2% and 3% of all claimants making claims of discrimination succeeded in obtaining compensation from the ET. A remission system backed by the automatic reimbursement of fees by the unsuccessful party could go some way to addressing imbalance.
- In discrimination cases Claimants can seek declarations and more significantly recommendations which could have a wider equality impact on others (i.e. not just the Claimant). This is different to the other types of claims in which remedy is isolated to the Claimant and ordinarily of monetary value. P & B suggest that remission should therefore take account of this different form of remedy with a reduction/exemption in fees. The net disproportionate impact on equality groups and on incidents of discrimination in the workplace is difficult to measure and is a step backwards in terms of progress on equality.
Q8 – Do you consider our assumption that the potentially adverse effects of the introduction of fees together with the remission system will mitigate any possible adverse equality impacts on the groups covered by the analysis in our equality impact assessment to be correct? If not, please explain your reasons.
8.1 No. The remission system will mitigate some adverse equality impacts but will not address them completely, for example those in the middle/higher income brackets will be disadvantaged by the remission system proposed and therefore face the burden of paying the highest level of fees with no waiver. The income levels in remission 2 are significantly lower than the average annual earnings in the UK.
8.2 The remission system will have to be understood both by Claimants and ET staff, and operate efficiently, to provide the mitigation suggested. In that regard consideration must be given to the impact on those with protected characteristics and in particular claimants with a learning or sensory disability, or whose first language is not English, who as a consequence are more likely to have difficulty accessing remission from paying fees. A report prepared analysing the impact of the introduction of the 2007 court fees (on which the proposals are based)-Ministry of Justice “Is the 2007 court fee remission system working?” PriceWaterhouseCoopers LLP 2007– provides some useful information on possible equality impact (and more generally of the fees and remission system). In a section analysing views on the fee remission system it states
“some focus group participants suggested that the information and guidance provided could have been clearer, particularly for those whose first language is not English or with other special needs”.
8.3 A more general point made by the report is that it seems the largest dissatisfaction with the new court fee remission system centred on the uncertainty of court staff processing remissions and dealing with queries from possible applicants. The report recommended training and guidance. We question what administrative costs will be incurred by HMCTS in training and supporting staff with this entirely new system. We are also concerned how it will operate thereafter.
8.5 We do not accept the assertion that the remission system will necessarily provide justification for adverse impacts of the proposals on the various “equality groups” identified in the Initial Equality Impact Assessment. Justification entails not just mitigation of adverse consequences but proportionality between the discriminatory effect and the legitimate aim pursued (in this case making users of the ET service responsible for meeting part of the cost of providing the service). We are not supportive of this as a “legitimate aim”. The appropriate enforcement of employment rights is of benefit to everyone in society. Any employer or worker can suddenly need the tribunal to resolve a dispute between them, and the treatment of ET users as some kind of consumer, there by choice, is misleading and a dangerous misconception to support. Claimants and Unions are not “shopping” for their employment rights, they are enforcing what is legitimately theirs and by doing so encouraging good standards of behaviour and employment practice which is also good for business. The government’s treatment of claimants as the major users of the system who bear the brunt of the cost/ initial outlay reinforces this mistaken impression. Consideration should be given to making employers with the greatest number of successful claims against them contribute more as it is their actions/ inaction which lead to more strain on the system.
8.6 Many claimants, especially those with on-going discrimination claims and who are still employed will not be entitled to any form of remission. Likewise those who have been dismissed or whose employment is at an end may also find it difficult to satisfy the conditions for having fees remitted. Time limits for presenting claims are very short; in most cases three months from the time of the incident or discrimination in question. Many claimants will not have the means to pay the initial fees whilst they are, for example, waiting to see if they are entitled to state benefits, or during a period of disqualification. Many claimants will not be entitled to benefits for some months and therefore will not satisfy the rules on remission of fees before the three month time limits expire. This will prevent many worthwhile cases being brought in the ET and undermine any potential justification of the acknowledged adverse impacts that the MoJ may seek to establish.
8.7 Also, there are deterrents for potential claimants who weigh up the fees they will have to pay against the sums they will be likely to obtain, particularly where there is no automatic right to recovery of fees from an unsuccessful respondent. This could be partly addressed by making reimbursement automatic rather than discretionary. However, there is still the issue of respondent failing to pay when ordered to do so by the ET. Non-payment of ET awards is common enough that this must be a real concern for many potential claimants.
Q9 – Further to Q8 could you provide any information to help us in understanding and assessing the impacts?
9.1 In view of the power for tribunals in discrimination claims to make recommendations which benefit the whole workforce, such as training in equality matters for managers. They can therefore lead to benefits for employers in terms of a happier and more stable workforce.
Q10 – Could you provide evidence of any potential equality impacts of the fee payment process described in Annex B of the Equality Impact Assessment you think we should consider?
Q11 – Further to Q10 do you have any suggestions on how those potential equality impacts could be mitigated?
10.1 These two questions can best be answered together. Annex B provides little insight into what payment processes are proposed. It is suggested technology will be utilised and the examples of on-line and automated telephone payment solutions are given. It is also suggested centralised fee accounting will be developed and payments taken away from local offices, whilst ensuring those who do not have access to or the means to pay fees electronically will still have access to justice. The suggested example is allowing payment through a High Street bank.
10.2 We believe the widest possible range of payment options should be made available for the timely payment of fees, especially if time limits are still to run until the fee is paid. Please refer to our response to Question 31 on the main Consultation Paper. We note in particular that the civil courts system provides the widest possible options for payment of fees including payment by cash as well as debit or credit cards, cash, postal orders or cheques.
10.3 We draw attention to the fact that the latest Office for National Statistics (“ONS”) Bulletinfound that 23% of households did not have a household internet connection. That is 5.7 million households. Of those who used the internet, only 27% currently use it to submit official forms electronically. It is anticipated that an even smaller number make payments with official forms submitted electronically. Accordingly, relying mainly on the internet for payment of fees is likely to present barriers to access to justice for a significant proportion of tribunal users.
10.4 The ONS Internet Access Quarterly Update 2011 indicates that 4.25 million disabled adults had never used the internet, which is just over half of the 8.43 million adults who have never used the internet. P & B considers this is a significant number and a failure to provide accessible alternatives to electronic payment over the internet can be anticipated to have a disproportionate effect on disabled users, amongst others.
10.5 HM Treasury Statistical Release records that there are still some 0.85 million households without access to bank accounts (referred to as “unbanked”), covering 1.5 million adults. 58% of these households had an adult of working age. 89% of unbanked households were in receipt of a state benefit compared with only 69% of “banked” households. 20% of unbanked households contained a person not in work due to ill-health. Unbanked individuals would not be able to use electronic methods of payment, since of necessity they will not have debit cards, and almost certainly not credit cards either. Failure to provide alternative ways of paying fees not requiring access to a bank account can be anticipated to have a disproportionate effect on disabled users and a potential equality impact.
10.6 The statistics for unbanked Black and Minority Ethnic Groups do not appear to differ significantly from those for white households but this may mask the number of the unbanked who are migrant workers from Europe, who often do not have access to a bank account and so would have to pay fees in cash. This may have a potential equality impact with regard to national origin. There are a substantial number of holiday pay claims under the Working Time Regulations by building and casual agricultural workers, many of whom are paid in cash and do not have access to bank accounts.
10.7 We have already noted that the civil courts system provides the widest possible options for payment of fees. We urge that the tribunal fees payment system should provide no fewer payment options than those available in the civil courts.
10.8 We appreciate that there may be estate and administrative costs in providing facilities for payment by cash at all ET offices. However, the inability to pay by cash may have a disproportionate affect on disabled users and migrant workers and so an equality impact. It also affects access to justice for other “unbanked” households. In addition, there are only 33 ET offices throughout the country, and very many potential claimants would find personal attendance at the nearest ET office both very inconvenient and expensive. In our response to Question 31 above we propose that it should be possible to pay tribunal fees in cash in Post Offices to mitigate this effect.
Q12 – Where, in addition to any of the questions that have been asked, you feel that we have potentially missed an opportunity to promote equality of opportunity and have a proposal on how we may be able to address this, please let us know so that we may consider it as part of our consultation process.
12.1 P&B have nothing to add to the responses above.