EurWORK European Observatory of Working Life

United Kingdom: Fall in Employment Tribunal claims linked to introduction of fees

Printer-friendly version

The number of claims submitted to UK employment tribunals has fallen dramatically. While the government denies that this is due to fees introduced in 2013, it has agreed to make minor amendments to the fee remission scheme.

Introduction

In 2013, the government introduced a system of fees for those wishing to make a claim at an employment tribunal. It wanted to transfer some of the system’s costs to users and also to encourage people to use alternative services to help resolve their disputes. The changes also made it mandatory for potential claimants to seek conciliation over a one-month period with the conciliation body Acas (which advises employers and employees) before making a claim.

Trade unions and a number of third-sector organisations widely condemned the introduction of the fees and have continued to highlight their adverse impact on the number of claims. The government has recently conducted a review on the impact of the fees.

In light of this, an examination of the system, its impact and the likely outcomes of the government review is timely.

Background 

Employment tribunal fees were introduced by the coalition government in July 2013 under the Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013 (SI 2013/1893). Prior to this, since the creation of the system in 1964, there were no fees for bringing claims or appeals.

The proposal to introduce fees originated in the government’s Resolving Workplace Disputes consultation in January 2011. The objectives were to:

  • transfer some of the costs to users (the proposals were set against the background of a 23% reduction in the budget for the Ministry of Justice (MoJ) following the government’s spending review);
  • help streamline the system and keep the provision of services at an ‘acceptable level’;
  • incentivise earlier settlements/discourage unreasonable behaviour.

Two major employer bodies, the Federation of Small Businesses (FSB) and the Confederation of British Industry (CBI), welcomed the changes, arguing they would help to reduce the number of weak/vexatious claims.

Tribunal fees

Fees system

Claimants must pay an issue fee to lodge a claim as well as a hearing fee for the first substantive hearing. If they are of limited means they can apply for a remission. The fees differ depending on the type of claim, with the more complex varieties of claim and multiple claims subject to higher rates.

  • For Type A claims, which include claims for unlawful deductions from wages and unpaid wages, there is an issue fee of £160, followed by a hearing fee of £230 (£390 in total).
  • For Type B claims, which include unfair dismissal, discrimination and equal pay, there is an issue fee of £250, followed by a hearing fee of £950 (£1,200 in total).
  • Appeals to the Employment Appeal Tribunal (EAT) attract additional fees; lodging an appeal costs £400 while the hearing fee is £1,200.


Claimants are eligible for the fee remission scheme only if they have savings or investments of less than £3,000 (this increases for higher level fees). Claimants also need to be either in receipt of benefits or meet the low-income eligibility threshold.

Impact of the fees

The introduction of fees coincided with a steep decline in the number of cases received by employment tribunals. In the year to June 2013, the tribunals received, on average, just under 13,500 single cases per quarter. Following the introduction of fees, the number of single cases has decreased by 67%. The average number of multiple cases (brought by two or more people) has decreased by 73%.

Table 1: Impact of the fees on the number of claimants

 

Years before fees¹

First year after (2014)²

% changeᵌ

Second year after (2015)

% change³

Third year after (2016)

% change³

Total claims

195,570

43,951

-78%

74,979

-62%

94,606

-52%

Single claims

53,844

18,480

-66%

17,123

-68%

16,895

-69%

Multiple claims

141,726

25,471

-82%

57,856

-59%

77,711

-45%

Multiple cases

5,847

1,740

-70%

1,817

-69%

1,102

-81%

Total cases

59,691

20,220

-66%

18,940

-68%

17,997

-70%

1 July-September quarter 2012 to April-June quarter 2012

2 October–December quarter 2013 to July-September quarter 2014; second and third years same quarter

3 % change — latest year-on-year before fees

4 Single claims + multiple cases

Source: Labour Research Department Workplace Report, March 2017

 

MoJ data for appeals also show a fall in numbers. In the first year following fees, the numbers declined by 39% and, in the third year, the fall in the number of EATs from that of pre-fee introduction was 60%.

Criticisms and Unison’s legal challenge

Trade unions and several charities have been highly critical of the changes, pointing to the deterrent effect of the fees and the dramatic falls in claims. For example, a survey carried out by the charity Citizens Advice in 2014 found that 82% of respondents who were having a problem at work said that the current fee levels would make them less likely to make a claim (PDF) or deter them from claiming altogether. Similarly, the TUC found that, even for the lower-level Type A claims, fees of £390 often exceed the amount of money an individual is seeking to recover (PDF), deterring low-paid workers from making a claim.

Moreover, Employment Tribunal judges also expressed concern that there has been a greater fall in lower-value claims and claims which did not seek a financial remedy. They suggest that for some types of case, ‘the fees were disproportionate to what was at stake […] with people deciding that they were not economically worthwhile’.

In 2013, the public sector union Unison instigated a judicial review of the fees in the High Court. This was unsuccessful, with the court ruling that the claim was premature and that new proceedings should be lodged if and when further evidence became available. The union appealed in 2014, following figures showing the sharp drop in claims being brought. The union’s second challenge was also unsuccessful but it was granted permission to appeal to the Supreme Court. This was heard in March 2017 and judgment is pending.

Further criticism came from the Justice Select Committee’s inquiry at the House of Commons, which concluded that the fees have had a significant adverse impact on access to justice for meritorious claims (PDF). It called for fees to be reduced and for a more generous remissions system. The committee also criticised the government’s delay in publishing its post-implementation review of court fees, announced in June 2015 but not published until January 2017.

Tribunal fees review

The review claims the government has met its objective of encouraging people to use alternative dispute resolution services, citing the increasing number of people now using Acas. However, this is misleading given that potential claimants have no choice but to trigger early conciliation if they want to pursue a tribunal claim. 

The review also referred to figures from an evaluation of early conciliation by Acas, based on a survey of claimants and employers in 2014. The government claims that ‘the majority of people […] have been able to use the reformed system to access justice, either by successfully using conciliation […] or by going on to pursue a claim to the employment tribunals’. The government also referred to evaluation findings showing that around 19% of all respondents were not able to resolve their dispute through conciliation but then did not go on to issue proceedings in the tribunal. It noted that some of these (2,500 people, around 3%) said that it was because they could not afford to pay.

However, separate Acas data identified higher figures for these negative outcomes, showing that 68% of those who initially sought early conciliation neither received a settlement nor subsequently progressed to a tribunal; some 53,000 out of a total 83,000 seeking conciliation. The data also showed that 26% of all notifications did not proceed to tribunal because of fees.

While asserting that there was no conclusive evidence that fees have prevented people from bringing claims, the government conceded that some changes were needed. It, therefore, outlined proposals to widen access to the fee remission scheme. However, this only amounts to a minimal uprating in the income threshold, with the disposable capital threshold remaining unchanged.

Union responses

The TUC described the Acas survey figures as a serious underestimate, arguing that the survey excludes many potential claimants who decide that the fees are prohibitive and who therefore do not bother with Acas conciliation. Moreover, it said that the proposed changes were inadequate. 

The Unite union said that the limited extent of planned change was ‘offensive’. It proposes scrapping the fees and replacing early conciliation with pre-tribunal non-binding arbitration.

Commentary

Despite the dramatic fall in numbers of claims submitted to tribunal, the government claims that this is not due to affordability, stating that it shows that the mandatory pre-tribunal conciliation scheme has been highly effective in settling disputes, thus negating the need for progress to tribunal (despite the existence of data which undermines this argument). The only change it intends to make to the scheme is a minimal reform of the remission scheme. The Supreme Court’s judgment on Unison’s legal challenge is pending, which could force the retraction of the fees. However, the original judicial review hearings and other appeals have failed, suggesting there is little scope for optimism.

Useful? Interesting? Tell us what you think. Hide comments

Add new comment

Click to share this page to Facebook securely

Click to share this page to Twitter securely

Click to share this page to Google+ securely

Click to share this page to LinkedIn securely