On the 26th July 2017, employment tribunal fees were ruled to be unlawful by the Supreme Court. They were introduced by the former justice secretary Chris Grayling in 2013 to reduce the number of malicious and weak cases.
Immediately, the number of cases that went to an employment tribunal plummeted. Consequently, the fees produced barriers for those that could not afford to fund their own tribunal. Andrew Gilchrist, Head of Employment at Lupton Fawcett, explains what employment tribunal fees are, what they were for and how the ruling will affect you and your business.
What are employment tribunals?
Employment tribunals are independent public bodies in England, Wales and Scotland that hear disputes between employers and employees. Some of the most common types of dispute brought before tribunals include wage disputes, redundancy or unfair dismissal, or workplace discrimination. All employment tribunals are supervised and governed by the Tribunals service and the Administrative Justice and Tribunals Council.
Until July 2013, approximately 5,000 cases were going to an employment tribunal every month. The UK government sought to intervene by introducing employment tribunal fees. In a statement, it said: “employment tribunal fees would ‘disincentivise unreasonable behaviour, like pursuing weak or vexatious claims’”.
What are employment tribunal fees?
Introduced in July 2013 by former justice secretary Chris Grayling, employment tribunal fees were divided into two distinct categories: Type A and Type B. Type A cases dealt with unpaid wages, redundancy pay, holiday pay and notice pay. Type B cases dealt with more complex issues such as discrimination, whistleblowing and unfair dismissal. Both types of claim had pricing tiers attached to them, with Type B cases costing all the way up to £1,200 for a single claimant.
As employment tribunal fees were rolled out, the number of cases brought to tribunal dropped. In September 2013, the government recorded 1,203 tribunals for the month of September. Examining data from the GOV.UK website, 79% fewer cases were brought before a tribunal over the next three years.
Why did the Supreme Court rule tribunal fees to be unlawful?
Workers union, UNISON took the UK government to court. Their case argued that employment tribunal fees prevented workers from taking their employer to tribunal because of the amount of cash they would need to spend to do so.
All seven judges that sit on the Supreme Court agreed. In a press statement, they stated that lower and middle income claimants would only claim if they were absolutely certain to win their case and recover tribunal fees paid in full. The Supreme Court also found tribunal fees were indirectly discriminatory against women. They reached this assessment because a higher proportion of women would make Type B than Type A claims.
In the final part of their statement, the Supreme Court ruled that all fees paid since employment tribunal fees were introduced must be repaid in full.
What does this mean for employees?
It’s good news for employees. Now, they no longer need to pay any sort of fee to take an employer to an employment tribunal. For those on lower and middle incomes, it will come as a relief as they will no longer have the concern of juggling their income and taking action against their employer.
Also, it is great news for those that feel they have a case against a current or previous employer. The Citizens Advice Bureau, and similar organisations are encouraging people to come forward if they have a grievance with their previous employer. In particular, this is important for those that felt put-off by the large fee.
For those that spent money taking their employer to a tribunal, it is good news as the government is obliged to pay back all paid tribunal fees, at a cost of £27 million. Finally, women in the workplace benefit, as the high court ruling removes tribunal fees that were discriminatory towards women in their nature.
What does this mean for businesses?
Businesses can expect an increase in requests for employment tribunals. Some commentators have indicated they expect employment tribunals to resume at the same rate before tribunal fees were brought into law in 2013. Others have suggested that we will see a dramatic increase on the 2013 figure to make up for the time disgruntled employees may not have been able to pursue their case.
The advice to businesses is to be very careful when it comes to dealing with employee matters. In the long run, this could encourage employers to treat their employees better, which in turn could increase job satisfaction rates and naturally increase staff retention. This will save businesses tremendous amounts of cash and time for training new staff.
Despite what we’ve mentioned above, many people would argue that the change to the law isn’t positive for employers. This is because businesses might end up facing an excessive number of tribunals that disgruntled employees may not even be able to win.
What kind of tribunals can businesses expect to see more of?
It is tricky to say exactly which kinds of cases businesses will see more of. However, we can make educated guesses by analysing the types of tribunals that were heard before 2013.
When employment tribunal fees were introduced, there was a sharp decrease in low value claims. Businesses faced little risk from employees on a lower salary and those with less than two years’ service. Employers were happy to risk dismissal on the basis that an employee would be unlikely to afford employment tribunal fees. So, it would only be natural to assume that now financial barriers have been lifted, these sorts of claims will increase.
Employers may also see an increase in women taking them to an employment tribunal. Research by the Young Women’s Trust shows as many as one-in-four young mothers face discrimination in the workplace when their employer discovered they were pregnant. A survey by the Equality and Human Rights Commission found that six times more mums under the age of 25 are being dismissed when they tell their employer about their pregnancy.
With 61% of mothers aged 16-24 saying they are only just about managing financially, getting rid of employment tribunal fees may give young women the opportunity to take action against their employer if they feel they have a case.
Challenge or opportunity?
The abolition of employment tribunal fees presents challenges and opportunities for employers and employees alike. While some employers may see fees as a useful deterrent for frivolous tribunal cases, the Supreme Court ruling should be seen as an opportunity to implement reforms to decrease the number of employment tribunals received initially.
