The return of Employment Tribunals: Good for business?

The UK government is proposing to reintroduce fees for employment tribunal claims

The return of Employment Tribunals

The UK government is proposing to reintroduce fees for employment tribunal claims, eight years after they were quashed for being unlawful when they were last in place after a successful challenge by the Trade Union Unison in the Supreme Court.

Tribunal fees wereintroduced in 2013 by the then UK coalition government with a standard fee for ‘simple’ tribunal claims totalling £390, while for more complicated matters the charges totalled £1,200. 

The rationale behind the government wanting to re-introduce the charges is to ensure users are paying towards the running costs of the tribunals, and put users on broadly the same footing as users of other courts and tribunals who already pay fees. In reality though, the number of employment tribunals are starting to return to pre-pandemic levels and as a result there is an increase in waiting times for claims to arrive at the final hearing, in some cases extending to 12 or 18 months from the date of the claim being issued. 

The first introduction of fees in 2013 had an initial impact with a drop of 79% in total claims for certain jurisdictions, which can be construed as being both detrimental to claimants’ willingness to submit a claim whilst also reducing caseloads for the tribunal service.

From this and subsequent data, it seems quite clear that some claimants were not willing to submit their case to a tribunal, which implies a shift away from the key principle that tribunals should be easily accessible and inexpensive. 

How much are the newly proposed fees?

The fees proposed in the consultation is £55 in total which is modest in comparison 20 the 2013 – 2017 fees.

Based on the number of tribunal claims heard in 2022 / 23 the proposed fees are expected to generate between £1.3m-£1.7m a year towards the £80m annual cost of administering employment tribunals. 

Defending an Employment Tribunal isn’t cheap. According to the British Chamber of Commerce, the average cost of an employment tribunal claim is around £8,500 therefore businesses may benefit from a reduction in a number of claims they have to defend. On top of the costs for defending the claim, if the case is lost financial awards can also be quite considerable with unfair dismissal claims attracting a basic award of £16,320 plus a compensatory awards of either 52 weeks’ wages or £89,493 (whichever one is lower). 

For discrimination claims, there is no maximum amount, with the claimant even be compensated for injuries to their emotional wellbeing, which can range from £27,400 to £45,600.

The aftermath of going through legal hearings can also be damaging to your reputation. Employment Tribunal judgements are now publicly listed. Also, the general public and media representatives are usually allowed to attend hearings where details of the case can easily be leaked, damaging a business name.

What will be the impact on businesses be?

Although there will be less tribunal claims to defend the impact of the last introduction of fees was the general increase in discrimination claims in comparison to other claims. As there was a fee for submitting a claim, the Claimants may have been trying to maximise their ability to gain compensation which could be a trend if tribunal fees are re-introduced.

Therefore it is imperative that employers reduce the chances of disputes being raised to tribunal hearings through providing a fair and decent workspace through having:

  • Have clear policies and procedures that are implemented properly and reviewed annually 
  • Having an up to date and robust Contract of Employment that is not ambiguous and minimised implied terms and conditions of employment 
  • Provide mediation to help resolve disputes internally using Acas, Unions or other party support mechanisms
  • Collect data for compliance so that there is a clear audit trial of the persons employment which has been documented in full
  • Ensure managers are trained to an appropriate level of HR knowledge to manage staff effectively and to pre-emp any potential disputes

The consultation will run from 29 January 2024 for a period of 8 weeks and will close on 25 March 2024. As a business it is important to provide feedback on the proposed fees which can be done by answering these questions.

Dr Jonathan Lord
Dr Jonathan Lord

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