In July 2013, employment tribunal fees were introduced by the Coalition Government and then, in a landmark decision by the Supreme Court on 26th July 2017, they were abolished.
This post discusses the reasons the tribunal fees were introduced, why they were abolished, what the resulting situation has been and what you should do now.
Why did we have tribunal fees in the first place?
If you can recall back to 2013, employment tribunals were extremely busy! Case after case was lodged by employees both seeking justice and those taking the opportunity to see if they can get a pay out from their employer just on the off chance. Without anything preventing employees bringing an employment tribunal claim, we saw cases from the most serious to the most ridiculous being brought to court.
The system couldn’t deal with the volume of claims, particularly with such a high volume being opportunistic and without any merit.
So in order to try an address this issue, the government introduced tribunal fees. The aims behind them were to transfer some of the operational costs to those using the court system, to encourage earlier settlements and to act as a disincentive for bringing of weak or vexatious claims.
What was the impact of introducing tribunal fees?
With the introduction of the tribunal fees, employers were finally able to breathe again. The number of claims dropped significantly. In the first year following the introduction of the fees, tribunal claims fell by almost 70% and the numbers never picked back up significantly.
Employers finally saw the threats of employment tribunal clains weaken as employees who did not have strong cases were no longer pursuing these through courts. This together with the increase of the length of service requirement from 1 to 2 years for bringing unfair dismissal claims in 2012, meant that employers felt more confident in making business decisions without the constant threat of employment tribunal claims.
Tribunal Fees were ruled as unlawful
A trade union (Unison) took it as a mission to challenge the introduction of the fees through the courts system. Even with a number of failed attempts, Unison finally succeeded and on 26th July 2017 employment tribunal fees have been ruled unlawful.
The government then had the challenge of reimbursing all of the fees that had been paid in the past, which amounted to £32 million. This put a significant administrative burden on the government and on the court system.
While some see this as a wonderful victory for the country in terms of establishing the rights of the people and the limits of the powers of the government, the business world will find itself once again having to deal with ongoing threats of employment tribunals.
We believe that we will probably not go back to the pre- 2013 levels of employment tribunal claims but a significant rise should be expected. The fees did prevent those who went to the tribunals on the off chance of winning from doing so and the removal of fees will once again enable such behaviour.
Businesses now need to take a more cautious approach to employment relations as the repercussions of not doing so are once again higher. Your employees might not win a tribunal case, they might not have a strong case at all but if they want to they will be able to take you to a tribunal as a way of putting pressure on you.
As an employer, you probably know that tribunal costs for you commence from the day a claim is lodged and this cost is the cost of your lawyers, management time and all of the additional administrative burden that this demands even before the claim goes anywhere. If the employee knows that this cost is high for you, then they will threaten a claim with the hope that a settlement with them will seem more economical for you from the very beginning.
We really do not like to ever ‘scare’ our clients into action but feel that this new development needs to get the required attention and to be taken seriously.
At Lighter HR we often support our clients with employment situations where things have not gone so well but this is definitely the time to start utilising your HR adviser before taking any actions. It’s easier to do things properly from the start rather than needing to dig yourself out of a hole.
If you are our client – we strongly urge you to make sure you give us a call before you start to deal with an employee issue. And if you are not our client, then please feel free to give us a call on 0203 319 1649 to talk through any issues you are facing.