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To fee or not to fee

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The Minister of State for Education and Business, Matthew Hancock, recently hailed figures demonstrating a 79% reduction in Employment Tribunal claims in the last three months of 2013, suggesting that tens of thousands of workers had been ‘squeezing the life’ out of businesses with bogus discrimination and harassment claims, believing that employers have been ‘ruthlessly exploited’ by workers in an attempt to ‘cash in’ under the old system. But what exactly was the old system?

Previously, claimants never had to pay any issue fees. But on the 29 July 2013 the introduction of issue fees up to £1,200 could be expected to be paid if their claim makes it to the final hearing. Without any attempt to deny Mr Hancock his sense of integrity this appears to be the slightly more realistic reason for the severe drop in claims being issued in the Tribunal, not simply a reduction of vexatious claims as a result the fee system.

There were 5,619 single claims lodged in the Tribunal from January to March 2014. Compared to the 13,491 claims lodged in the same period in 2013, there is no ignoring the fact that the new fee structure has taken no mercy on potential claimants. Richard Fox, chair of the Employment Lawyers' Association, states that these figures are ‘concerning’, and rightly so.

But Mr Hancock's justification for the tighter regulations preventing 'bogus' claims appears to have some backing from other ministers. Justice Minister Shailesh Vara believes the fee structure will encourage early settlements and avoid emotional damage to claimants and businesses.

The ACAS Early Conciliation process demonstrates the Government's attempt to encourage parties to settle claims before they have even begun. But does it not seem a little coincidental that the fee system prevents only vexatious claims from being issued, rather than the possibility there is another reason for the number of reduced claims? Potentially the new two-year qualifying period for unfair dismissal claims is responsible for the statistics. Perhaps even the three month rule to issue discrimination claims leaves claimants with little time to dawdle. However the fees themselves are the more likely reason for the reduction in claims.

It seems too easy to accept that the introduction of the fees has wholly eliminated only vexatious claims because these figures fail to identify otherwise meritorious claimants who simply cannot afford the £1,200 price tag to issue their claim. For those on low incomes the average award for an unfair dismissal at £5,000 to £10,000, and this is a potentially daunting figure where the issue fee is one fifth of their award with no guarantee of success. Even where a claimant is entitled to a fee remission, lengthy procedures surrounding the dreaded EX160 form further exacerbate the time it takes to issue the claim.

But should the fee system be removed altogether? While it may be argued that its removal would prevent indirect discrimination of those who simply do not have the means to pay the fee, Policy Advisor Richard Dunstan believes that lower fees for both claimant and respondent could restore access to justice, as cutting the fee regime altogether is unlikely to happen. Dunstan believes that lower fees for both claimants and respondents, and a higher 'losing fee' for employers is a more desirable fee system, if a fee system was ever desirable at all.

Mr Hancock's comments therefore indicate that employers are now well protected by the fee system as vexatious claimants are being deterred by the issue fees. But for those with meritorious claims the reality is much different; claimants who simply cannot afford the fee suffer the most and the employer essentially gets away with their wrongdoings. But scrapping the fee altogether is arguably undesirable, and Dunstan’s proposals offer a more Tribunal-user friendly alternative, keeping the Ministry of Justice happy and acting as an incentive to pay a reduced issue fee. But for those in desperate need of justice and without the means to pay the issue fee, the answer as to whether we should eliminate the fee system is quite simple.

By Thomas Fuller, employment & discrimination advisor

If you would like to discuss your claim or receive advice on issuing your claim in the Employment Tribunal then please do not hesitate to contact us and we will be happy to assist you.