CIPD: Are fees the cause of the drop-off in employee law suits? The introduction of employment tribunal fees last July was a controversial measure and, at the moment, the statistics indicate that the fee system may have been too successful for its own good.
Government statistics show that claims for 2013/14 fell by 45 per cent compared to 2012/13. To put the overall numbers into context, comparing the first quarter of 2014 with the same period in 2013, gives some startling results. Race discrimination claims fell by 59 per cent, sex discrimination claims by 81 per cent, unpaid wages claims by 80 per cent, and unfair dismissal claims by 62 per cent.
The blame, or credit, for the dramatic fall in claims has been firmly placed on tribunal fees, as most claims now cost around £1,200 to take to a hearing. While there is a system for low income employees to avoid fees, the process is complex and it is difficult for employees to understand if they qualify.
However, fees are not the only factor at work. The current government has also increased the qualifying period for unfair dismissal claims from one year to two; reduced the unfair dismissal cap to the lower of a year’s pay or £76,574, thereby reducing the perceived value of such a claim for lower paid workers; and brought in Acas early conciliation as a further hurdle for employees seeking to claim.
The economy is also in improving health, which normally accompanies a decrease in claims. Prior to the economic crisis, claims for 2007/8 totalled 189,303. At the height of the crisis in 2009/10 they were 236,103. By 2012/13, before fees were introduced and the other changes noted above had made an impact, claims had dropped back to 191,541.
Access to justice
The question is, are the fees preventing access to justice? It is very difficult to answer this, looking purely at the statistics. For example in 2013/14, of all the sex discrimination claims issued, 23 per cent were settled via Acas, 2 per cent won at a hearing, and 52 per cent were withdrawn. We do not know what percentage of the withdrawn claims were actually settled by employers or just withdrawn by claimants. Nor is it possible to say how many of the claims, including those involving Acas, were settled on a commercial basis to save costs rather than indicating any acceptance of actual wrongdoing. However it is highly likely that a significant proportion of valid claims are now not being pursued due to the impact of fees, and it is likely that a large number of nuisance claims are also not being pursued.
So, if you are an employee, particularly a lower paid one with limited access to legal advice, tribunal fees appear to be a major barrier to justice. If you are an employer, tribunal fees have been a success. It is not, however, all good news even for employers. In 1979, trade union membership in the UK peaked at 13.2 million. By comparison in 2012 it had dropped to 7.2 million, according to government statistics. This decline has been mirrored by an increase in individual employee rights and easier access to the tribunal system. Given the increasing inability to seek redress through the tribunal system, perhaps we will see an increase in union membership and activism?
Employers also need to bear in mind that bad employment practice does not just lead to tribunal claims; it is also likely to result in higher employee turnover and lower levels of engagement. These can have direct and immediate financial consequences.
So, will fees last? The government’s position is that fees are to remain although it is likely to review the levels of fees.This is not a magnanimous gesture. The legality of introducing tribunal fees has already been challenged in the courts, initially unsuccessfully, by trade union Unison. That case is due to go to the Court of Appeal later this year.
The Labour Party has been rather silent on the issue, as it faces a difficult balancing act of not appearing too unsupportive of business or under the yoke of the unions. Whatever the result of next year’s election, it is likely the government will reduce the level of fees, although scrapping them entirely is probably a step too far.