KNOWLEDGE

Employment Tribunal fees could be back before the end of the year

Morton Fraser Associate Andrew Gibson
Author
Andrew Gibson
Senior Associate
PUBLISHED:
12 February 2024
Audience:
Business
category:
Blog

The UK Government have launched a consultation with a view to re-introducing employment tribunal fees, and this time they may well be here to stay.

When employment tribunal ("ET") fees were introduced in July 2013 ("the 2013 regime") they were widely met with criticism and concern, primarily about the impact on access to justice.  The 2013 regime was complex, having different fees payable depending on the type of claim brought. There was both an initial "issue fee" and then a later "hearing fee" payable, both were expensive. Type A claims (which covered simpler disputes such as unpaid holiday pay) attracted a total cost (issue and hearing fees) of £390; and Type B claims (which covered more complex disputes) had a total cost of £1,200.  The total cost of an appeal to the Employment Appeal Tribunal ("EAT") was £1,600.  There was an equally complicated fee remission scheme.

The concerns raised about the 2013 regime seemed to be justified with case volumes falling by 53% in the 12 months after it was introduced.  In 2017, the Order that brought the fee regime into effect was quashed following a successful judicial review. In R (Unison) v The Lord Chancellor the Supreme Court held the fees were unlawful. The Supreme Court found that the fees were in practice unaffordable, and they rendered pursuing non-monetary and low value claims futile.  The fee structure was also found to be indirectly discriminatory against women and individuals with protected characteristics who were more likely to have to bring Type B claims which carried with it a requirement to pay the higher fee. 

Why re-introduce the fees?

The proposed "modest" fee of £55 is intended to relieve some of the cost of the tribunal system which is currently borne entirely by the taxpayer.  The direct running cost of the ET and EAT in 2022/23 was approximately £80 million. The Advisory, Conciliation and Arbitration Service (ACAS) is also funded by the taxpayer and had approximately £24 million directed towards individual dispute resolution in 2022/23.  Based on current claim volumes and taking into account the fee remissions (the current Help with Fees ("HwF") scheme utilised in other areas of the court and tribunal services will be extended to the employment tribunal), it is anticipated that fees would generate between £0.6m and £0.7m in 2024/25 (assuming the regime is implemented in November 2024) and between £1.3m and £1.7m per annum thereafter.  It is also hoped that the fees may encourage parties to resolve conflicts via early conciliation without proceeding on to the ET.

So how does the new fee proposal differ from the 2013 regime

According to the consultation document the proposed new fee regime has affordability, proportionality and simplicity as the 3 key principles underpinning a fair and balanced approach to setting fees for the ET and EAT. 

The new proposed scheme would require an "issue fee" of £55 to be paid by a claimant bringing a claim to the ET.  That cost would see the claim the whole way through the tribunal process with no further payments being needed.  Where a claim is brought by multiple claimants, the fee will still only be £55.  In the EAT, a £55 fee would be payable by the appellant on lodging an appeal.  This fee would be charged per judgment, decision, direction or order of the ET that is appealed.  So, if a notice of appeal included appeals against two ET decisions, the fee would be £110.

In addition, proceedings that need to be brought by a claimant to establish the right to a payment from the National Insurance Fund would be exempted from the fee regime.

As regards fee remission, individuals who do not qualify for HwF but whose circumstances are such that they can't realistically afford to pay the fee, remission may also be available under the Lord Chancellor's Exceptional Power to remit fees, with applications being decided on a case-by-case basis.  Eligibility for HwF is assessed on personal circumstances, disposable capital and gross monthly income, and remission can be partial or for the full £55 fee.

How likely is it that the proposed fee regime will be introduced?

The big unknown this year is the anticipated general election.  Clearly, if the Conservative party remain in power it seems likely that this regime will be introduced.  The basis of the proposed new scheme does, on the face of it, seem more affordable, proportionate and simple to operate than the 2013 regime, although it is worth noting that one of the consultation questions is whether a higher fee could be charged.  Even if the Labour party were to form the next UK Government, it is quite possible the new regime could be in place before then (even if fees do not fall to be paid until later in the year).  Although unions are already pushing back on the proposal, it remains to be seen whether the Labour party would see reversing the new regime as a priority.  Our view is that it would more likely prioritise previously publicised promises to reform employment status and make protection from unfair dismissal a day one right. These are issues that would impact the majority of the working population, not just those who find themselves in the unfortunate position of raising employment tribunal proceedings.

Disclaimer

The content of this webpage is for information only and is not intended to be construed as legal advice and should not be treated as a substitute for specific advice. Morton Fraser LLP accepts no responsibility for the content of any third party website to which this webpage refers.  Morton Fraser LLP is authorised and regulated by the Financial Conduct Authority.