The above was a typically restrained Daily Mail headline following Wednesday’s Supreme Court’s Judgement in R (on the application of Unison) v Lord Chancellor, declaring employment tribunal fees to be unlawful.
In reality what does the judgement mean? what impact is it likely to have in relation to numbers of employment tribunal claims and frivolous and vexatious claims? and how can employers seek to mitigate the risk of such claims?
The Decision
Very much in brief, the decision is that the employment tribunal fee regime, introduced in July 2013, whereby, in order to pursue employment tribunal claims, individual claimants needed to pay issue fees of between £160 and £250 to initiate a claim and then further hearing fees to proceed to hearing of between £230 to £950, was unlawful from the outset and, therefore, must be quashed.
As to why, again, very much in brief, this is because the regime effectively prevented access to justice. As Lord Reed, who gave the leading judgement, indicated,
“people and businesses need to know, on the one hand, that they will be able to enforce their rights if they have to do so, and on the other hand, that if they fail to meet their obligations, there is likely to be a remedy against them ”.
or, as he quoted from the Magna Carta of 1215,
“we will sell to no man, we will not deny or defer to any man either justice or right”.
The regime prevented access to justice as the evidence made clear that fees were not set at a level that everyone could afford, the fall in the number of claims having been,
“so sharp, so substantial, and so sustained as to warrant the conclusion that a significant number of people who would otherwise have brought claims have found the fees to be unaffordable”.
The immediate impact, therefore, is that, the employment tribunal fee regime is removed at a stroke. The Minister of Justice has confirmed this will happen. It is no longer necessary, therefore, for claimants to pay fees in order to pursue employment tribunal claims.
Likely impact in relation to numbers of employment tribunal claims
Clearly, only time will tell in relation to this. It is certainly the case, however, that the introduction of the fee regime led to a significant reduction in the number of employment tribunal claims. Evidence collated as part of a Ministry of Justice Review in 2017 referenced a reduction in claims of 66% to 70%. Lord Reed, within his judgement, referred to this as a “dramatic and persistent fail in the number of claims brought.”
It is, no doubt, inevitable that there will be an increase in claims and there may well be an initial significant spike as those still within the relevant time limit for pursuing claims who have, thus far, been put off by the need to pay a fee, put in claims.
Frivolous & Vexatious Claims
One of the stated aims of the introduction of ET fees was to deter frivolous and vexatious claims. Will we, therefore, following the removal of the ET fees system see an increase in such claims and will steps be taken to try and prevent this?
The Ministry for Justice could revisit employment tribunal fees or some other mechanism, for example, looking again at costs awards to try and address this issue.
Fees seem unlikely, however, given the emphatic nature of the Supreme Court decision and the indication that fees would need to be reasonably afforded in the real world and should not render it futile or irrational to bring even low value claims or claims, such as seeking written particulars of employment, where there is no financial award.
Practical steps employers can take to mitigate the risk of facing employment tribunal claims
As has, no doubt, always been the case, the key to employers mitigating risk involves the following:
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rigorous recruitment processes to ensure the right staff are recruited into the right roles;
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proper use of performance review and probationary periods so that poor performers are quickly identified before they obtain unfair dismissal rights;
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rigorous, objective and fair appraisal and performance processes, again, to identify poor performers and steps to improve but also to allow objective justification of future decisions regarding remuneration, promotion and restructuring/redundancy, making it easier to defend against allegations of discrimination;
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real buy-in from line managers to necessary HR processes and close effective working relationships between HR and line management;
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appropriate disciplinary and grievance policies and real application involving proper investigation into any such issues and appropriate use of appeals with a view to ensuring an employer is in the best position to defend against claims and providing maximum scope for resolution of issues internally.
In addition to the above, all effectively involving the application of best HR practice, it remains the case that, even following the elimination of the ET fee regime, an employee needs to go through the ACAS compulsory conciliation process before pursuing an employment tribunal claim. This effectively provides another opportunity for an employer to head off an employment tribunal claim.
Lastly, employers can also take advantage of the pre-termination negotiation process introduced in 2013. This procedure affords a highly effective route for agreeing a termination, for example, in a case of consistent poor performance or where an employee is no longer a good fit for a role, with the certainty of a settlement agreement in return for a lump sum payment. We have seen this particular route being very effectively used by a number of clients. It provides real advantages from the point of view of providing a quick process, following a settlement agreement, providing absolute certainty that a claim cannot be bought, and often at comparatively low cost.
