HomeHRWhat will the removal of tribunal fees mean for employers?

What will the removal of tribunal fees mean for employers?

Amanda Chadwick explains how a Supreme Court ruling could open the door for a flood of unfair dismissal claims.

UNISON’s long-running judicial review against the legality of tribunal fees has been decided by the Supreme Court. The judgment that the fee regime is unlawful will have a major impact on the outlook of tribunal claims over the coming months and years.

The government introduced tribunal fees in July 2013 with the aim of transferring the financial costs of tribunals from the tax payer to those who were using the system. Claimants would have to pay an issue fee and a hearing fee at a cost of up to £1,200 depending on the matter in issue. Following the introduction, the number of claims fell around 70%. UNISON lodged an immediate challenge but failed at earlier stages because there was not enough evidence to validate their claims.

The Supreme Court has now decided that fees were set at a level that restricted access to justice and discriminated against women and those with particular protected characteristics. In essence, the fees were so high that people could not enforce their employment rights by using the tribunal system.

This decision means that, from the 26th July 2017, claimants do not have to pay a fee to make a tribunal claim. The fee requirement has been removed from the online system and claimants simply lodge their claim form to start the tribunal process. The removal could see the number of tribunal claims reaching pre-2013 levels and increasing by around 70%. A number of new key employment law initiatives, for example the requirement for larger companies to publicly report on their gender pay gap, could also see claims rocketing in the long term.

A short-term influx of claims may also be evident as claimants rush to make a claim before their claim goes out of time. The majority of claims have a time limit of three months from the unlawful act, or the last in a series of acts, within which to submit a claim. Employees who had a valid claim but were unable to pay the fee, or were put off making a claim because of the fee, may now rush to submit a claim before the time limit passes.

At the time fees were first challenged, the government pledged to refund fees paid if they were found to be unlawful. Following the decision, the government is now committed to refunding around £27million in fees to claimants. This may mean employees who had to pay fees as part of their compensation award may receive a refund, although more information is awaited on this.

Other aims of the fee system were to reduce the number of vexatious claims and encourage early settlement. The early conciliation process was introduced to enable this and, if it remains, the process will become more important for employers to evaluate the risks of settling or proceeding to tribunal.

An increase in tribunal claims will see an increase in the number of tribunal judgments being published online. This carries a real reputational risk as the public, future employees and the media can see the scrutiny of business practices that the tribunal carries out when making a decision.

Taking steps to prevent unlawful treatment in the workplace will reduce the many risks of going before a tribunal. Employers need to ensure they are acting fairly and lawfully when making decisions regarding their employees. They also need to provide their staff with accurate documents and their correct employment rights depending on their employment status. This well help to reduce the likelihood of employees submitting a claim against the business.

  • Amanda Chadwick is an employment law and health & safety presenter at Peninsula Business Services

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