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Employment Tribunal fees held to be unlawful… what does this mean for employers and how can they protect themselves?

  • United Kingdom
  • Employment litigation and dispute resolution
  • Industrials


Introduction of Tribunal fees

Before July 2013 it was free for individuals to bring Employment Tribunal Claims. However, in July 2013 the Government introduced Employment Tribunal fees for anyone wanting to make a claim or appeal a judgment. The Government hoped that the introduction of Tribunal fees would generate approximately 8 million pounds and assist in funding the system. The fee to lodge a claim was £160 or £250 (dependent upon the nature of the claim) and the fee to pursue the matter to a final hearing was a further £230 or £950 (again dependent upon the nature of the claim). If employees won their claim, the Tribunal Judge could order the Company to pay any Tribunal fees incurred.

Supreme Court decision

The Trade Union, Unison, decided to challenge the Government’s implementation of the fee regime, they claimed that it was unlawful and indirectly discriminated against women and that since the introduction of fees, the number of claims submitted had fallen by 80%.

Both the High Court and Court of Appeal rejected the claim, however last month the Supreme Court quashed the Tribunal fee regime giving judgment that it was both unlawful and indirectly discriminatory.

The Supreme Court decided that the government had acted outside its powers when it introduced fees at current levels, because the fees effectively prevented access to justice, as many Claimants simply could not afford to pay the fees, especially in low value claims.

What does this mean?

As a result of the judgment no further fees can be charged by Employment Tribunals unless and until a replacement scheme is introduced. This means new claims can now be brought for free and no hearing fees will be charged claims already lodged.

As for those who have already paid tribunal fees, the Ministry of Justice has undertaken to reimburse fees already paid. What is not yet clear, however, is whether that undertaking extends to compensating employers who have been ordered by Tribunals to reimburse fees paid by Claimants when their claims have been successful. Also, it appears that claims that have been struck out for the non-payment of Tribunal fees will be reinstated.

Without the deterrent effect of fees, employers now face an increased risk of employment-related claims from current and former staff. It is also possible that some individuals might now try to claim they should be permitted to bring out-of-time claims in respect of past alleged breaches of their rights, arguing that the now found to be high and unlawful fees prevented them from bringing a claim until now.

The Government may try to act quickly to replace the system quashed by the Supreme Court, however in light of Brexit there is already a hectic parliamentary schedule, therefore when a replacement system will be debated and passed is unknown, it could be months or even longer. The Supreme Court ruling gives Parliament a lot of ‘food for thought’ but so far it is unclear what shape a replacement scheme would take.

Whilst there is a window of opportunity to submit a claim without paying a fee, it is likely that employees will take it. Claim numbers are expected to rise, but whether they will rise to the levels they were at prior to the introduction of Tribunal fees is unknown. If they do, it is unlikely that the current Tribunal system (with a reduced number of hearing centres, Judges and Clerks) could cope. No doubt, if a new fees regime is introduced and once the media attention has died down, the number of claims will level, but, in the meantime, we must watch and wait.

How can you protect your business from claims being made?

There is no hard a fast rule as to how to protect your business from employees making Tribunal claims. Unfortunately, Tribunal claims are always a risk even for the best and most responsible employers, however there are some simple steps you can take to try and avoid claims being made and minimise the risks if claims are made.

Top tips

1. Ensure all employees have up to date contracts

Not only is it important to issue a contract of employment when an employee first starts work with you, as failure to do so can result in a claim being made for compensation of two to four weeks wages, it is equally as important to check your contracts are up to date. Regular reviews should be undertaken to ensure the contracts the company has in place and accurate and give the protection the company needs.

Employers sometimes forget that the contract issued to a junior employee may no longer be sufficient as they spend more time at the business. For example, as time passes it may be appropriate to introduce post-termination restrictions into an employee’s contract, to protect businesses interests if the employee was to leave and attempt to poach other employees or clients. A good time to update contracts is when conducting pay reviews or when promoting an employee, as there is an obvious incentive for the employee to accept the new terms.

2. Have clear and accessible policies dealing with discipline, absence and grievances and try to ensure Managers follow them

The Tribunal will expect (especially bigger employers) to have a clear set of policies dealing with discipline, absence and grievances. Where a company fails to follow its own policy this can be fatal to their defence to a claim in the Tribunal.

It is important to be clear whether or not the policies form part of the employees terms and conditions of employment. It is advisable for policies not to be contractual, so that you can change them without needing employee agreement first.

3. Train employees (especially Managers) on recognising discrimination in the work place

The damages for discrimination claims are uncapped and are therefore can be the most costly claims for employers. Discrimination claims can also be made against not only the business but individual employees as well. It is therefore vital that all employees have, at least, a brief understanding of what constitutes discrimination. If the Employer can show it has anti-discrimination policies in place and has adequately trained employees on anti-discrimination, it can use this to aid their defence to a claim.

4. Keep accurate records of all meetings and telephone calls with employees

In a large number of Tribunal claims there are arguments about what was said and done. We are now in an era where not everything is committed to a formal letter and by the time a claim reaches the Tribunal (which can be many months after the event) witnesses struggle to remember what happened. A case can be lost or won on documents. Judges are swayed by documents especially if there is proof they were made at the time (i.e. date stamped, signed by the attendees). Good practice is to always make a note of telephone calls and meetings and retain them on the employee’s file should they be needed at a later date.

5. If in doubt ... take advice

It is usually a lot easier to address any issues at the time they occur rather than at a later stage. Therefore, if in doubt, take advice at the time before committing to a course of action you are unsure about.

What to do if a claim arrives

When you receive notification of a claim it is vital to act quickly. Employers only have 28 days to submit a response. Missing this deadline can lead to judgment being entered against you automatically in favour of the Claimant. Unless you have a very good reason, it is very difficult for those judgments to be overturned.

In a lot of cases, the claim form will be accompanied by a list of cases management orders and a hearing date. Make sure you diarise the keys dates, as missing one could lead to your response being struck out or the business being fined up to £1000.

It is worthwhile considering who will attend the Tribunal as a witness on behalf of the Company as soon as possible. This is usually the person who is alleged to have discriminated against the employee or made the decisions to dismiss, not uphold the grievance or appeal and so on. It is important to make sure they are free to attend the hearing and do not have any pre-booked holidays or medical appointments as soon as possible.

It is also important to check the claim form was submitted in time, within 3 months from the date of dismissal or discriminatory act, taking into considering any additional time permitted due to the Claimant participating in ACAS Early Conciliation. If the claim is out of time it may be possible to get the claim thrown out by the Tribunal.

If you are intending on instructing solicitors to represent you in Tribunal proceedings (which is advisable due to their complexities), it is best to do so at the outset. Once a response is lodged it can be difficult to depart from points made, so if possible, seek advice straight away.