Employment Tribunal fees: the government strikes back

The Employment Tribunals are intended to be an informal, accessible and flexible avenue for workplace disputes. Unlike civil courts, there are currently no fees required to bring a claim in the Employment Tribunal ('ET') or to lodge an appeal in the Employment Appeal Tribunal (‘EAT’). However, this has not always been the case and the government are now proposing to reintroduce ET and EAT fees.

The government’s intention is to reduce the cost to the taxpayer to fund tribunal services, incentivise parties to settle disputes at an early stage and encourage better engagement in Acas early conciliation. With the Tribunals continuing to face significant backlogs, a fee regime may also alleviate some of the pressures faced.

What ET fees used to be payable?

The government previously (and, at the time, controversially) introduced ET fees in July 2013. The amount payable by a claimant or appellant depended on the nature of their claim:

• Type A claims – for simple disputes such as claims for unlawful deduction for wages, statutory redundancy payments and breach of contract: Issue fee of £160 and hearing fee of £230.
• Type B claims – for more complex claims such as discrimination, unfair dismissal, equal pay and whistleblowing: Issue fee of £250 and a hearing fee of £950.

To lodge an appeal at the EAT, there was a £400 issue fee and a £1,200 hearing fee.

Full and partial fee remissions were available for those with limited resources, with both an income and capital test to determine eligibility for remission.

Following a challenge by Unison, in 2017, the Supreme Court ruled that the legislation requiring fees to be paid for bringing ET claims was unlawful and should be quashed. It was held that the fees prevented access to justice and indirectly discriminated against women (as a higher proportion of women brought Type B claims so they were placed at a particular disadvantage). This decision instigated the momentous task of refunding all fees paid by users of the tribunal service.

What ET fees are now being proposed?

Acknowledging that the previous fee regime did not adequately protect access to justice, the proposed arrangement has been designed to meet the tests of “affordability, proportionality and simplicity”. The proposals are:

• A £55 issue fee payable by the claimant to bring an ET claim
  
  In the spirt of keeping matters simple for the Tribunals, this would be flat fee regardless of the type of claim or the number of claimants involved. There is no proposed hearing fee.
  
  
• A £55 appeal fee payable by the appellant upon lodging an appeal in the EAT
  
  The fee of £55 would be payable per judgement, decision, direction or order being appealed (reflecting how the EAT would handle the appeals in practice).
  
  
• A fee exemption in limited circumstances
  
  The proposal outlines an exemption where an individual is claiming for a right to payment from the National Insurance Fund (NIF), usually where an employer is insolvent. This would include applications for unpaid pension contributions or redundancy payments from the NIF.
  
  
• Help with Fees remission scheme
  
  Individuals who are assessed as not having sufficient disposable funds would be eligible for a partial or full fee remission under the existing Help with Fees scheme. As before, eligibility will be based on both an income and capital test (although the proposed thresholds have been raised).
  
  
• No change to the rules on costs
  
  The general approach to costs is that each party pays its own legal expenses. There are currently limited circumstances in which the ET could order one party to pay the legal costs of the other, such as where a party has acted vexatiously or if a claim has no reasonable prospect of success. The new proposal does not change this.

What impact could a new fee regime have?

The proposal has already met pushback from some unions. UNISON’s general secretary has commented that the proposal is ‘trying to pick another fight with working people’. TUC has stated that reintroducing fees means that the government is ‘taking the side of bad bosses’ over workers exercising their rights and they are concerned about a possible drop in claims. Indeed, statistics showed a dramatic 79% drop in ET claims during the first full quarter after fees were introduced in 2013 (compared to the previous quarter in 2012). But would the proposed new fee level really cause a similar drop in claims?

The proposed £55 fee is significantly lower than the 2013 fee regime; a Type B claim would previously have attracted total fees of £1,200. Even with the cost-of-living crisis, the proposed fee is likely to be a more affordable sum for many. In conjunction with the more generous remission scheme, the proposed level of fees is unlikely to cause such a significant drop in claims. Having said that, paying any amount of money upfront may prompt claimants to consider the merits of their claim before issuing. It is possible that there could be a reduction in spurious claim or that more employees will properly engage with Acas early conciliation.

Whilst these consequences would likely be welcomed by employers, it is worth noting that the Supreme Court previously found that the (higher) fee regime had made a lower contribution to ET costs than predicted, failed to deter unmeritorious claims and did not appear to have encouraged settlement of cases. It is therefore questionable how a much lower fee could help achieve any of the objectives set. For example, the consultation states the direct running cost for running the ET and EAT was £80 million in 2022/23 and it is predicted that the new fee regime would only generate between £1.3-£1.7 million per annum from 2025/26.

The government are clearly balancing a fine line when determining what would be a ‘fair’ fee that does not impede access to justice whilst helping achieve their policy objectives. Although the current proposal is for a relatively low fee, one of the consultation questions asks for views on whether a higher fee could be charged.

Even though an election is widely expected for later this year, the government will likely be able to squeeze in the introduction of a fee regime before then. If Labour win the election, they are expected to prioritise reforms such as introducing day one unfair dismissal rights, reforming employment status and banning zero hours contracts. Reversing any fee regime is unlikely to be high on their agenda. ET and EAT fees could therefore be here to stay this time!

The consultation can be accessed here. The consultation period will end on 25 March 2024.