Stephen Levinson analyses the results of enquiries into the impact of the fees in employment tribunals.
Shortly after the Ministry of Justice (MoJ) announced it was to review the impact of the fees in employment tribunals the Justice Select Committee, which keeps the MoJ under review, declared it was to do the same thing. Given the disquiet caused by the fees, perhaps this level of concern should not be unexpected. That is why, before either announcement was made, the Employment Lawyers Association (ELA) commissioned a survey of its 6,000 members to canvass their views. This article discusses the outcome of that survey concerning the impact of fees, the enforcement of awards and also the effectiveness of the rule changes. It then attempts to draw some wider conclusions (in the opinion of the author and not the ELA) from tenor of these responses.
The greatest anxiety is related to access to justice. Politicians can be expected to be entirely cynical about such views and will claim that they are based on self-interest and concern about lost business. As a counter, one can say that the ELA’s members know a great deal more about the operation of employment tribunals than nearly every politician and that their views echo those of very many other groups. Even the head of employment policy at the Confederation of British Industry and many of its members have criticised the current level of fees.
These developments come at a time of great upheaval within employment tribunals as in addition to the imposition of fees, the idea that lay members should be disposed with entirely is gaining ground and the revamping of the court estate by the MoJ has resulted in tribunals being required to sit in some novel places, including pensioned-off criminal courts. Also after the Scotland Act comes into force fees will disappear north of the border.
There is no need to repeat the widely reported and dramatic reduction in claims made following the introduction of fees. The responses of members concerning the reduction in their instructions reflects these statistics. One aspect less well reported is that over a third of replies indicated that whether a client has legal expenses insurance was of increasing importance. At present many insurance packages are “bolted-on” to household or motor policies for very low or no apparent additional premiums. It seems probable that the insurance market will become increasingly aware of the attractiveness of these policies and that will be reflected in an increase in cost. Another result may be to encourage an increase in union membership to take advantage of its providing a cheap form of legal insurance. This is to look ahead because at the moment the question whether there has yet been a change in the way claims are funded produced 41% of replies that said no change had been observed and 31% who did not know. The remaining 24% said they had seen a change.
Another question asked was about which particular types of claim are suffering the greatest decline. According to many comments, it is the low value claims that are most affected. These include deduction from wages and unpaid holiday pay, notice pay and redundancy pay. Many observed the futility of providing the “right” to seek recovery of such payments from recalcitrant employers if the system to do so makes it so economically unattractive.
As far as settlements are concerned, one question asked was whether the introduction of fees had changed whether settlements were achieved. Opinion was divided. One in three felt that fees had only played a minor role or made no difference, but nearly one quarter (23%) felt that fees had played a major role. The other settlement issue was whether fees had made any difference to the point at which cases settled. Most thought not, but a decent minority (27%) thought cases were settling earlier.
Access to justice
The key issue of interest for both the ministerial and the parliamentary enquiries relates to the issue of access to justice. The stated intention of government in introducing fees was that it was right and proper for users of the system to contribute towards the costs. At the time the fees were introduced, civil servants were adamant that this was the intended purpose of a fee system and that it was not being done to reduce claims. These protestations did not sit well with the government’s delighted response after the statistics became apparent that fees had been successful in reducing all of those “unmeritorious claims” they had always been anxious about. The views of employment lawyers are nearly as dramatic as the statistics relating to the fall in claims. In their replies 85% of members thought that fees had been either detrimental or very detrimental to access to justice. In addition 71% thought that fees should either be abolished (30%) or reduced to a small flat rate (41%). A large proportion of the lawyers represent the interests of employers who might be expected to be pleased to be facing fewer claims. This is not, however, as simple as it seems. A recent survey of more than 1,000 employers by the CIPD found that 38% of respondents felt the fees should be maintained. However, a similar proportion, 36%, believed the
fees should be significantly decreased or abolished, while the remainder of survey respondents were undecided. This again indicates that the lawyers’ views are not so far apart from those of their clients. The other obvious point is that the scale of the decline in claims makes it inherently unlikely that the principal effect has been to block only unmeritorious claims.
The problem here is the number of tribunal awards that are unpaid. Research commissioned by the department for business, innovation and skills (BIS) some time ago found that over half of those awarded compensation following an employment tribunal hearing did not receive their award in full. BIS surveyed 1,000 individuals who had been granted an award by an employment tribunal between May and June 2013. They found that only 49% of those individuals had been paid in full, while a further 16% had been paid in part. More than one third of successful claimants had therefore not received any of the money that they were entitled to, in some cases even after enforcement action was taken. Claimants’ representatives have been complaining about the high incidence of non-payment for many years.
It is possible to apply to the court to enforce an unpaid tribunal award. This is done in two ways. Individuals can either apply to the county court, for an initial fee of £40; or they can access the services of a High Court enforcement officer through the “fast-track” scheme for a fee of £60. However, the research also disclosed that only 41% of claimants were aware of the options open to them if an award went unpaid. Among those that did not use enforcement mechanisms, only 28% were aware of their options.
The ELA survey echoed these findings in rather an alarming way. Only 29% of those replying had “lots/some” experience of enforcing awards. Very few (10%) had any experience of advising on the fast-track scheme. A similar figure (13%) had experience of dealing with the County Court to enforce awards. Of those who had this experience about six in 10 believed the system to be effective.
A considerable majority (67%) were in favour of a proposed scheme to impose financial penalties on employers who had not paid awards. A similar majority seemed to support the suggestion of providing the sums recovered in this way to the unpaid claimants if their awards had not yet been paid in full. This of course is unlikely to do much for the fairly common situation of an insolvency followed by a pre-pack sale.
The government has suggested a form of licensed public humiliation by a scheme of “naming and shaming” respondents who fail to pay. This idea split the ELA membership. Half were in favour and 40% against. The alternative idea of giving the tribunals power to make a deposit order to secure a potential award received a more favourable response with 58% considering this to be more effective than the naming and shaming proposal.
Not so new Rules
In July 2013 revised rules were introduced for all employment tribunals. What does the ELA membership think of them? A bit of a mixed bag is the answer. The idea of combining the former case management discussions and pre-hearing reviews in the interests of “improving efficiency” was adjudged to be “very/somewhat successful” by 44% but 24% thought it was “not very/not at all successful”.
On the whole, the feeling was that the rule changes had not had a major impact on the way tribunals operate or on the decision making process. For example no clear answer was given to the question of whether there had been an increase or decrease in the willingness of judges to make deposit orders. One third of respondents did not know. Only 25% noted an increase.
The rules are, however, more clearly expressed and one particular advantage noted was that this has made it easier for litigants in person to understand what is expected from them. Given the increase in cases without any formal representation this has to be a plus.
As he was retiring, the last president of employment tribunals, in a speech to the Law Society, gave his views on the reforms needed to the tribunal system. He covered enforcement, the question of a single venue for all employment cases and the removal entirely of lay members. What he failed to do, and what both BIS and the tribunal service fail to do now, is articulate any vision for what employment tribunals are for. What was foreseen by the Donovan report was a clear vision. When years later in 2001 the Employment Tribunal System Taskforce set up by the then lord chancellor and the secretary of state for trade and industry produced their report they too had a vision and said what it was. That taskforce was staffed by people who really understood the system.
The reasons that prompted this survey and the context described above make clear that no such vision now exists. When a senior civil servant at BIS was asked to state the department’s vision in a public meeting not very long ago all she could come up with was that they should be “efficient”.
Both the parliamentary and ministry enquiries should widen their ambit beyond access to justice to consider this issue. If they do not the risk is that the concept of a forum that really understands the workplace and recognises what fairness means in that context and the necessity of easy access appears to be in danger of extinction.
This article was written for and first published by the New Law Journal.
This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.