Charging fees in employment tribunals

Two stage fee structure from summer 2013

The Government has announced that it will introduce a two stage fee structure in Employment Tribunals in the Summer of 2013 – we summarise the key elements of the fee charging proposals.

Background

At present there are no court fees or charges imposed to bring a claim in the Employment Tribunal (ET) or to appeal to the Employment Appeal Tribunal (EAT). The cost of claims is funded by the taxpayer.

In early 2011, the Government announced its intention to introduce fees to the Employment Tribunals in its consultation paper “Resolving Workplace Disputes”. This was followed by the Ministry of Justice’s (MOJ) consultation paper, “Charging Fees in Employment Tribunals and the Employment Appeal Tribunal”, which sought views on two alternative fee charging structures proposed for the ET and one proposed charging structure for the EAT.  The MOJ consultation papers stated that the fee proposals are intended to relieve some of the financial burden on taxpayers by requiring users of the ET and EAT to make a contribution to the cost of the service where they can afford to do so.

Proposals

The consultation paper proposed two options for the fee charging system in ETs, specifically:

  • Option 1 – a two stage charging system with the first fee stage being due on the issue of the claim and the second fee stage due prior to the full merits hearing, with the level of fee (initially 3 levels proposed) payable dependent on the type of claim and stage in the proceedings; or
  • Option 2 – a single fee on issue of the claim, dependent on the type of claim and the value of the award sought by the claimant – a higher fee being due where the claimant sought an award over £30,000.

The consultation paper also outlined a number of proposals applying to both options above, including:

  • fees would be charged for specific applications, such as application for dismissal following settlement or withdrawal; counter-claims; requests for written reasons after an oral judgment; and for mediation;
  • a power for the Tribunal to order the unsuccessful party to reimburse any fees paid by the successful party;
  • a remission system in line with that used by the civil courts would apply to those who could not afford the full fee or could only afford to make a contribution.

Ministry of Justice Response to consultation

On 13 July 2012, the MOJ published its response to the consultation paper having received 140 responses from unions, legal groups and solicitors, businesses, advisory and equality groups and other interested parties and individuals.

The MOJ’s response is that the Government will introduce the option 1 (two stage) fee structure in the Summer of 2013.  The proposed fee structure to be implemented in Summer 2013 is as follows:

  • level 1 claims (generally for sums due on termination and more straightforward claims, such as unlawful deduction from wages, redundancy payments etc – £160 issue fee; £230 hearing fee;
  • level 2 claims (unfair dismissal, discrimination complaints, equal pay and whistle blowing claims) – £250 issue fee; £950 hearing fee;
  • fees for claims brought by multiple claimants increase depending on the number of claimants and the level of the claims being brought;
  • Employment Appeal Tribunal – £400 appeal fee; £1,200 hearing fee; and
  • other specific fees, e.g. £60 for an application to dismiss following settlement  (although this might change in light of Mr Justice Underhill’s fundamental review of fees), summarised in this month’s Newsbrief – £600 for judicial mediation, £100 for an application for review of a level 1 claim decision – £350 for level 2 claims and £600 (payable by the employer) for judicial mediation applications.

The MOJ plans to publish the wider MOJ consultation on the remission system (exemptions for people who can’t afford fees) this Autumn. This is because of the concern from the Respondents in the consultation that the remissions scheme in the civil courts is complicated and results in incorrect decisions about who does/does not qualify for fee exemptions.

Comment

Fee charging is a new concept for the employment tribunals and so is the discretionary power to be awarded to Judges to order a losing party to pay a successful party’s costs.  The MOJ has commented that “Fees are part of the Government’s programme to promote early resolution of disputes in order to help individuals and companies to get on with their lives and businesses. The intention is to encourage people to look for alternatives – like mediation – so that tribunals remain a last resort for the most complex cases”.

Whilst it appears that the reason for the fee proposals is twofold: to promote early resolution of disputes, and to reduce the cost to the tax payer, it remains to be seen whether/how the fee charging scheme will affect claims to the Tribunal.  Readers will no doubt recall the much maligned statutory Dispute Resolution Scheme implemented in 2004 and scrapped not long after because it was too complicated and did not achieve the aim of promoting early resolution of disputes between employees and employers.

However, the fee charging proposals coupled with the Government’s proposed compulsory pre-claim mediation scheme, amongst other proposals, might be enough to deter parties from litigating disputes to a full Hearing.