Impact of employment tribunal fees: Key issues for the 2015 Parliament

The employment tribunal system was created in 1964, and until July 2013, individuals were not required to pay any fees to take their claims to a tribunal.

Since then, claimants have had to pay separate fees to issue their claim and have it heard, unless they qualify for a reduction or waiver on the grounds of having limited wealth and low income.

The introduction of fees coincided with a steep decline in the number of tribunal cases.

Chart 1: Employment tribunal claims

Percentage change in number of employment tribunal claims in 2014, compared with 2013, by type of complaint; top ten complaint types size of circle indicates number.

Chart showing change in number of employment tribunal claims 

Many employers argue that the introduction of fees will reduce the costs they incur in defending vexatious claims. Others, including organisations representing employees, are concerned that affordability may now be a barrier to those seeking justice.

Background

Fees were introduced by The Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013 under powers conferred by the Tribunals, Courts and Enforcement Act 2007.

Proceeding to a full hearing for a simple case (e.g. refusal to allow time off) now attracts fees of £390. For a more complex matter (e.g. unfair dismissal), fees amount to £1,200.

The changes were made against a background of fiscal consolidation and a tough spending settlement that required the Ministry of Justice to reduce its annual expenditure by £2 billion over the course of the last Parliament, affecting the annual employment tribunal budget of approximately £80 million.

In this context, the Government argued that it was right to ask claimants to contribute towards the cost of operating the tribunals.

Reaction

Employers had long argued that the tribunal system failed to discourage vexatious and weak claims. For the employee, the low costs involved, and the fact that self-representation was the norm, meant there was little to be lost, in financial terms, from making a claim.

Employers, by contrast, typically incurred legal fees. Yet, unsuccessful tribunal claimants are generally not required to pay defendants’ legal costs, meaning that employers were left out-of-pocket whatever the outcome. For this reason, many employers and their representatives welcomed the introduction of fees.

Organisations representing employees have opposed the introduction of fees. Their concerns are, on the whole, not with the charging of fees per se, but with the level at which they have been set, which they argue has diminished access to justice.

They also argue that the size of the fees typically has little relation to the value of the claims pursued, and that the system for waiving or reducing them for those with limited wealth and low income is strict and unduly complex.

Moreover, while the introduction of fees has coincided with a decline in claims, there has not been a marked change in rates of success, indicating that some claims that would have been successful are now not being pursued.

Of particular concern to many has been the decline in the number of sex discrimination claims, which fell by 83% in the year following the introduction of tribunal fees.

Challenges and review

This decline in sex discrimination claims has, in large part, formed the basis of several legal challenges to the fees regime. Tribunal fees have been the subject of repeated judicial review proceedings, both in England and Wales, and in Scotland. 

To date none of these challenges has been successful. Notably, the trades union Unison applied for judicial review of fees, with the Equality and Human Rights Commission intervening as an interested party. 

The High Court dismissed the application, largely on evidential grounds, although hinted at the possibility of further, more convincing challenges.  Unison has been granted permission to appeal.

The previous Government committed to a comprehensive review of the impact of tribunal fees, although this did not occur in the last Parliament. 

A key issue for the new Parliament will be the outcome of this review, should it proceed, and any legal challenges. The new Government, meanwhile, will continue to face a delicate balancing act between employees’ access to justice and employers’ concerns, against a backdrop of fiscal restraint.

Chart 2: Claims received by employment tribunals

The introduction of employment tribunal fees in July 2013 coincided with a marked decline in claims.

Claims received by employment tribunals. Quarterly, Q2-2009 to Q4-2014, thousands

Chart showing claims received by employment tribunals

Party lines

  • Greens: reduce fees so that tribunals are accessible to workers
  • Labour: abolish the fee system
  • Liberal Democrats: (…) review Employment Tribunal fees

 

Current Briefing Papers

The Key Issues articles were published in May 2015. However, the Commons Library produces new briefings as topics evolve.

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