EPL claims – will there be a re-introduction of employment tribunal fees?

Background

The government previously introduced ET and EAT fees in July 2013. The amount payable by a claimant depended on the nature of their claim, with an issue fee of up to £250 plus a hearing fee of up to £950. To lodge an appeal at the EAT, there was a £400 issue fee and a £1,200 hearing fee. The introduction of fees led to a substantial fall in the number of claims; case volumes fell by 53% in the 12 months after the fee change.

Following a challenge by the union 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. Amongst other points it was held that the fees prevented access to justice and was discriminatory.

The government is now consulting on whether to introduce fees on a more limited basis and has said the fees proposed have been designed to meet the tests of "affordability, proportionality and simplicity".

What is being proposed now?

Under the new fee proposal:

• ET fees : the issue fee would be £55 per claim. No separate hearing fee would be payable; the £55 fee would cover the entire journey of the claim through the ET.

• Where a claim is brought by multiple claimants, the fee would remain at £55 and ‘the claimants’ would be treated as a single entity. The cost of the fee could therefore be divided among all the claimants involved, as agreed between them.

• EAT fees : there would be a further £55 fee for lodging an appeal in the EAT. This would apply per judgment, decision, direction or order of an ET being appealed. For example, if a notice of appeal includes appeals against two ET decisions, the total fee payable would be £110.

• Fee exemptions : no fee will be payable where proceedings are bought to establish a right to receive a payment from the National Insurance Fund (generally a claim for a redundancy payment / notice payment on the insolvency of an employer).

• Fee remission : eligible individuals who cannot afford the proposed fees will be able to apply to the current Court fee remission scheme, Help with Fees, for a partial or full reimbursement of ET or EAT fees. For individuals who do not qualify for Help with Fees but whose circumstances are such that they cannot realistically afford to pay the fee in question, a remission may also be available under the Lord Chancellor’s Exceptional Power to remit fees. This power applies where the payment of fees would cause undue financial or other hardship.

• Costs orders: no change is proposed to the existing rules on costs orders (in terms of which there are only very limited circumstances where one party will be ordered to pay the other party's legal costs).

What does this mean for EPL insurers and their insureds?

The proposed fees are significantly lower than those introduced in 2013. In conjunction with the remission scheme, the level of fees is unlikely to cause such a significant drop in claims if they are introduced. Having said that, paying the fees upfront may prompt some claimants to consider the merits of their claim before issuing and therefore this may lead to a reduction in spurious claims. The government also hopes that it will lead to more employees properly engaging with Acas early conciliation.

Interestingly, although the current proposal is for a relatively low fee, one of the consultation questions seeks views on whether a higher fee could be charged. So it is possible that the government may subsequently increase fees further. One of the stated aims of introducing fees is to relieve some of the cost to the general taxpayer by requiring tribunal users to pay for the tribunal system, where they can afford to do so. However, the overall running costs of the ET/ EAT was £80 million in 2022/23 and the consultation paper notes this proposal would only raise around £1.6 – 1.7 million per annum from 2025/26.

The other key unanswered question is whether this consultation will head anywhere if there is a change in government. Although trade unions have already pushed back against the proposal, the Labour Party has not said anything explicit about it. Should the Labour Party become the ruling party, its impact on the ET system will potentially be significant.. In its recently published "A New Deal for Working People", Labour has said that it will scrap the qualifying period for unfair dismissal claims making it a Day 1 right, it will extend the time period for bringing claims to the ET and it will remove the caps on compensation currently in place. So, it's potentially a seismic period ahead for ET claims.

The consultation in respect of ET fees can be accessed here.