Fees in the Employment Tribunal – Let’s face the music and dance
The draft statutory instrument to introduce fees in the Employment Tribunals (ET) and the Employment Appeal Tribunal (EAT) (the Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013) has recently been laid before Parliament.
Claimants, or appellants, will be required to pay an “issue fee” on submitting a claim or appeal and a “hearing fee” before the full hearing. The anticipated implementation date is – perhaps optimistically – the end of July 2013. The fee levels are the same as those in response to the Government consultation.
The official policy aim of the introduction of fees is to transfer some of the cost of running the ET and EAT from taxpayers to Tribunal users. The policy objective is to require those users to pay fees where they can afford to do so in order to have their workplace dispute resolved through the ET and EAT process. It is worth taking a moment to reflect on the potential teething problems that may potentially arise under the new regime.
Computer says no – A recent ‘dear stakeholder’ letter from HM Courts & Tribunals Service (HMC&T) to ET and EAT stakeholders (dated 25 April 2013) advised that they are ‘currently working with corporate partners and HM Courts & Tribunal Service operational staff to ensure that the necessary IT systems and administrative processes are in place to support the new fee structure’. Without sounding too cynical there may be (at least initially) glitches in the new IT systems.
Back-up system? – It is not immediately clear what practitioners will do if the new IT systems crash or if online fee payments are not accepted (or received) due to technical glitches. Is there a back-up plan?
A recent Q&A document from HMC&T provides that fee payments will be made via the online service or will be otherwise collected through centralised processing centres. It also confirms that local ET or EAT offices will not have facilities to take fees, handle cash/cheques or undertake any additional banking functions. Remission applications will also be centralised within the centralised processing centres.
Extensions of time limits – Will Employment Judges use their discretion to extend the time limit for bringing a claim if there is a problem with the new IT systems? The Q&A document states: “there is no extension to the existing time-limits for making claims because paying a fee or completing a remission form should not cause the parties to fail to meet existing time-limits”. It would seem likely that a strict approach will be taken.
Consequences of failure to pay a fee – The ‘dear stakeholder’
letter provides that in the EAT fees will be required upon lodging the appeal and in advance of the oral hearing. Failure to pay these fees (or prove eligibility for remission) will result in the discontinuation of the appeal. In view of the existing strains on the Tribunal system we will need to consider if there are sufficient resources to deal with an influx of new applications to deal with technical appeals.
Expect an increase in the level of fees charged – Charging fees is going to be a money spinner (or a recoupment on investment depending on your viewpoint). The explanatory memorandum to the Fees Order confirms that ‘fee levels will be initially set at 33% of the full cost’. We can safely expect an increase of at least 67%; and it is highly likely, in my view, that the Treasury will soon spot the opportunity to fill the coffers by rolling out fees in further areas of the ET and EAT system – perhaps resulting in payment of fees for routine applications.
ACAS – Let’s not forget that ACAS is funded by the tax payer. I consider that it is highly probable that the Government could (eventually) seek to charge for using the service of ACAS. Perhaps by introducing a COT3 completion fee to be shared between the parties (or more likely paid by the employer) when a COT3 is completed?
Remissions/ability to pay – When the Government consultation was first published the Institute of Directors (Iod) stressed that the framework should analyse an individual’s ability to pay rather than their employment status, as they foresaw the risk that fees might be waived for the vast majority of claimants who are out of work. The ‘dear stakeholder’ letter explains that the Ministry of Justice (MoJ) is in the process of reviewing the remissions scheme as part of the changes needed to introduce Universal Credit in autumn 2013.
The Q&A document explains that: “As a general rule, everyone is deemed to be able to pay unless they demonstrate (by way of application through court remissions scheme), that they are unable to do so”. The Ministry of Justice (MOJ) has recently published a new consultation on a wide-ranging reform of the fee remission (waivers) system for the Courts and Tribunals, and it proposes a two-stage test based on the disposable capital and monthly income of the claimant.
Refund proposals – Cash back? – The initial Government consultation proposed that no refunds would be given if the hearing fee is paid and subsequently the case does not require a hearing. Following the Government’s reply to the consultation that proposal looks set to continue. A response to the consultation made the valid point that once a claimant had paid the hearing fee they may well feel that they want to continue to a full hearing, as they have ‘invested’ in their claim. With this in mind perhaps in the same way that the vast majority of employers offer a contribution towards the employee’s legal expenses when entering into a compromise agreement, we may see respondents offering additional ‘sweetener’ payments representing a contribution towards repayment of incurred fees.
Service standards and expectation –Tribunal users will expect higher levels of service from the Tribunal Service, and Tribunal user groups/forums might become more vocal. It is not clear if HC&TS intends to recruit more staff, or roll out more training to meet the likely increase in service expectations.
Mediation – There will be a push towards Alternative Dispute Resolution (ADR), most notably mediation. I predict that commercial mediation providers will attempt an early land grab, followed closely by ACAS – who offer a mediation service, for which they charge c.£1,000 for the first day and £620 for subsequent days.
- Client care letters – Solicitors will need to update their client care letters and costs letters to clearly inform clients about the level of issue and appeal fees, and the monies that will be required on account.
- Case Management system – As payments will need to be made using the online service or otherwise collected through centralised processing centres. Clients and solicitors will need to ensure that they have procedures in place to do this.
- As hearing fees will need to be paid 4-6 weeks before the hearing practitioners will need to take careful note of the deadlines for fee payments.
- Entitlement to remission – Practitioners should advise their clients as to the criteria to apply for a remission of fees, the evidence required, and the time limits for making an application.
- Dispute Resolution and ACAS – Under the new ET rules a Tribunal shall wherever practicable and appropriate encourage and facilitate the parties use of the services of ACAS, ‘judicial or other mediation, or other means of resolving their dispute by agreement’. Practitioners should consider all available methods of dispute resolution, and the likely costs. Fees for judicial mediation are to be £600 and are to be paid by the employer, practitioners would be advised (as always) to reach out to ACAS at an early stage to try to resolve the dispute pre-issue, before Tribunal fees/judicial mediation fees are incurred.
- Insurance companies – As Tribunal fees are a recent development existing legal expenses insurance policies may be silent as to who is responsible for paying Tribunal fees, in which case clients will need to carefully review the terms. Solicitors who are instructed on behalf of an insurance company, or are on an existing panel, will also need to carefully consider the terms and conditions of their relationship with the insurance company.
This article was first published by Solicitors Journal on 28 May 2013, and is reproduced by kind permission. Please see www.solicitorsjournal.com.
HMC&T Service – “Dear stakeholder” letter (25 April 2013) http://goo.gl/lp1oV
HMC&T Service – “Q&A” (25 April 2013) http://goo.gl/nEjXr
Partner, and Head of Employment law, DKLM LLP