Has introducing tribunal fees just shifted litigation from tribunals to county courts?
When fees were introduced in the summer of 2013 it was hoped that this would bring about a reduction in the number of tribunal claims. The statistics certainty show a large dip in applications in the Scottish employment tribunals in August 2013, with only 116 claims lodged for the whole of August set against an average prior to the fees being introduced of 30 a day. However this was preceded by a spike of over 200 claims being lodged in the last three days of July. More recent anecdotal evidence from the south London employment tribunal indicates that there has been a pick up in the number of cases received in the last month or so. In reality the picture will only become clearer in the new year.
Fees
Around a fifth of claims in employment tribunals are made for non-payment of wages (notice pay, holiday pay, unpaid wages and so on). According to the most recent full year statistics, 17 per cent of claims were for deduction of wages. Since July 2013 claimants wishing to recover unpaid wages in an employment tribunal have had to pay a fee of £160 to issue a claim. If the matter goes to a hearing, a further £230 must be paid. This gives a total outlay of £390 to recover what are usually relatively small sums of money from an employer. If you then add to this the fact that there is no automatic repayment of the fee should the claimant succeed (the new tribunal rules simply state that tribunals maymake an order) and no expenses, one would imagine a lot of employees are simply not going to bother to make a claim for wages in the tribunal.
Small claims
So, perhaps the government will have achieved its policy objective of reducing the litigation burden on employers? I think not. I saw a client in August who was owed notice money and was considering making a claim in an employment tribunal. The claim was for less than £3,000 so I advised her to use the small claims court as it would only cost her £80 to make a claim online for the notice money. So, one knock-on effect of the new fees regime is that employees will turn to the small claims court to recover wages owed them by their employer. The fees for filing a claim online in the small claims court begin at around £35, with claims of £1,000 or less costing £60 online rising to £100 for a claim with a value of £5,000 or less. There is the added bonus of a small claims mediation service and no hearing fee. If you win, you get your fee back and can even claim some expenses. Lastly there is a six year time limit for bringing contractual claims compared with the usual three-month time limit for bringing a tribunal claim.
Drawbacks
But there are some drawbacks for employees in using this approach. In an employment tribunal, an employer can only make a counter claim where the employee has made a contractual rather than a statutory claim. No such restriction exists in the small claims court. And employees may not want to bring separate claims in the small claims court and an employment tribunal when the claim is for more than just wages (for example, when it is accompanied by an unfair dismissal or discrimination claim which needs to be heard in a tribunal). Then there is the added drawback that the small claims court does not have specific employment law expertise. Concepts and rules which are peculiar to employment law and well known to employment judges will not be so well known to most district judges, adding to litigation time, costs and the risk of a bad decision.
Switch
So, while the government may have reduced the number of claims in the employment tribunal is has done so by inadvertently switching some of the claims to the county court system. An important policy objective behind the introduction of fees was to reduce the burden of litigation on employers. However, the intervention of the law of unintended consequences may well have stymied that objective.
Peter Doughty is a barrister and head of the employment team at 12CP Barristers
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