Employment Tribunal statistics: the introduction of fees in tribunals is resulting in a staggering reduction of claims. Is it all good news? - Goldenleaver
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Many of us predicted that the introduction of fees in July 2013 for claims in Employment Tribunals would reduce the number of claims being brought. However, none of us anticipated a staggering 79% drop in the number of applications lodged in the last quarter of 2013 (compared with the same period in 2012).

Is it good news for employers? Generally it is because troublesome claimants with weak claims who were clogging up the system and wasting management time and cost seem, for the moment at least, to be a thing of the past. However, there is a sting in the tail because successful claimants can generally expect to recover their fees from employers, and the Employment Appeal Tribunal has recently confirmed that this applies to appeals as well. And as from 6 April 2014, tribunals will also be able to impose financial penalties on employers where it is decided that an employer has acted unreasonably, for example where there has been malice or negligence involved in an employee’s treatment. Penalties will be 50% of the award made to a claimant and subject to a cap of £5,000.

Is it good news for employees? Not really because any penalty awarded goes to the government’s Consolidated Fund and not to them.

Is the new system serving the interests of justice? The government would say it is because it is increasingly taking a utilitarian view of access to justice, namely that a tribunal system which is not bogged down with bad claims and pays for itself must be good for the majority of legitimate claimants because it produces an efficient and sustainable system of justice.

We, and most employment lawyers, feel instead that it is a travesty because the tribunal system no longer serves the people it was set up to protect; individual justice has been lost. True enough, many of the time wasters will be among the 79% of claims not brought, but so too are the majority of the bread and butter claims by employees who have not been paid their salary or who have been summarily dismissed without justification.

Even without being a cynic, it is easy to see that the tribunal system no longer serves the majority of its constituency: for those who can actually afford to pay lawyers (a shrinking minority), the new cap of £76,574 as from April 2014 on normal awards and the inability to recover costs (rather than tribunal fees) even if successful make most claims uneconomic. For the low paid, the lack of a costs regime puts them in the hands of ‘no win, no fee’ lawyers who need a quick solution in order to make claims pay, and who are reluctant to front any fees. The government and employers are happy, as they can report that claims are reducing as are the costs of a bloated system.

I feel that the balance is wrong and there is likely to be a market solution found with both employers and employees having to insure themselves against the possibility of claims, and the insurers acting as gatekeepers, only allowing legitimate claims with good prospects of success to proceed and managing the costs in any claim or defence they support.

Jonathan Golden