Sweeping changes to UK employment law take effect from today, Monday 29 July 2013. Stephen Hopkins and Pam Sidhu, employment law experts at The Wilkes Partnership, believe the reforms will be welcomed by employers.
The reforms are arguably the most substantial changes to employment law by the coalition government to date. The most significant change is the introduction of employment tribunal fees. For the first time since the tribunals were set up in the 1970s, employees will now have to pay a fee to bring a claim, whereas up until now they have been able to do this for free.
Employees who wish to bring Tribunal proceedings (for instance, claiming unfair dismissal) will be required to pay a fee. For many years, employers have felt it to be unjust that an employee can, with apparent impunity, bring (often weak) claims – impunity in the sense that the Employment Tribunal Service has always been accessible free of charge. Further, if/when the employer successfully defends the case, it is only on rare occasion that the employee is ordered to make a contribution to the employer’s (often high) legal costs.
The typical fee to bring an unfair dismissal claim, the most common claim brought in the Employment Tribunal, is £1,200. This is likely to be a major deterrent for employees, and we anticipate that there will be a noticeable reduction in the number of employment tribunal claims brought by workers.
When do fees become payable?
Claimants will have to pay a fee to bring a claim if their claim is presented on or after 29 July 2013.
The two most important fees are:
- When the claim is first begun; and
- A second fee which is payable if there is to be an actual hearing. Employers will of course appreciate that often claims settle on financial terms without any hearing ever taking place; the prospect of paying a second fee will no doubt be a further incentive for employees to do deals.
How much are the fees?
There are two tiers of fees – Type A and Type B. Type B are the more expensive. The cheaper, Type A claims, include “Wages Act” claims – i.e. where the employer has improperly failed to pay wages owing. Type B claims include claims for discrimination and unfair dismissal. Type B fees are higher for the simple reason that these claims are generally more expensive and time consuming.
Type of fee
Mediation is a popular means of seeking to settle an employment dispute. The fee arrangement here is that the employer always pays the fee, and the fee is £600.00.
On occasion, employees join forces and bring multiple claims. An enhanced fee structure is in place in respect of these types of claims.
Appeals to the Employment Appeal Tribunal
If an employee (or an employer) wishes to appeal, there is an initial fee of £400.00 followed by a fee of £1,200.00 for a hearing.
What if an employee brings a claim for both a Type A and Type B matter
The employee pays one fee only, at the higher rate.
Can the employee recover any fees he/she has paid from the employer?
Yes, if the employee is successful they can ask the Employment Tribunal to order that the employer must reimburse all fees paid.
Fee Remission Scheme
Importantly, it is possible for impecunious employees to obtain a waiver of the fees. The presumption is that everyone is able to pay unless they can demonstrate, by applying through the remissions process, that they are in fact unable to do so. There are three circumstances in which full or part remission of fees will be allowed:
- If the employee is receiving a qualifying benefit, such as income based jobseeker’s allowance, full remission applies;
- If the employee’s gross annual income is lower than an applicable threshold, full remission applies. For instance, in the case of a couple with two children the applicable threshold is £23,860;
- If the employee’s monthly net disposable income is £50 or less, full remission applies. Otherwise, part remission applies on a sliding scale.
Stephen Hopkins, Partner in the Employment department, comments: “The introduction of fees is a significant development, which is to be welcomed by employers. Employees will now have to factor in the requirement to pay a fee before bringing a claim against their employer in the Employment Tribunal. In some cases, this may deter the bringing of claims. However, it is important to note that employees can obtain a waiver of the fees in certain cases. At first, remission of fees will match the system currently used in the civil courts (as explained above), but this will also soon be changing.”
Pam Sidhu, Associate, comments: “While the likely reduction in claims is good news for British businesses, we also expect that employees will want any fees they have paid to launch a claim factored into any out of court settlement reached with the employer. Also, there are further significant developments taking effect today, with regard to re-labelling of “compromise agreements” as “settlement agreements” and pre termination discussions around settlement packages being deemed to be confidential except in the case of “improper behaviour”. Employers will want to take advice on these new developments to ensure compliance.”
Please note the position regarding legal costs, i.e. the charges imposed upon an employer by their own lawyer, is unaffected. It has always been, and remains, the case that an employee will be ordered to pay such fees if they have acted wholly unreasonably in the bringing of and/or conduct of the proceedings. Rarely does this happen in practice. However, significantly, the amount of costs that the Tribunal can award a party who successfully argues a costs application from 29 July 2013, is now unlimited.
Currently, UNISON is challenging the new fees in the High Court and there is to be an oral hearing on 29 July 2013, on the same day as the introduction of fees.
For further information please contact Stephen Hopkins at firstname.lastname@example.org or any member of the Employment team