Should fees be introduced for EAT hearings etc. The UK is planning to do so

Given that our own employment rights structures are undergoing serious review and surgery it is interesting to see that the UK government is planning to introduce fees for lodging and pursuing cases at the employment tribunals. (Note that the EAT in the UK is presided over by a High Court judge, it is not the same as the Irish EAT; the UK equivalent of which is the Employment Tribunal.

Many Irish employers (especially small companies) complain about the system here being stacked in favour of the employee, specifically the facility with which employees can make claims.

They would doubtless welcome a deterrent to mischievous or flippant claims, and according to recent research carried out by HR Magazine (UK) they believe that will happen as a result of introducing fees. (Read the report here).

That said employers would not be the only beneficiaries of rooting out such claims.  Genuine claimants waiting a long time for an EAT outcome would also benefit. There are of course arguments against such fees.  Claimants, for example recently dismissed or redundant employees should not be impeded in making their claim (although the delay in getting it heard is a more serious issue than any fee that might be charged).

It ought to be relatively easy to devise a system for exemptions.

In my submission to the Employment Rights review I made a strong case for the extension of mediation at all levels of the system.  Looking at the question of fees from a different and more positive point of view in order for mediation to develop as an alternative to adjudication in employment disputes a big problem is that there is no real financial incentive to settle.

The opposite is the case in commercial disputes where disputants face the costs of litigation and the additional threat of an adverse finding on costs even where they succeed in the courts if they have unreasonably refused mediation. (Sup Cts Order 56A in Ireland, Halsey v Milton Keynes Trust in UK,)

So costs are seen in the wider justice system as a means of incentivising parties to mediate.  What about a fee system which could be waived in the event that parties entered into mediation in good faith?

This might also tend to discourage the presence of lawyers at early stages of employment rights disputes where, frankly, they are often no addition. One could go further. Both the Rights Commissioners and the EAT (or whatever we end up with) could be empowered with ‘Order 56A’ type powers to adjust downward awards to claimants who refuse to mediate at an early stage. I have been involved in a recent EAT case where the award to a successful claimant was reduced by 20% because he did not use the internal appeals procedure. Extending the logic of this to failure to engage with mediation is hardly a giant step.

Radical perhaps, but radical is needed!

Since posting this initially a number of colleagues have commented on Linkedin on the financial benefits to employers of using mediation in terms of time saved etc. This is a good point but underscores the point that the benefits of mediation are still not fully appreciated and embraced by many employers.

However most claims are triggered by employees and more carrot and a little stick is what is being floated here!

So now we take a look at the UK proposals.

The UK Consultation document is here

Fee Levels – Employment Tribunal The first step will always be to categorise the claim as between minor or ‘straightforward’ cases (Payment of Wages etc), Unfair Dismissal as the second category and then more serious disputes (TUPE) etc are thurd.  In relation to Option 2 (below), there will be a fourth fee level for any claim exceeding £30,000 in value.

Option 1 Under this option, the Claimant would have to pay both a fee for issuing the claim and a fee for a hearing. If the incorrect fee is paid when issuing a claim, the Employment Tribunal will reject the claim.

The claim could then be struck out if the Claimant fails to pay the correct, or any, fee for the matter to proceed to a hearing. The fees payable by the Claimant will depend on how the claim is categorised and they range from UK£150 to £250 to lodge a claim and £250 to £1250 for a hearing (£1000 for an Unfair Dismissals case)

Under Option 2, the Claimant would only have to pay a fee for issuing the claim.  However, the size of the fee would depend on the Claimant’s assessment of the value of the claim, with the intention that this will provide employers with greater certainty about the potential liability they could face.

Option 2 The consultation paper suggests that a subsequent award given by the Tribunal in the event that the Claimant is successful could not exceed the assessment value, even where the Tribunal decides that it should do so.  A Claimant will therefore have to take great care to pitch the value of his claim correctly: too high and he will have to pay a higher fee; too low and his award will be limited.  The consultation paper gives an indication of the fees likely to be payable in respect of claims of different value, as follows:

Refunds In general fees outlined above would be non-refundable.  However, the Tribunal might be given a discretion to order the unsuccessful party to reimburse the fees paid by the successful party.

Fees for Applications In addition to proposals to introduce fees for lodging claims, the Government has also indicated that it is considering the introduction of fees for making specific applications: This fee would be submitted at the time the application is made.  If the requisite fee is not paid, and the party is not eligible for the Remission Scheme, (see below), the application will not be processed.

EAT Fees The proposal is that Appellants to the EAT will have to pay an Issue Fee of £400 and a Hearing Fee of £1200. (Again bear in mind this is not the equivalent to an Irish EAT but is at the level of the High Court)

Courts & Tribunals Remission Scheme The Remission Scheme currently operates in the civil courts to provide individuals with a full or partial exemption from paying Court fees subject to certain eligibility criteria.  It is proposed that this scheme will be extended to proceedings in the Employment Tribunal and EAT.  Remission will be granted without proof in emergency situations.  Of most interest to employers is the fact that those in receipt of income support / job seeker’s allowance – highly likely where an individual has lost his job – will receive full exemption from the new fees.

Multiple Claims The proposals also envisage that different fees will apply where there are multiple Claimants.

So what do you think? Clearly the main thrust of these proposals is to reduce the cost burden on employers. Nothing wrong with that in principle (as employees gain from more profitable businesses too) if the application of employment rights is not affected and disputes arising are resolved expeditiously. Employees should not be bullied out of pursuing their rights on financial grounds and yet there is a level of abuse of the system which fees might help reduce.

But its a negative way of approaching dispute resolution. The increasing claims culture is not exclusively an outcome of litigious employees, but a failure of dispute resolution processes and skills.