Employment update

The most significant issue in UK employment law at the moment is the impact of fees on the level of employment claims. Statistics published by the Ministry of Justice on 13 March confirm reports from nearly every tribunal user group in the country that the startling reduction in the number of claims continues.

The latest figures relate to the period October to December 2013. The claims presented were 9,801 which is 79 per cent fewer claims than in the same period in 2012 (50,000) and also 75 per cent fewer than in the last quarter. Discrimination claims are reportedly down by 80 per cent.

The statisticians have stressed that these figures need to be treated with caution for a number of reasons. One of these is that claims where a remission is sought are not included until the remission is granted, causing a time lag. Another is that monthly statistics of receipts of claims 'demonstrate much volatility'.

They also emphasize the distorting impact of multiple claims. The president of the EAT, Mr Justice Langstaff, in his contribution to the annual report of the Senior President of Tribunals, thought that the limitation in unfair dismissal cases to cap compensation at one year's pay was also likely to have been a significant factor in discouraging claimants.

Putting people off

Such is the extent of the decline that it merits an assumption that the imposition of fees is putting a very large number of claimants off litigation. In one (perverted) sense this trend might be seen as one of the most successful policy outcomes this government has achieved in times of austerity.

It is almost impossible to deny, given the interminable rhetoric about burdens on business and the red tape challenge, that two of the principal objectives the government had for employment tribunals were to reduce its running costs as much as it possibly could and to reduce the number of claims that businesses had to face. A number of other policy decisions can be seen also to have been aimed at these objectives. Increasing the qualifying period to bring unfair dismissal cases to two years, changing the rules for hearings for unfair dismissal to allow most of these cases to be heard by judge alone (thereby removing the need to pay lay-members) and capping compensation at one year's salary all contributed.

Cutting costs

The need to reduce cost will be well understood and up to point has to be a legitimate objective for government. Two examples of how this has affected the employment tribunals are the reduction in the number of new judges appointed and the refusal to allow ACAS an increased budget to run the early conciliation programme.

The President of Employment Tribunals, Mr David Latham, revealed in his contribution to the report of the Senior President of Tribunals that two recruitment exercises for judges had been cut back. The exercise that began in 2012 to appoint 30-full-time equivalents was reduced to half that number of appointments and the recruitment exercise for up to 60 fee-paid judges resulted in only 40 appointments. The reason was 'administrative and resource constraints'.

The remarks by the President that these decisions were 'unfortunate' and 'disappointing' must reveal his view that the numbers allowed were inadequate. Presumably when the exercises began government accepted the need for the higher numbers. When ACAS was required to take on the early conciliation programme they and every commentator exercised themselves by asking what additional resources would be made available.

ACAS funding

In parliament the minister gave an assurance in responding to these questions that 'adequate' funding would be provided. A few months later an official explained this by saying that in this context 'adequate' did not necessarily mean more. So it proved, when the Treasury turned down the ACAS request for an increase they demonstrated their understanding of 'adequate' by permitting the budget to remain as it was the previous year and not be cut.

Is it too much of a speculation to think that reducing the number of judges and not increasing the budget for ACAS were both predicated on an assumption that the cumulative effect of the legal changes to the employment tribunal regime and in particular the chilling effect of the large amounts required for fees would mean that the system could cope because of the resulting reduction in claims?

Some may argue that that is far too Machiavellian a view, others that government is never that clever. Possibly it does not matter whether that was the thinking or not as that that seems to be the probable outcome.

Eventual demise?

As mentioned reducing expenditure is an understandable policy up to a point. The question is what is the long-term impact and does what is happening presage the eventual demise of the system of employment tribunals. One comment that can be made is that those in charge of the policy decisions do not seem to understand that the purpose of employment tribunals was to provide an alternative to courts because courts were not seen as the best forum in which to resolve employment disputes.

Creating a tribunal where the lawyers were outnumbered by lay-members who had greater and wider experience of the workplace than solicitors or barristers, was seen as a significant element in judging what was reasonable and fair in the workplace. Removing the lay element from unfair dismissal cases goes further than just cost-saving, it is a denial of what tribunals were established to achieve.

Then again, also in an attempt to save costs, the tribunals are now being encouraged to have hearings in ordinary court buildings. This is the policy of HMCTS 'to ensure that the estate is utilized flexibly and as fully as possible'. So the bean-counters are in charge and the result is that employment hearings end up in magistrates courts.

No one who understood the purpose of employment tribunals could possibly think of this as an advance. The complaint about employment tribunals, not so long ago, was that they were too legalistic. These moves are hard to see as a move away from legalism.

Access to justice

The point at which all of this becomes unacceptable is when access to justice becomes is sufficiently impaired. The question of the moment is whether that has been the result achieved by adding the requirement fees at their current level to all of the other changes. It is no surprise that at the recent annual lecture of the Employment Lawyers Association, Frances O'Grady, general secretary of the TUC, attacked the imposition of fees, it was, however, striking that her co-speaker, John Cridland, director-general of the CBI said that he thought the fees were too high and regretted the sharp reduction in claims. That such representatives share these views to this extent is worth noting.

The union Unison rather rushed the gate when it brought judicial review proceedings to challenge the introduction of fees. In its decision in February in R (Unison) v Lord Chancellor and another [2014] EWHC 218 (Admin) the Administrative Court held that the claim had been brought at too early a stage for it to be able to be sure that the statistics truly revealed the fees were unlawful.

In particular the union relied on the principle of effectiveness because the fees made it 'virtually impossible, or excessively difficult' to exercise rights conferred by EU law and based this claim on the decline in discrimination cases.

The court did accept that the principle of effectiveness applied and said that it was particularly important in discrimination cases given the existence directives requiring an effective remedy for those rights. Unison will appeal and is no doubt encouraged by the latest statistics.

It will also be encouraged by the comment made by the court that it would be 'impossible for (the Lord Chancellor) to object to any future claim on the basis that was too late to launch it' as his objection had been based on this claim being premature.

The court also said that 'the hotly-disputed evidence as to the dramatic fall in claims may turn out to be powerful evidence that the principle of effectiveness is being breached by the present regime'.

In due course this will have to be balanced by the courts remarks that the test is a stiff one as creating 'difficulties' and being 'daunting' will not be sufficient to permit a decision that the fees are excessive. Quite what the test is to determine this was left unclear, but a drop of 79 per cent seems close to the mark if it continues. Again the excessive caution shown by the statisticians might, by the Machiavellian observer, be regarded as having had a dual purpose.

Another interesting outcome of the decision is that a concession was squeezed out of the Lord Chancellor that a successful claimant should expect to recover the fees paid from a respondent. There is no provision saying this, but a change in the rules was suggested. The principal must also apply to fees for the Employment Appeal Tribunal.

Lower fees?

The most likely outcome of this litigation, if it eventually succeeds, is a reduction rather than a removal of fees. Given the remarks of the Administrative Court it is not impossible that government will be satisfied to keep them at a level where they are merely daunting and difficult for most claimants.

This leaves the observer who supports the idea of a separate jurisdiction dedicated to resolving employment disputes with plenty to worry about. The drift is towards moving employment disputes away from the tribunal and pushing them towards the County Court. No one will admit this is the objective for the present but beware the creeping influence of the CPR and any changes to the costs regime.

Whatever happens what is needed is a clear understanding of what we want from an employment tribunal system. It is insufficient to rely on statements from officials that the system should provide an efficient mechanism for the disposal of disputes. That should be a given in any system, but what features of the tribunals do we want to preserve? It is unlikely that this government will ever come clean, so those of us who represent tribunal litigants should make their demands known before it is too late.