Testing times on the horizon

Employment tribunals will start charging fees from 29 July 2013. A level one claim, such as one for unlawful deduction for wages will cost £160 to lodge, followed by a £230 hearing fee. A level two claim, such as one for unfair dismissal or discrimination will cost £250 to lodge, followed by a £950 hearing fee.

There will be other fees for judicial mediation (£600), applications to review default judgment (£100), applications to review judgments (£100-£350) and appeals (£400 on issue and £1,200 hearing fee).

These are substantial fees, which will have a significant impact on litigants before the tribunal. They have the potential to stop poorer litigants bringing cases and thereby limit access to justice.

Against that possibility is the existence of fee remission. Poorer litigants will not have to pay the fee or pay a reduced fee. But much depends on the detail of that system.

The employment tribunals will follow '¨the same remission as the civil courts, which the government intends to reform, based on its recently closed consultation 'Fee remissions for the courts and tribunals'. Employment lawyers will need to grapple with a new system, probably from sometime in 2013, just a matter of months after fees '¨are first introduced.

This article is based on the Employment Lawyers Association's (ELA) response to the fees remission consultation.

Given the importance and breadth of the government proposals, the four-week consultation period was extremely short. This truncated timescale caused considerable difficulty for ELA (and other organisations) to respond fully. ELA has warned that such short timescales risk undermining the value of consultations. The quality of responses is likely to decline and stakeholders will become reluctant to engage in them if it appears that the government is uninterested in the responses.

Over the limit

The new remission system introduces a capital test. A litigant in a household with £3,000 of disposable capital will not be entitled to any remission on fees up to £1,000 (which means all fees in the employment system, except the EAT hearing fee). This is a much stricter capital test than applied to civil legal aid means assessment, where the capital limit is normally £8,000.

The capital test is also likely to cause particular difficulties for employment claimants, because they often receive lump sums on dismissal. For example, a redundant 30-year-old claimant on the national minimum wage of £6.19 per hour, working 40 hours a week, employed for eight years would be entitled to redundancy pay of £1,981. He might well also receive a payment in lieu of notice or in respect of accrued holiday pay. Combined with even meagre savings, such payments are likely to take many claimants, who are by no means well off, over the capital limit.

The government proposals combine the three current income tests (passported benefits, gross annual household income and disposable household income) into a single test of monthly gross income.

The level of income required to receive full remission will depend on whether a litigant is single or coupled and whether they have children. A single litigant with no children earning up to £1,085 per month will receive a full remission.

A couple with two children will receive a full remission if their household income is below £1,735 a month.

Recipients of income-related '¨Employment and Support Allowance, Income Support, income-based Jobseeker's Allowance and Pension Credit guarantee will be presumed to be below the income threshold for remission.

Those with a higher income may benefit from partial remission. For each additional £10 of household income above that necessary a full remission, £5 of the fee is payable. The move to a single measure of gross household income is likely to disproportionately affect those with high housing costs and those with children - the single test taking no account of differences in the costs of living.

Most worrying, however, is the proposals' failure to grapple with the practical problems of the income test.

Employment tribunals have no facility for taking money or for considering remission applications. There are no plans to introduce these facilities. Instead remission applications will be posted, with accompanying evidence, to a central processing facility. Those with experience of remission applications and legal aid means-testing warn that the proposals underestimate the difficulties this will cause.

In the civil system, where remission applications are normally made at the court desk, litigants receive information and support when they make their applications. Documents are informally checked and problems identified. None of this will happen under the proposed system.

These problems will be exacerbated by the timing and nature of employment tribunal disputes. In the majority of cases, a claimant's financial position will have dramatically changed as a result of a dismissal. There will be a substantial drop in household income - but often preceded by a surge caused by lump sum payments.

Litigants, often acting in person, will '¨have to grapple with identifying the '¨correct fee (not easy in the case of partial remission) and the correct evidence to support their application. Often they will struggle in vain at which point, there will need to be dialogue - presumably via correspondence - between the processing facility and the litigant, to determine what fee should be payable.

This will happen against the backdrop of short time-limits and listing schedules within the employment tribunal system. Any delay in processing a remission application is likely to create difficulties either with the time-limits for bringing claims, or, in the case of hearing fees, with the hearing itself going ahead.

All of this is particularly worrying given existing concerns about the current remission assessments. In 2009 PriceWaterhouseCoopers carried out research for the Ministry of Justice. In tests, processesors of remission applications achieved only 70 per cent accuracy. In dealing with remissions not based on passported benefits, most staff got the answers wrong. Problems with remission determinations could create administrative chaos and long delays and prevent impecunious litigants accessing the tribunal. It is not yet clear how much resource will be available to deal with remission decisions. If it is under-staffed and under-resourced - as seems likely in the current environment - the consequences could be grave.

Legal challenges

These problems will be all the more acute when dealing with 'multiple claims' - those involving multiple claimants.

These will require complex calculations of the fee payable, remissions and the fee payable by those not entitled to full remission. In large multiple claims, such '¨as the equal pay claims involving hundreds of litigants, substantial burdens will '¨fall on lawyers and those making '¨remission decisions.

The introduction of fees into the employment tribunal system has been controversial. The proposed changes to the remission system will increase, rather than reduce, concern. There may well be legal challenges. For example, older employees, who are more likely to have savings or receive redundancy payments taking them over the capital test may challenge the remission system on grounds of age discrimination. Employment lawyers can look forward to interesting times ahead.