Tribunal roulette: new rules on fees for employment tribunals are just a money spinner

The draft statutory instrument to introduce fees in the Employment Tribunals (ET) and the Employment Appeal Tribunal (EAT) (the Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013) has recently been laid before parliament.

Claimants, or appellants, will be required to pay an issue fee on submitting a claim or appeal and a hearing fee before the full hearing. The anticipated implementation date is - perhaps optimistically - the ?endof July 2013. The fee levels are the ?same as those in response to the ?government consultation.

The official policy aim of the introduction of fees is to transfer some of the cost of running the employment tribunals and Employment Appeal Tribunal from taxpayers to tribunal users. The policy objective is to require users to pay fees where they can afford to do so in order to have their workplace dispute resolved through the ET and EAT process. It is worth taking a moment to reflect on the potential teething problems that may potentially arise under the new regime.

Computer says no

On 25 April 2013, a 'dear stakeholder' letter from HM Courts & Tribunals Service (HMC&T) to ET and EAT stakeholders advised that the court service is "currently working with corporate partners and HM Courts & Tribunal Service operational staff to ensure that the necessary IT systems and administrative processes are in place to support the new fee structure". You don't have to be too cynical to think that there may be, at least initially, glitches in the new IT systems.

What practitioners will do if the new IT systems crash - or if online fee payments are not accepted (or received) due to technical glitches - is not immediately clear. Is there a back-up plan?

A recent Q&A document from the court service provides that fee payments will be made via the online service or will be otherwise collected through centralised processing centres. It also confirms that local ET or EAT offices will not have facilities to take fees, handle cash/cheques or undertake any additional banking functions. Remission applications will also be centralised within the centralised processing centres.

Time limits are another potential problem. Will employment judges use their discretion to extend the time limit for bringing a claim if there is a problem with the new IT systems? The Q&A document states: "there is no extension to the existing time-limits for making claims because paying a fee or completing a remission form should not cause the parties to fail to meet existing time-limits". It would seem likely that a strict approach will be taken.

The 'dear stakeholder' letter also provides that in the EAT, fees will be required on lodging the appeal and in advance of the oral hearing. Failure to pay these fees (or prove eligibility for remission) will result in the discontinuation of the appeal. In view of the existing strains on the tribunal system, we will need to consider if there are sufficient resources to deal with an influx ?of new applications and to deal with ?technical appeals.

Money spinner

Charging fees is going to be a money spinner (or a recoupment on investment depending on your viewpoint), so we should expect an increase in the level of fees charged. The explanatory memorandum to the fees order confirms that "fee levels will be initially set at 33 per cent of the full cost". We can safely expect an increase of at least 67 per cent; and it is highly likely, in my view, that the Treasury will soon spot the opportunity to fill the coffers by rolling out fees in further areas of the ET and EAT system - perhaps resulting in payment of fees for routine applications.

Let's not forget also that ACAS is funded by the taxpayer. So it is highly probable that the government could eventually seek to charge for using the service of ACAS. Perhaps by introducing a COT3 completion fee to be shared between the parties (or more likely paid by the employer) when a COT3 is completed?

Ability to pay

When the government consultation was first published the Institute of Directors (IoD) stressed that the framework should analyse an individual's ability to pay rather than their employment status, as they foresaw the risk that fees might be waived for the vast majority of claimants who are out ?of work.

The 'dear stakeholder' letter explains that the Ministry of Justice (MoJ) is in the process of reviewing the remissions scheme as part of the changes needed to introduce universal credit in autumn 2013.

The Q&A document explains that: "As a general rule, everyone is deemed to be able to pay unless they demonstrate (by way of application through court remissions scheme), that they are unable to do so." The MoJ has recently published a new consultation on a wide ranging reform of the fee remission (waivers) system for the courts and tribunals, and it proposes a two-stage test based on the disposable capital and monthly income of the claimant.

In some circumstances, a refund will be possible. The initial government consultation proposed that no refunds would be given if the hearing fee is paid and subsequently the case does not require a hearing. Following the government's reply to the consultation that proposal looks set to continue. A response to the consultation made the valid point that once a claimant had paid the hearing fee they may well feel that they want to continue to a full hearing, as they have 'invested' in their claim. With this in mind perhaps in the same way that the vast majority of employers offer a contribution towards the employee's legal expenses when entering into a compromise agreement, we may see respondents offering additional sweetener payments representing a contribution towards repayment of incurred fees.

Practical expectations

One consequence of the new rules is that tribunal users will expect higher levels of service from the tribunal service, and tribunal user groups or forums might become more vocal. It is not clear if the court service intends to recruit more staff, or roll out more training to meet the likely increase in service expectations.

Another consequence will be a push towards alternative dispute resolution (ADR), most notably mediation. I predict that commercial mediation providers will attempt an early land grab, followed closely by ACAS - who offer a mediation service, for which they charge around £1,000 for the first day and £620 for subsequent days.