The Supreme Court’s landmark ruling that employment tribunal claim fees are unlawful could herald a spike in claims. Michael Shroot examines the implications for employers.
There are realistic concerns that the drastic drop in employment tribunal claims following the introduction of fees could go into reverse now that they have been abolished. So businesses should ensure they have specialist legal advice and may be even a suitable insurance policy.
Fees were introduced in 2013 by the coalition government in an attempt to make justice self-financing, deter bogus claims and promote early settlement of disputes.
The effect was an almost immediate 70 per cent reduction in claims as many employees couldn’t afford spending £1,000 or more on an employment tribunal. However, the Supreme Court has now ruled the introduction of the fees was unlawful, meaning they must stop immediately with the government having to refund fees paid – estimated at £32m.
What does this mean in practice for employers?
The most obvious concern is that difficult employees will bring many more claims because they can do so at no cost to themselves, now the financial barriers have been removed.
Before fees were introduced, workers could bring a case knowing that it would cost the employer thousands of pounds, so it often became easier, faster and less costly for employers to agree a settlement payment to make the issue disappear. Anecdotal evidence suggests this happened even in cases where the employer had a strong chance of winning at the tribunal.
The scrapping of tribunal fees could signal a return to practices in which claims were sometimes made because disgruntled employees had nothing to lose – or even just to create hassle for their former employer.
Why employers must get everything right immediately
Now more than ever, employers must manage risks by ensuring they have professional employment law advice from experienced solicitors.
The Supreme Court found that the introduction of fees particularly discriminated against women and individuals with other ‘protected characteristics’. With this in mind employers should make sure they are fully compliant with this area of employment legislation.
Moreover, developments in transparency, such as gender pay gap reporting, could also see employers facing an increasing amount of tribunal claims from female employees.
The importance of reducing risks
It’s crucial to ensure you are determining employment status correctly, applying the correct employment rights to each employee, and not treating members of staff unfairly.
By ensuring your practices are fully aligned with legislative requirements you will reduce the risk of a potentially costly tribunal claim. It’s also worth keeping in mind that judgments are now published online, so reputational damage could be caused by having your business scrutinised in public.
Another risk is that individuals who can demonstrate that fees prevented them from making an earlier claim, may argue that they should now be allowed to bring a ‘post-dated’ claim.
In addition, employers using flexible ‘gig’ workers could face an increase in claims if they incorrectly treat workers as self-employed and fail to provide them with national minimum wage and holiday pay entitlements.
Keeping a watchful eye on a changing lanscape
The government is expected to explore how it can implement a lawful employment tribunal fee scheme, possibly using a scale of fees linked to the value of claims, as in the small claims court.
However, the situation remains subject to change and all employers should carefully monitor developments.
At WHN Solicitiors we have a fixed price employment helpline, staffed by solicitors, with the optional back up of a premier employment protection policy to cover the costs and awards in any claim.
For further advice on employment tribunal fees, call Michael Shroot on 0161 761 4611, or email him at email@example.com