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Over the past few days, I have been trying to get my head around the Government’s proposals for charging fees in employment tribunals, as set out in the consultation paper issued last month. My head is hurting.
The consultation paper invites us to choose between two alternative fee regimes. Under both options, the fee level would be determined by the type of claim, based on the three ‘tracks’ into which the Courts & Tribunals Service already allocates ET claims for the purposes of administration and listing hearings. So, all ‘short track’ claims (e.g., unpaid wages or redundancy pay) would attract level 1 fees, regardless of the sum claimed; all ‘standard track’ claims (e.g., unfair dismissal) would attract level 2 fees; and all ‘open track’ claims (e.g., discrimination) would attract level 3 fees.
Under the consultation paper’s option 1, there would be two fee-charging points: first, upon issue; and then, for those claims that proceed to a hearing, a point four to six weeks before the hearing. Level 1 claims would attract an issue fee of £150 and a hearing fee of £250; level 2 claims an issue fee of £200 and a hearing fee of £1,000; and level 3 claims an issue fee of £250 and a hearing fee of £1,250.
Under option 2, there would be only one fee-charging point: upon issue. Level 1 claims would attract a fee of £200; level 2 claims a fee of £500; and level 3 claims a fee of £600. However, under this option all such claims would be subject to an arbitrary cap of £30,000, and a claim of any type for more than £30,000 would attract a (level 4) fee of £1,750. Ouch!
Choosing between the two options is not easy – the phrase ‘Devil and the Deep Blue Sea’ comes to mind. A sample cohort of 1,000 (real) CAB clients would pay a total sum of up to £688,300 under Option 1, depending on how many claims were settled early in the process or resulted in a default judgment without a hearing, but only £304,550 under the considerably simpler Option 2. However, if more than 75% of claims were settled early or resulted in a default judgment, then option 1 would be ‘cheaper’ than option 2 for our cohort of 1,000 claimants. And with option 2 there is the not insignificant matter of that arbitrary cap of £30,000. Pass the ibuprofen.
At a meeting with Citizens Advice, the TUC and trade unions yesterday, Ministry of Justice officials set out four criteria by which, they said, they and ministers had assessed these and other alternative fee regimes, before settling on the above two options. First, the regime must be simple (so that it can be understood by ‘users’); second, it must be cost-effective (i.e., easy to administer); third, it must ensure access to justice; and fourth, it should encourage early settlement of the claim (i.e., without a hearing).
Well, call me pedantic, but the Government’s two options don’t tick any of those boxes. Option 1, in particular, would in practice be horribly complex, and so difficult (and costly) to administer. Option 2 would offer no incentive to settle early, while Option 1 would actually discourage early settlement by providing respondent employers with a very good reason to hold out until the claimant is put in the position of having to choose whether to gamble a substantial hearing fee. And, most importantly of all, both options would create a substantial barrier to justice for low-income claimants. So, my verdict: 0 out of 4, could do better.
Fortunately, towards the end of the consultation paper, there is a question asking whether there is ‘an alternative fee charging system which you would prefer’. And my answer to that question is: yes, there is!
What’s not to like
According to official statistics, in 2010/11 a total of 24,286 employers had an ET ruling made against them, 16,057 after a full hearing and 8,229 in a default judgment. At yesterday’s meeting, officials said that the fees regime needs to raise £9-10 million. Well, charging those 24,286 employers a fee of £400 would raise about £10 million.
That would be fair, since the employers will have been found by a tribunal to have acted unlawfully (or, at least, improperly), and accordingly it was their unlawful or unfair actions that caused the ET system to be used. So it would meet the Government’s objective of transferring ‘some of the cost burden from the taxpayer to the users of the system’. It would also be simple to understand and easy to administer, would ensure access to justice, and would encourage early settlement. Indeed, charging fees to ‘losing’ employers would, in ministers’ own words, ‘encourage employers to have greater regard to what is required of them in law and, ultimately, lead to fewer workplace disputes and employment tribunal claims’. Fantastic!
I make that four out of four in terms of the Government’s own criteria for a fees regime. But if charging a flat-rate fee is considered unfair, then one could charge a lower fee (£300) to those employers against whom a default judgment is made, without a hearing, and a higher fee (£450) to those who ‘lose’ at a full hearing. That would also raise about £10 million, plus it would increase the incentive to avoid a full hearing.
So, my proposed fees regime ticks all the right boxes, and my proposed fee levels are considerably lower than most of those proposed for claimants by the Ministry of Justice. What’s not to like?
OK, there’s no need to answer that question.