What does the abolition of tribunal fees mean for employers?

On July 26 the Employment Tribunal system changed as the UK Supreme Court declared Employment Tribunal fees unlawful. Employment law solicitor Tim Wolley looks at what this landmark ruling means for employers and how it could impact your business.

What is an Employment Tribunal?

As an employer, your staff may make a claim to an Employment Tribunal if they feel they have been treated unlawfully in terms of:

  • Unfair dismissal
  • Discrimination
  • Unfair deductions from pay

More claims expected 

The Supreme Court decision will mean that there will inevitably be a significant rise in the number of employers facing employment tribunal claims. The removal of fees will mean that particularly lower value claims from those employers on low salaries will be on the increase.

In addition, the recent ruling that fees were unlawful brings with it an increased legal challenge in that it opens up the potential for historical or ‘out of time’ claims. Those claimants who would have engaged in the tribunal process could now opt to do so ‘out of time’ on the basis that it was not affordable for them to do so at the time their employment terminated.

Is it all bad news for employers?

No. For any business an increase such as this could lead to both damage to reputation and unsustainable court costs for your business. However, there are many simple management steps you can take to mitigate the risks posed by Employment Tribunals:

Good Management Practice

Most employers want to do the right thing. Ensure that your business is fully compliant with statutory procedure and, if necessary, review the way in which you deal with grievances internally.

In the event of any staff grievances employ the correct HR procedures and deal with them appropriately.  If an issue arises, such as a claim of unfair dismissal or disputes over pay, investigate immediately, act consistently and offer the employee in question evidence that supports your final decision.

With such employee grievances it is important to keep a note of all dialogue to offer up adequate evidence which will protect yourself and your company if needed in court. Record any conversations that you may have on the matter both digitally and on paper for this purpose.

Reducing the risk 

As an employer, if you are facing a contentious appeal or a request for ACAS Early Conciliation it is better to seek legal advice sooner rather than later:

Reduced bargaining position

Under the fees system, employers faced with a request to conciliate would rightly hang fire on the next move to see if the claimant would be prepared to pay that fee before engaging in settlement discussions. Now, with those fees abolished employees will have a greater bargaining position in that they are less likely to settle for a low figure at an early stage in the tribunal process.

Increased insurance premiums

As markets adjust in the long term, employers may see a rise in their legal expenses insurance if they face more claims (with case history affecting premiums).

Delays Expected

In light of the recent changes the Employment Tribunal system will need somewhat of an overhaul. During the fee period (and the consequent drop in cases) the service was stripped right back. Moving forwards it will have to recruit in order to deal with the influx of new claims and to process refunds.

Is this the end of fees for good?

Possibly not. It’s highly likely that at some stage the government will review fee arrangements albeit at a more realistic level.

Finally…the refunds

Trade Union Unison, which bought the case to the country’s top court, has said that refunds to claimants will amount to in excess of some £27million. However, those employers who have had to pay fees to a claimant following the loss of a case since July 2013 (when the fees were introduced) may be able to claim the cost of fees back. However, this is not clear-cut and it pays to seek legal advice on your company’s position.

If you need further expert legal advice on any aspect of Employment Law please do not hesitate to call Tim Wolley today on 01782 200007 or 07891 834081. Alternatively you can email him at tw@bowcockpursaill.co.uk

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