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Employment Tribunal Fees Update

The Supreme Court ruled in two separate judgments that the Employment Tribunal Fees regime is unlawful and indirectly discriminatory. The Order, which introduced the Fees Regime in 2013, will now be removed from the Statute books.

The fees had resulted in a 70% drop in claims being brought, so employers had become used to low claim rates and, in some cases, may have felt that they could take greater risks without quite as much fear of a claim being brought.

It is more likely that the current regime will be replaced with a new fees regime than them disappearing altogether – perhaps in line with the cost for bringing civil claims?

We have yet to see what such a replacement regime might look like, but this judgment is definitely unwelcome news for employers for the following reasons:

  • We may now see many employees bringing late claims against their employers and trying to persuade Tribunals to hear their cases out of time;
  • The Government will be taking great care to make any replacement fees and rules more reasonable to limit the risk of successful legal challenge, which suggests that fees would be set at a lower level to avoid a repeat of the argument in this case that the level of fees were a barrier to access to justice;
  • The differing level of fees for bringing simple claims and more complex claims will not be replicated in any new regime because this was found to be discriminatory. So employers may see an increase in more complex and costly, Employment Tribunal claims being brought, such as discrimination, whistleblowing and Equal Pay claims;
  • One of the ideas that have been mooted is charging employers a fee when they lodge their defence, presumably in an attempt to even the burden up or encourage settlement by employees who do not want to pay the defence fees. If this happens employers will, of course, face the heightened risk of claims plus have to pay a fee to defend the case (this seems an unjust time in the process to make the employer pay a fee before any fault has been established).

Having got used to low claim rates, employers will now have a higher risk of claims. It goes without saying that complying with all employment laws and following fair processes in all dealings with employees will, as always, be crucial in order to avoid expensive claims but employers may witness the return of more spurious claims, aimed at the employer incurring costs or hoping for a settlement offer. Taking good legal and HR advice as soon as possible will be helpful for mitigating your risks.