Employment tribunal fees - what a difference a year makes

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Today marks the anniversary of the abolition of fees in the employment tribunal. We take a look at the impact of abolition one year on.

Increase in employer claims

The latest employment tribunal (ET) figures compiled by HM Courts and Tribunal Services (covering the period from 1 January 2018 to 31 March 2018) were released by the Ministry of Justice (MOJ) in June. These showed a continuing increase in the volume of single ET claims, (as opposed to class actions by multiple claimants) presented since the abolition of fees on 26 July 2017. Claims were up by 118 per cent compared with the same quarter in 2017, (i.e. pre the abolition of fees). (See our briefing, Supreme Court rules Employment Tribunal fees regime is unlawful, for background on Unison’s fight to abolish the controversial introduction of ET fees in 2013). (See here for latest MOJ data).

EEF members also saw a spike in claims following the abolition of fees. In the immediate post abolition period ET claims against EEF members rose by around 60 per cent. However, this increase has subsequently levelled off. Looking back over the entire twelve month period since abolition, EEF has experienced an overall increase in member ET instructions of around 25-30 per cent.

Increase in early conciliation

Notwithstanding the on-going marked increase in ET claims, it seems unlikely that total numbers of claims will ultimately significantly exceed pre-fee introduction levels. This is in part due to the continuing operation of mandatory Acas Early Conciliation (EC). Since its implementation in May 2014, EC has proved an effective mechanism for resolving a significant number of potential employment claims, before they reach the ET.

Acas reported receiving a total of 109,364 EC notifications in the period from April 2017 to March 2018 (compared to 77,167 from April 2016 to March 2017). Of these notifications, only 27 per cent subsequently went on to become ET claims (see here for latest ACAS conciliation figures).

Fee refunds

From the launch of the ET fee refund scheme in October 2017 to 31 March 2018, there were 9,500 applications made for fee refunds and 7,700 refunds paid out, costing the MOJ nearly £6.5 million. Uncertainty remains as to what the final repayment bill will be.

ET compensation levels

From 6 April 2018, the maximum level of compensation for a successful claim of unfair dismissal rose from £80,541 to £83,682, (or 52 weeks (gross) pay, if lower). Furthermore, in addition to this increase, the maximum weekly pay used to calculate the unfair dismissal basic award increased from £489 to £508. (See here for a table of other current statutory rates and limits).

MOJ figures for ‘average’ (i.e. median* and mean**) levels of compensation awarded in the ET, show that for 2016/2017, the mean award for a successful claim of unfair dismissal was £16,543, and the median award was £7,520 (comparative figures for 2015/2016 were £13,851 and £7,322, respectively). Given the statutory provisions and judicial guidelines governing the assessment of ET compensation, year on year figures for compensation awards will inevitably remain more static than those for number of claims lodged, and will not be so dramatically impacted by fee abolition.

However, other developments over the last 12 months may impact on levels of award for certain ET claims going forward. In particular, the 2017 Employment Appeal Tribunal (EAT) decision in University of Sunderland v Drossou. In Drossou, the EAT, in the context of calculating the amount of a compensatory award, rejected the previously accepted convention of excluding an employer’s contributions to a pension scheme from a ‘week’s pay’ under the Employment Rights Act 1996 (ERA 1996). The EAT found that a ‘week’s pay’ for these purposes should not be limited to payments made directly to the employee, and so the employer’s pension contribution should be included. The decision in Drossou will primarily affect ET compensation, where:

  • 52 week’s gross pay is less than the monetary cap for a compensatory award (currently £83,682), before pension contributions are included; and/or,
  • When calculating a basic award for unfair dismissal, an individual’s weekly pay, not including pension contributions, is less than the maximum statutory ‘week’s pay’ (currently £508).

There are of course other circumstances (including non-litigious situations) where a ‘week’s pay’ under the ERA also comes into play, including:

  • Calculating statutory redundancy payments. However, as such payments are subject to the weekly statutory cap (currently £508), so Drossou only impacts on those employees whose weekly salary is below this cap.
  • Statutory claims where a ‘week’s pay’ is uncapped; for example, where there is a failure to inform and consult in a redundancy situation (up to 90 days’ pay), or in a TUPE transfer (up to 13 weeks’ pay).

Another development that will impact on award levels in successful discrimination claims is the updated compensation guidance for awards for injury to feelings, known as the ‘Vento bands’. For successful claims presented on or after 6 April 2018, the Vento bands increased to the following levels:

  • A lower band of £900 to £8,600 (for ‘less serious’ cases);
  • A middle band of £8,600 to £25,700 (for cases that do not merit an award in the upper band); and
  • An upper band of £25,700 to £42,900 (for the most serious cases). Only in the most ‘exceptional of cases’ will an award for injury to feeling exceed £42,900

Although the Vento band guidelines are not binding on ETs, they are required to have regard to them when determining compensation.

How can EEF help?

EEF is always available to assist members with the management of potential workplace disputes, be that by way of HR advice, facilitating mediation, handling ACAS Early Conciliation, and/or preparing for and representing your organisation at employment tribunal.

Members can also access further information about statutory payments and the calculation of ET awards on the resource section on EEF’s website (click here).

EEF will also continue to keep you updated on relevant HR and employment law developments. Dates for our popular Autumn Member Briefing: Employment Law Update are now available. You can reserve your free place here.

*The mean award is calculated by finding the total value of all the awards made over the year, and dividing by the number of cases in which awards were made.

**The median award is that in the middle of all the awards, if they were arranged in order.


Author

Principal Legal Adviser

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