A major change in legislation was announced yesterday with the Supreme Court ruling that Employment Tribunal fees were unlawful. The result being that employees will no longer be required to pay a fee to take their claim to an employment tribunal, leading to an obligation for the government to repay an estimated £32m to claimants who were unlawfully charged.
The recent change in the legislation is a result of the persistent objections made by Unison since the introduction of fees in July 2013. Unison were originally unsuccessful in two High Court challenges and again in the court of appeal, however the union continued to pursue this and made a final appeal to the Supreme Court in March 2017. On the 26th of July 2017 it was ruled unanimously in their favour.
The introduction of the fees in 2013 led to much disagreement over the ethicality and legality of the implementation. The claimants were initially charged to bring their claim to the tribunal, charged again if the case was heard and then a further fee should they wish to appeal the decision. The amount payable varied significantly dependant on the case, categorising each claim into Type A or Type B. The higher fee was implemented for Type B claims, which involved more complex cases such as discrimination and equal pay claims (XpertHR, 2017).
Since the implementation of fees there has been a significant decline of 79% in the number of cases brought before an employment tribunal. Unison argued that the significant cost involved in bringing a Type B claim before a tribunal led to indirect discrimination, as it was found that claimants of discrimination were disproportionately female. In addition it was found that the cost of making a claim would be unaffordable for families with a low income and, in the instance that they were able to afford the initial costs, the financial risks of losing the claim would be likely to deter them, even where their claim was well founded (BBC, 2017). The financial restrictions placed on making a claim were suggested to create a perpetual cycle of discrimination, in which the most vulnerable groups continued to be disadvantaged and unable to take formal action.
The ruling is suggested to be a huge triumph for employees, facilitating their ability to defend themselves should they be treated unlawfully or unfairly by their employers. The abolishment of the fees could potentially lead to an influx of tribunal claims and employers will need to give this serious consideration. As always it is essential that employers are meeting their statutory obligations and following best practice however, considering the possible compensatory awards of a tribunal of up to £80,541 for unfair dismissal and uncapped for discrimination, it is now more important than ever that employers are aware of what their obligations are. Employment tribunals should only be utilised as a last resort for employees. Any employment issue should initially be handled through internal grievance and disciplinary procedures, and having effective processes in place can assist in maintaining a positive employment relationship to avoid this costly and timely practice.
At HR Services Scotland all of our HR contracts include legal indemnity insurance, via our partners at AXA, which provides cover up to £250,000 per individual claim.
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