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New Tribunal Fees to Help Business Owners

In a move designed to protect businesses against workers with grievances, Chancellor George Osborne announced at last month’s Conservative Party conference that employees placing an employment tribunal claim will have to pay a fee beginning in 2013.

The announcement follows years of campaigning by business groups that maintain the lack of fees simply encourages litigation from employees who may feel willing to place a claim if they have nothing to lose. Consequently, businesses often spend huge amounts of money preparing to defend a claim that has no prospect of succeeding. Many businesses will settle before the case even reaches the tribunal stage, simply to avoid incurring legal costs.

The fees are expected to be £250 at the initial stage, with another £1,000 to be paid once a hearing date is set. The amount will increase for claims involving higher sums of compensation. The fees will be forfeited if the case is lost, but refunded if won.

This has prompted fears that only the wealthy will be able to place claims, despite the fact that it is often the most vulnerable, low-income employees who have genuine claims against their employers.

However, the government confirmed that ‘poor people’ will be exempt from paying the fees. What ‘poor’ actually means has not been clarified, but it is expected to mean people in receipt of low-income benefits will not have to pay. This leads to speculation as to how many claims the introduction of fees will actually prevent, as those who have been dismissed, and will therefore be claiming benefits, place most claims.

There is also concern that the introduction of fees could deter genuine claimants who will be reluctant to pursue a claim where there is no guarantee that they will win. The final fee of £1,250 is a lot of money to risk where the outcome is not certain; it will essentially be a gamble. UK law evolves over time, as ‘test’ cases challenge existing precedents. These test cases will be few and far between if employees are unable to afford to place claims – thus jeopardising the development of UK employment law.

It’s also unclear whether the infrastructure is in place to administer a complicated system of fees. The receipt and refunding of fees is likely to be a cumbersome task for the tribunal system, leading to speculation that the taxpayer will not actually benefit from this change at all.

Despite these concerns, Craig Bennison, Head of Litigation of Empire HR, believes the introduction of fees is a positive move from the government.

He said: “The government is finally listening to the business community which has long campaigned for the introduction of tribunal fees. Whilst there are a lot of genuine claimants out there who quite rightly deserve the opportunity to pursue a claim, there are also a lot of vexatious people who simply feel they should try to get whatever they can out of the system, regardless of the impact upon their former employer. Why should a hardworking business owner suffer at the hands of a former employee who never had a genuine claim in the first place?”

Even where a claim is settled before the case is heard, or the employee loses his or her claim, a business often spends many thousands of pounds on legal fees. This leads to a situation where serial litigants are often paid large settlements simply because the time and expense spent on responding to their claim is just not worth it. The introduction of tribunal fees will help tackle this problem.

Mr Bennison said: “Serial litigants are a problem for businesses. For example, one litigant placed more than 60 claims during a three-year period. A website naming and shaming serial litigants revealed that one man has been responsible for more than 150 claims. The cost to the businesses targeted by these people cannot be underestimated. It’s not just financial; it really puts business owners off employing people in the first place.”

Mr Bennison advises businesses to seek advice as soon as they feel there is a risk of a tribunal claim.

He said: “Unfortunately, there will always be people out there who will abuse the system. Our Advocacy Unit can deal with any claims you may receive in a timely and cost-effective manner. Any claim raised by a malicious claimant will be dealt with swiftly.”

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