It is clear that the introduction of employment tribunal fees more than two years ago has reduced the number of potential claimants. However, the number of employment disputes referred to Acas for early conciliation is actually on the rise.
People now have to pay an issue fee when lodging a claim and a hearing fee once the case has been listed for a final hearing. There are two tiers of fees based on the complexity of the case. Simple claims involve an issue fee and hearing fee of £390, and £1,200 in total for more complex claims. The government is currently conducting a review of the fee regime and is considering reducing them, which may have a knock-on impact.
Since the introduction of the fees the number of single claims has fallen from an average of 13,500 per quarter to around 4,500 per quarter — a decrease of 67%. This is despite the existence of a fee remission scheme that enables claimants with reduced financial means to obtain a reduction or waiver of the costs.
Trade unions vehemently opposed the introduction of tribunal fees, describing them as a “barrier to justice”. In 2012/13 (before the introduction of fees) 36% of unfair dismissal claimants were successful at their hearings; in the first half of 2014/15 (well after the introduction of fees) it was 40%. The unions say this suggests the number of vexatious claims brought before the introduction of the fee system was overstated.
Another recent tribunal reform was the introduction of Acas early conciliation in 2014. It is now a mandatory requirement for parties to consider mediation through Acas before a claim proceeds to the employment tribunal. The number of disputes referred to Acas per quarter has significantly outstripped the number of claims brought to a tribunal even before the introduction of fees – and the new Acas procedures seem to have contributed to the reduction of tribunal claims by resolving disputes without litigation.
There also appears to be increased interest from employers in resolving disputes away from the employment tribunal. One in three organisations surveyed by the CIPD in 2015 made use of settlement agreements and, importantly, employers reported using them more since the introduction of tribunal fees. The CIPD also reported that businesses are increasingly using mediation – both formally and informally – to manage conflict.
The marked reduction in tribunal claims is not purely due to the introduction of fees. Current unemployment rates are historically low and job security has increased since the low period following the 2008 financial crisis.
However, employers should not be complacent. The economic cycle – combined with the development of new technologies, process improvements and global demographic changes – almost guarantees that some companies will need to review their headcounts and staffing structures in the future. If dismissed employees are unable to find a new job quickly they are more likely to consider bringing employment tribunal claims (potentially using insured contracts or trade union membership as back-up).
Organisations may look back on the current low volume of claims as a ‘golden period’. As such, many employers would be well advised to review their internal grievance procedures and consider including formal mediation as part of any exit process. This would establish the structures that employees and employers could use during any later downturn to resolve their differences without resorting to litigation.
Daniel Aherne is EY’s head of employment law in the UK & Ireland
