Added Tribunals (Employment Tribunals and Employment Appeal Tribunal) Order 2013

Baroness Drake Excerpts

Monday 8th July 2013 Lords Chamber

This complicated and misguided proposal will not deter the headline-seekers or those who are sure that their employer will pay them off to the tune of £2,000 simply to avoid an ET. It will not deter a member of a trade union if they have trade union support. It may well deter the applicant whose claim is relatively small or who is relatively poor so that they cannot put up the money, or they think twice about it. So, it is the weaker who will pay the Ministry of Justice tax. At best this proposal is inept, and at worst it is a petty con trick.

[Baroness Drake]

My Lords, on any reading this order raises the barriers to an effective remedy to enforce employment rights for ordinary people. Yes, some employees will bring cases without merit but in my experience, from 27 years as first an ET member and then an EAT wing member, most claimants have a genuine belief that they have experienced a wrong in the workplace and been treated unfairly. Similarly, some employers behave badly—not all are models of paternalistic virtues facing difficult employees.

Employment tribunals used to be viewed as the last-resort mechanism, but the structural shift in the UK economy has also seen a corresponding decline in collective representation throughout the private sector. People no longer have access to a network of union representatives to help them pursue their workplace dispute. The tribunal system is often the only route open to them.

The order is concerned less with protecting access to justice and more with reducing the number of ET cases by pricing workers out of the system. In the order we see the obstacles to access. The language in the Explanatory Memorandum reduces the enforcement of employment rights to a commercial transaction. Paragraph 4.19 of those notes observes that if some users’ expected costs of bringing a claim now exceed their expected benefits of doing so, the total volume of cases brought to the ET might reduce. Concepts such as “consumer surplus”, “level of utility” and “price elasticity of demand” are deployed to give a monetary value to claimants’ loss of satisfaction so that they will no longer choose to bring cases, thus reducing enforcing an employment right to something akin to purchasing a washing machine or an insurance policy.

The Explanatory Memorandum made depressing reading. It showed insensitivity to what drives some claimants. The motive is not always compensation. They can often feel frustrated and humiliated at the way they have been treated, and it becomes important to have a public record that they were badly treated. They may bring a case for unfair dismissal because they know that unless they can win that claim they cannot get a decent reference or a comparable job, and their “utility”, as the memorandum puts it, may be far greater than the financial value of any remedy if they win, the median value of which is only around £4,600.

For those on low incomes, filling in an ET1 application form to register their claim is a complex procedure, notwithstanding the proposed simplifications. A remission form has been added that has to be submitted with the claim, which itself has to be submitted within a statutory deadline. Add limited literary skills, English as a second language and a lack of confidence, and we can see how the very process itself will work against precisely the vulnerable people who are most likely to be taken advantage of in the workplace.

An employment tribunal claimant is more likely to be male and working full-time or unemployed, confirming that women in low-paid and part-time jobs are less likely to use the tribunal system to enforce their rights. This order will simply reinforce that.

For some types of cases, proportionality is lost. For claims on annual leave entitlements, unpaid wages, statutory redundancy payments or non-payment of the national minimum wage, the fees being set could be greater than the remedy being sought—even more so if you are a part-time employee.

The remission system will mean that significant numbers of individuals in couples earning national minimum wage rates will still have to pay fees to enforce their workplace rights, as will others on modest incomes. When it comes to equivalence, as other noble Lords have said, the proposed fees are higher than fees payable in the civil courts. For some, an appeal to the EAT will simply be out of their league, particularly when the cumulative effect of an issue fee, hearing fee, ET review fee, EAT lodge and hearing fees and their own legal costs are taken into account. That is deeply unfair. Appeals from employers could begin to dominate the EAT. Appeals to the EAT are on points of law, which require legal help and support to put forward.

Added to that is the uncertainty that the claimant may not get their money back for the fees paid if they win their case. Yes, it will be open to the ET to order an unsuccessful party to pay an amount up to the value of the fees—or less, the criteria are unclear—then add the possibility that the employer may not pay up on such a fees order, or even on any other element of the remedy, and the scales of justice start heavily to tilt against the claimant.

The Government are already facing two legal challenges, one from a trade union, the other from a firm of Scottish solicitors. The order could affect women disproportionately, particularly in multi-claimant equal pay cases. Take the level of fees, the way in which the fee group may operate and the fact that solicitors operating on a no-win-no-fee basis may be unwilling to pay fees up front because they become too expensive, and again, before the claimant can get their foot in the door of the tribunal, we see those doors slowly closing.

The Government want to encourage parties to settle at an early stage, but the fees could produce perverse incentives and negative behaviour, as my noble friend Lady Donaghy explained. Some employers could become less likely to agree a resolution. They may want to see the claimant’s money submitted first by registering the case, knowing that the claimant has to come up with the money. The worst employers may be emboldened to treat their employees badly, knowing that they may have to come up with significant amounts of money to pursue their case.

As for the vexatious employee, who seems to dominate this debate, employment tribunals already have case management powers, and can make orders for deposits and costs where a party is deemed to have acted vexatiously, abusively, disruptively or otherwise unreasonably or where the bringing of proceedings has been misconceived—that is a long list—and they are increasingly using those powers. Of course there is scope for improving the efficiency of the tribunal system—I sit in it, and could suggest several—and there are arguments for strengthening the judge’s case management powers. Parties should be encouraged to settle whenever possible, but employment judges already often encourage them to do so. However, the order will introduce unfairness and raise the barriers for ordinary people to get an effective remedy. It will not raise the barriers for the well paid executive, but it will raise them for the ordinary person.

[Lord Monks]

My Lords, we know that the Ministry of Justice is constrained by some very tight budgets and needs to save money. However, it is clear from these orders that it is proposing to save money very much at the expense of the low-paid and the most vulnerable in our society. The argument that was made by my noble friend Lord Beecham about the comparison with the fees at the Supreme Court tells its own story. The fees at the Supreme Court are disproportionately low compared to what will be the position in the tribunals. Therefore, I do not see the Minister’s argument that saving money has to be at the expense of those in the lower income parts of our society compared to those who are much better off and will be taking cases in the higher courts. The burden is in the wrong place.

Secondly, it is clear that this is all about deterring applicants. My noble friend Lord Young will remember debates on another regulation about raising the qualifying period for unfair dismissal. That took 3 million people out of the unfair dismissals scope virtually at a stroke. Now we have got this as well. As people have said, it is not going to deter the well paid executive who can see a crock of gold at the end of the case. Nor will it deter the union member, because we already know that unions are preparing to support their members in appropriate cases by covering the fees. It will be those who are on their own, probably low paid and vulnerable, and who will not find it easy to get a comparable job. They are being told to go away quietly. I think that is a green light to the heartless, careless, poor employer that they can now get away with it when previously they would have had to be more circumspect.

I do not put too much weight on the remissions scheme. The idea that if one has a £3,000 household investment income or savings certainly seems to be unfair because it lumps the household together for those calculations. I think it is still very much an attack on the low-paid, and the remissions scheme is nowhere near adequate to cover that. This is Beecroft by the backdoor. I know the Minister’s party colleague has been very strong in his condemnation of Beecroft, but why is it that these particular measures keep appearing, under a different guise for sure, and we keep seeing these attacks on employment rights in exactly the same spirit that Beecroft meant them in his original report.

I, too, add my voice to that of my noble friend Lady Turner in asking for these regulations to be withdrawn.