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

Lord Monks Excerpts

Monday 8th July 2013 Lords Chamber

[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.

[Baroness Whitaker]

My Lords, I just want to speak briefly because I sat on employment tribunals for several years and I do not remember any vexatious claims. Although some were poorly argued, they would actually have done better with a lawyer. Of course conciliation is desirable where it can be arranged, but where it is not, I fear that these regulations will curtail access to justice. I am uneasy about the implication that assertion of rights is an unnecessary burden on business and therefore needs to be disincentivised.

There is exploitation and ill-treatment; I saw plenty of evidence of people sacked when pregnant or being sexually harassed. They were not glamorous bankers in the way that we read about them in the newspapers but, for instance, three cleaners whose lives were made a misery every day and people who were dismissed without a proper reason. The cases we found proved were brought by ordinary poor people who had lost their jobs. How could they afford to bring such cases under these regulations? I cannot imagine that they serve justice or provide that desirable balance between the interests of the employer and those of the employee; they distort it.

Legal Aid, Sentencing and Punishment of Offenders Bill

Lord Monks Excerpts

Tuesday 20th March 2012 Lords Chamber

[Lord Thomas of Gresford]

My Lords, in my youth I appeared for insurers and unions, and I did not pay anybody to get those cases. We competed on quality. The competition was there so that unions and insurers would send their work where they thought that they would get the best service, not where they thought that they would get the largest fee. It is insidious for fees to be paid to purchase cases from any organisation, whether it is a union or even the finest charity. It is not right that unions and charities should fund themselves in this way. The noble Lord has made the case from the point of view of unions and charities being funded. One has to look at it the other way round. Why should firms of solicitors or even barristers’ chambers—I have heard rumours about this—get work on the basis of how much they pay a person referring cases to them? It is a practice which has to stop.

[Lord Monks]

My Lords, I support my noble friend in this amendment. Referral fees are one aspect of the Bill that will affect union legal services adversely, along with changes to “after the event” insurance and conditional fee agreements. These three issues will make union legal services much more difficult and expensive to operate. Inevitably, fewer cases will be taken. Last year, unions assisted something like 50,000 individuals with cases. There was no charge on the public purse for that assistance. It was done through people’s membership of the union. Many people who were very ill or injured in some way were helped considerably. When this Bill becomes law, essentially, that will become more difficult.

I have checked which unions use referral fees and which do not. Two of the major unions use them and the rest do not. The two which use them do not use them to fund the Labour Party, which is the allegation that is around. As my noble friend explained, the political fund of the unions is completely separate. A separate contribution is made to that. It is registered under the Trade Union Act 1984, which was put through by the noble Lord, Lord King. You make a voluntary donation which is separate from your union membership fee and it is separately accounted for.

The suggestion that referral fees are used by unions to fund the Labour Party is totally wrong. The whole purpose of referral fees where they are applied has been to support the expansion of union legal services to make good some of the defects elsewhere in the justice system. I hope that the House will bear that in mind when it considers this amendment.

Legal Aid, Sentencing and Punishment of Offenders Bill

Lord Monks Excerpts

Wednesday 1st February 2012 Lords Chamber

[Lord Alton of Liverpool]

My Lords, claims management companies are sometimes described in more popular language as “claims farmers”, and they are a real pest. Inasmuch as the Government are seeking to do something about the claims farmers, I am totally in support of them. However, I have added my name to Amendment 166 to which the noble Lord, Lord Beecham, has just spoken. As the noble Lord, Lord Collins, has rightly said, in these provisions are all the seeds of the law of unintended consequences. Just as the trade union organisations which do a superb job for some of their members will be caught by some of these provisions, so too will the campaigning charities, to which the noble Lord referred in his remarks. Amendment 166 suggests that a regulated person would not be in breach of the rules set out in Clause 54 if,

“(b) the body to which the payment is made for the prescribed legal business is a registered charity that has been granted an exemption by the claims management regulation unit”.

As my noble friend Lord Pannick said a few moments ago, they have been doing a pretty good job up until now, so why do we not have confidence in the work they undertake?

I want to return to an issue that I raised at an earlier sitting of the Committee: mesothelioma and asbestos victims. The example I want to give your Lordships is that of a charity that works specifically with the victims of asbestos exposure. I shall quote Mr John Flanagan, on behalf of the trustees of the Merseyside Asbestos Victim Support Group, who wrote to me to say that if the Bill goes through in its present form,

“it will have catastrophic results for us if it goes through without amendment”.

For that reason, I hope that noble Lords and the Government will look favourably on the amendment tabled by the noble Lord, Lord Beecham. The Merseyside Asbestos Victim Support Group was formed in 1992 and became a registered charity in 1993. The founding members were ordinary working people who had been struck down with asbestos-related diseases of the sort I have described. They and their families felt that there was a lack of help and assistance for those suffering from asbestos-related diseases and that the only way to solve this was by creating their own support unit for people in the same situation as themselves. Given the emphasis the Government rightly place on voluntary endeavour, encouraging people to get engaged in the big society, I would have thought that they would thoroughly approve of a group like this, which is made up of people who are trying to help themselves.

The work of the group is primarily that of visiting victims who have been diagnosed with an asbestos-related disease, including the terminal condition of mesothelioma. As I said during our last proceedings, the prognosis once the disease has been diagnosed normally means that the victim has nine months to live. Victims of asbestos in almost all cases have not contributed in any way to their condition and they were not informed of the associated dangers or presence of asbestos in their workplace by their former employers. The idea that such people could be vexatious litigants or that these are frivolous claims is patently absurd and I do not think that anyone would advance that in your Lordships’ House.

MAVS is supported by and works closely in association with local clinicians on Merseyside to provide a holistic support framework. It is an impressive community. Services are based locally and work is carried out with other voluntary organisations—at no cost to the patient or to the community. Clinicians give out leaflets to patients on diagnosis with the recommendation that they should contact the support group. Again, this is highly compatible with the plea that voluntary organisations should take up more of the burden. This is something that they are doing already, and yet they are going to be hit by the provisions in the Bill. A full range of advice and support is provided to patients and their families, including help with welfare benefits such as industrial injuries disablement benefit, pension credit, attendance allowance, disability living allowance and carer’s allowance. They assist with the completion of complex application forms and offer practical help and support, providing assistance wherever it is needed. Sometimes victims and their families just need the support of a friend at the end of the telephone who understands what they are going through when times are really hard or challenging. They also provide details of legal advice experts, thereby preventing victims from falling into the hands of the claims management companies that the Government say quite properly that they want to deal with. Other asbestos victim support groups around the United Kingdom work tirelessly to provide the same services.

The majority of the people who run MAVS are volunteers, just like those described by the noble Lord, Lord Collins, in the trade union movement. I might add that the volunteers include those who themselves have been diagnosed with asbestos-related diseases. The management body, the trustees, also includes patients diagnosed with an asbestos-related disease and family members whose loved ones have been lost through asbestos-related illnesses. The Merseyside group co-ordinates with the Cheshire Asbestos Victim Support Group to hold an annual Action Mesothelioma Day, which helps to bring about awareness among the general public of asbestos disease and serves as a memorial day to commemorate those who have died from this insidious disease. I gave the figures during our last proceedings, but I remind noble Lords that some 30,000 people have already died of this horrible malignant disease, and it is predicted that before the terrible legacy of industrial disinterest in the past ends, there will be another 60,000 fatalities. The day is also used to raise much-needed funds for the Mick Knighton Mesothelioma Research Fund and the June Hancock Mesothelioma Research Fund; both organisations are working to try to find a cure for the disease.

The majority of the individual asbestos victims’ groups’ charities within the United Kingdom attend the All-Party Parliamentary Group on Occupational Safety and Health’s sub-group on asbestos, thus providing invaluable expertise and insight on this disease and the situation of those who have been affected. The Merseyside group also gives talks to the local community, including the Liverpool Community College’s building and construction section, to warn and educate upcoming apprentices of the dangers of asbestos and how to deal with it when it is discovered in their workplace. The charity works on a global scale with organisations such as the International Ban Asbestos Secretariat, which works towards a global ban on the use of asbestos. This collaboration has already produced a ban on asbestos in many countries which took the lead from the European Union ban back in 1999.

The charity was successful in obtaining lottery funding in 1997 for three years. It made a further bid for continued funding but was unsuccessful, being told that it was in the envious position of being able to attract donations from the legal sector for the work that it undertook. It set up financial arrangements under the solicitors’ code of conduct with several asbestos-related disease specialist solicitors to ensure its continued funding and existence. It considered the term “referral fee” objectionable, as this funding from solicitors is in recognition of continuing work for and on behalf of victims and certainly not in the same context as payments made to claims farmers. This essential funding, together with donations from victims, is vital to its continuing existence.

Inasmuch as the Bill will scrap referral fees, particularly those payments to claims farmers, it is to be commended. However, there is an irony in that CMCs will set up alternative business structures—so-called ABSs—to avoid their demise and that the hounding of the public will continue unabated. They will find a lacuna; they will find a way around, as those groups who are about just making money invariably do. The people whom the Government want to catch will escape, while those who have been performing this extraordinary public service out of an altruistic spirit will be caught. Genuine charities such as MAVS will have their funding from expert lawyers specialising in asbestos-related diseases cut altogether. If ever there was a case of throwing out the baby with the bathwater, this is surely it.

The Government do not seem to realise the impact that the Bill will have if the amendment is not accepted. Terminally ill people do not have the energy to fight their own corner and are often beaten into psychological submission, especially when their mind is on what will happen to their family when they are no longer there. Surely it is the Government’s responsibility to ensure that those least able to defend themselves are not treated as collateral damage in this Bill. That is why the amendment of the noble Lord, Lord Beecham, is so important. Let us remember those words from John Flanagan, who said that, if the Bill is enacted,

“it will have catastrophic results for us if it goes through without amendment”.

That is an intolerable, unconscionable situation which I hope the Minister will take very seriously.

[Lord Monks]

My Lords, I support the amendments. I declare an interest as a non-executive director of Thompsons Solicitors, the largest company of trade union-related solicitors in the country. I am very pleased that noble Lords who have spoken before me have recognised the value and extent of trade union legal work—the noble Lord, Lord Collins, gave the figures. Looking at the government Benches just in the course of this debate, I have spotted distinguished barristers who have worked for trade union legal services and solicitors over the years. They include the noble and learned Lord, Lord Howe, the noble Lords, Lord Carlile, Lord Lester and Lord Hunt, who is with us at the moment, and the noble Lord, Lord Thomas. All of them have earned a few quid from the trade union movement in their time, looking after the interests of people who have hit hard times and need help.

The Minister referred movingly on Monday to a family illness that developed from one of the old ICI works. In a way, unions’ role in litigation is only a relatively small part of their work on health and safety; the majority of their work is preventive. If you go to anyone in the chemical industry in Britain today, where conditions have improved immeasurably since the days of ICI in the 1960s, they will pay full tribute to the role of the trade union movement.

As others have said previously, the number of personal injury cases generally is falling, with the huge exception of road traffic accidents, where we know that something is going on that needs to be stopped, as my noble friend Lord Bach said earlier. Unions are getting a dirty name because some in the media, and perhaps in the Government, too, believe that unions should somehow be lumped together with the shroud-waving, ambulance-chasing, daytime TV-advertising groups of lawyers who go around inciting claims all over the place.

The need to differentiate is clear. At the moment, we are not being differentiated in any way. We are losing on conditional fee agreements, on “after the event” insurance, on legal aid in tribunals and now on referral fees, which is the subject of this debate. These are all ways in which we are able to fund a substantial legal service and which will be much restricted if and when the Bill goes through in its present form. The different provisions impose major limitations on unions’ ability to run effective legal services. At a time when legal aid is being cut, a double whammy is being inflicted on many working people and a great victory is being enjoyed by the insurance industry.

Will the Minister and others in the Government give some recognition on Report to this imbalance? Not all aspects of trade union work are uncontroversial, but their legal services are widely appreciated and widely respected. They should be supported by the Government, not hit and curbed as they are in the Bill.

Legal Aid, Sentencing and Punishment of Offenders Bill

Lord Monks Excerpts

Monday 21st November 2011 Lords Chamber

[Lord Monks]

My Lords, I declare an interest as a non-executive director of Thompsons Solicitors, which is probably the most experienced legal firm acting for workers in the personal injury and employment fields, and certainly the largest legal firm working with trade unions. That is enough of the advertising.

I am grateful to the noble Lord, Lord McNally, for affording me the opportunity to discuss my concerns about the Bill with him. A central concern relates to Part 2 which, if enacted, will undoubtedly make it harder, more hazardous and more expensive for many damaged workers to have access to justice. As a result, it will act as a major deterrent to applicants to apply for justice. A good thing too, some might say, including some employers and insurance companies. However, the losers will be the many victims suffering from injury or illness who are afraid to risk the expense of seeking redress.

In recent years, access to justice has been much encouraged by conditional fee agreements—the so-called no-win no-fee arrangements. These have certainly not led to an explosion of cases in the employer liability personal injury field. Employer liability claims are on a downward trend and fell between 2007 and 2011. There has been no noticeable surge in the compensation culture in this area. As the noble Lord, Lord Hunt, highlighted earlier, recently there has been a surge in road traffic cases, which are up 43 per cent to the very high figure of 791,000, 10 times the number of employer liability cases. I understand the Government's concern in the road traffic area, but that is no justification for making no-win no-fee arrangements in relation to employer liability and making access much harder for vulnerable claimants.

Conditional fee agreements were introduced to ensure that people who did not qualify for legal aid had an opportunity to instruct solicitors on a no-win, no-fee basis. Changes to funding, brought in by the Access to Justice Act, meant that from 2000 solicitors were able to make judgments about whether to proceed with cases with a degree of confidence that they would get paid; and, importantly by using the success fees that they recovered in cases that they won, they could fund riskier, less straightforward cases with worse odds of success. As the Bill is now, there will, at best, be a limited fund from success fees because they will be capped and it is a fund into which clients would have to pay from the compensation, if any, that they receive. We calculate that as many as 25 per cent of injured people whose cases would currently be run, and won, will not be able to find a lawyer willing to take on their cases.

The Bill is not making minor adjustments to the present system; it is scrapping the present system. Sections of society, other than the wealthy, will be frightened off pursuing cases. As the Law Society has argued, the other winner will be the insurance industry. I ask the Minister: is that industry preparing to cut premiums as a result of these substantial changes in its favour? They have given no such promises in the road traffic area, so those small and medium-sized employers who were in Ministers’ minds when they introduced the Bill had better not count on getting a better deal from their insurers.

Even at this stage, I hope that the Government will rethink their position. As the noble Lord, Lord Newton, said earlier, public finances may well not benefit. There could be a loss to the social security department in recoupable benefits, extra burdens on the NHS for the costs of care, and more people being reliant on benefits. Victims who win cases will have to pay a hefty slice of their compensation to lawyers, while many others will be deterred from taking cases at all. There is many a human tragedy, as we have heard today, behind all this technical talk of fees and so on. In today’s debate we have heard very moving stories about the victims of asbestos, from the Spinal Injuries Association, and other support and self-help groups. I ask the Government to look again at Lord Justice Jackson's two alternative packages, which would control recoverable success fees, and at the problems in the road traffic area.

I have one final point on legal aid. I would like to support points made by, among others, the noble Lords, Lord Newton and Lord Phillips, and the Chairman of the All-Party Group on Citizens Advice in the other place, that at a time when major changes are taking place in the welfare system, it is unwise to withdraw support for people who are challenging bad decisions. We heard the statistics on that earlier. I hope that the Government will urgently meet concerns in this area. There is a way forward that is more equal and effective than the current provisions in this Bill and I hope that we can persuade the Government to take it.