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

Lord McNally Excerpts

Monday 8th July 2013 Lords Chamber

Moved by

[Lord McNally]

That the draft order laid before the House on 24 April be approved.

Relevant document:1st Report from the Joint Committee on Statutory Instruments

[The Minister of State, Ministry of Justice (Lord McNally)]

My Lords, I shall also speak to the draft Employment Tribunals and Employment Appeal Tribunal Fees Order 2013. The purpose of these orders is to make provision for fees to be paid by those who present claims or make appeals to employment tribunals and the Employment Appeal Tribunal. They also make provision for fees to be remitted or waived in full or in part if the person cannot afford to pay using the existing civil courts remission scheme.

Bringing a claim or an appeal to employment tribunals and the Employment Appeal Tribunal is currently free of charge. In 2012-13, the cost of running the employment tribunals system was £74.4 million. That cost was entirely met by the taxpayer. While the Government are committed to providing a fair system for those who need an independent tribunal to settle an employment dispute, we also believe that it is perfectly reasonable that those using the tribunals should contribute to their cost, where they can afford to do so. It is important that noble Lords understand that introducing fees into these tribunals is not an attempt to deter individuals from bringing claims—vexatious or otherwise—and given the mitigations in place we do not believe the provisions of this order will do so.

Employment tribunals were originally intended as the option of last resort in disputes when all other resolution services had failed. Over time that status has eroded and claims are now often launched prematurely, without exploring alternative options for resolving disputes. The introduction of fees can support a necessary change in the mindset of users and help to reset the system by encouraging individuals to stop and think about whether a dispute can be settled without recourse to a tribunal, and whether it is really necessary to submit a claim. Complementing that aim, mandatory early conciliation will be introduced in 2014, meaning parties will not be able to bring a claim to the tribunal without first having sought a conciliated resolution via ACAS.

The Government are also implementing a brand new simplified set of rules and regulations governing procedure in employment tribunals. The simplified rules attempt to roll back and reset unnecessary complexity in tribunal rules, creating increased clarity and understanding for the lay person. This ought to reduce claimants’ reliance on legal representation and help return employment tribunals to the role envisaged when they were first set up.

Responsibility for the wider employment law, including the rules, lies with the Department for Business, Innovation and Skills. Should issues arise in this debate that are beyond my remit I will ask my colleague, my noble friend Lord Younger, to respond in writing should it be necessary. I am confident that noble Lords will see that these proposals are not an attack on employment rights or on people with low incomes. They simply reset the system that this Government inherited and reduce the taxpayer subsidy of employment tribunals by transferring some of the cost to those who use the service, while protecting access to justice for all. Assuming parliamentary approval, the instrument is due to come into force on the day after it is signed and made. We are confident that, subject to that approval, fees will come into effect on 29 July this year.

I turn now to the provisions of each order. Parliament has already made provision for fees to be charged in tribunals under Section 42 of the Tribunals, Courts and Enforcement Act 2007. The added tribunals order provides for employment tribunals and the Employment Appeal Tribunal to fall within the provisions of Section 42 as added tribunals allowing the Lord Chancellor to prescribe fees by order for anything dealt with by them.

The fee structure provided in the fees order reflects the decisions made and announced after the Government’s consultation paper, Charging Fees in Employment Tribunals and the Employment Appeal Tribunal. We considered the views expressed by those who responded to the consultation, and settled on a final structure taking proper and full account of those views.

Part 2 of the order provides for claimants to pay an “issue fee” covering a contribution to the pre-hearing costs, and then a “hearing fee”, payable 3 or 4 weeks before a hearing, should that stage in proceedings be reached. It also outlines a number of application fees, payable by the party making the application, and a fee for judicial mediation, payable by the respondent.

Sections 5 to 10 provide the fees payable. Two levels of the issue and hearing fees are proposed, and are defined in the order as type A and B claims. Claims are allocated to type A or B depending on the nature of the complaints described in the claim form. Type A claims are those which are simpler for the tribunal to deal with and so cost less for a claimant to bring—namely, £160 at issue and £230 before the hearing. Type B claims are more complicated, requiring more tribunal time and resources to determine. Therefore they attract higher fees of £250 at issue and £950 at hearing. Where there is a mixture of type A and B claims within the same claim form, the higher fee will be paid.

Sometimes in the employment tribunal two or more claimants present their claims on the same form. The order defines this as a fee group, and the number of people in the fee group also affects the fee due to be paid. There are three bands of fees, increasing on a sliding scale depending on the number of individuals named within a form. If claimants present their claims in this way, the fee payable per person will usually be much lower—and will never exceed—the amount that they would have paid if they had sent their claim separately.

In certain circumstances, Article 12 provides a safeguard ensuring that no one in a fee group will have their claim struck out because of the failure of others in their group to arrange a group payment if they themselves are willing to pay the single fee.

Part 3 of the order provides for fees in the Employment Appeal Tribunal. A flat fee regardless of claim or appeal type will be required on instituting an appeal. A further flat fee will be required ahead of the full hearing of the appeal. Part 4 of the fees order provides for transitional arrangements and remissions. Fees will be charged from the date of the order, so that those who have commenced their claims or lodged their appeals before this date will not pay any fees. Schedule 3 of the fees order makes provision for a range of remissions or fee waivers based on the existing HMCTS civil courts scheme. This scheme will ensure that access to justice is protected by reducing or remitting fees for individuals who provide evidence of being in receipt of particular qualifying benefits, or that their income is below certain thresholds.

The Government are fully committed to ensuring that tribunals remain accessible and continue to provide an effective service which is responsive to users. This measure provides for the users of the Employment Appeal Tribunal to make a contribution towards the provision of that service and to better balance the cost of providing access to justice between the user and the taxpayer without restricting that access.

I therefore commend the orders to the House and hope that noble Lords agree that the measures which I have proposed today should proceed.

--- Later in debate ---

[Lord Young of Norwood Green]

My Lords, my noble friends have made the key points, but I want to emphasise a couple of issues. The Government wanted to do something really positive and constructive, as my noble friend Lady Donaghy said, and they started to do it by enhancing the role of ACAS and encouraging mediation. We support that wholeheartedly. It is the right way forward. It is positive, it is constructive, it does not discriminate against people regardless of their income and it does not swing the pendulum towards employers, as I firmly believe the current proposals do.

As regards reducing the number of claims or the claims that the Government believe should not be taken, it is interesting that the statistics demonstrate that the number of cases is coming down in any event. My noble friend Lady Drake brings a wealth of experience of employment tribunals and employment appeal tribunals. She pointed out that judges already have significant powers in dealing with vexatious claims, so that part of the problem could and should have been dealt with. In our view, this is an unfortunate piece of legislation that, as one of my noble friends said, does not reduce red tape. It adds complexity and tilts the balance against workers. I agree with my noble friends that this order ought to be withdrawn.

[Lord McNally]

My Lords, I thank all noble Lords who have taken part in this debate, many of whom I know have spoken from a wealth of experience of tribunals, ACAS and the trade union movement. It has been helpful to identify and address concerns. Doing so has enabled me to set on record why the Government have decided to introduce fees in the employment tribunal system and, crucially, what has been put in place to ensure that fees are not a barrier to those wanting to access the justice system.

In speaking to his amendment to the Motion on the fees order, the noble Lord, Lord Beecham, expressed regret that its provisions do not effectively protect access to justice, that some claimants will be deterred from bringing claims and that the remission system is inadequate. Neither I nor my government colleagues accept those arguments. We believe that the mitigations we have put in place will properly protect access to justice for those seeking to bring claims. The remission scheme will ensure that those on low incomes can apply to have their fee reduced or waived entirely and, given the importance of the issues at stake, the Government believe it is unlikely that fees alone will deter those with a strong case bringing a claim. These factors, together with the power for the tribunal to order reimbursement of fees paid, will help to ensure that access to justice is maintained for those who wish to bring a claim.

As I have mentioned, we hope that fees will encourage potential claimants seriously to consider options to resolve disputes outside the tribunal system. From 2014, mandatory early conciliation will mean parties cannot bring a claim to the tribunal without first having sought a conciliated resolution via ACAS. Any decrease in claims after the introduction of fees does not mean that claims are being deterred. It is more likely that disputes are being resolved without the need to use the tribunal, which benefits everyone.

The noble Lord, Lord Beecham, raised a number of issues. He asked whether fees should be charged for someone seeking a small amount. All claimants, irrespective of appeal or claim type should make a contribution to the cost where they can afford to do so, and everyone should also think carefully about entering into litigation irrespective of the remedy sought. Claimants should bear the cost of fees where they make an allegation in a claim and fail to pursue it or where the employer is judged to have acted lawfully.

The noble Lord said that the employment tribunal is more expensive than the civil courts. The civil courts do not offer a reasonable comparator in this instance as they charge at up to five points in the court process and fees are set to recover the full cost. Civil courts process significantly higher volumes of claims and therefore have lower unit costs. In the civil courts, parties open themselves to much wider cost powers, so there are different issues to consider.

The noble Lord asked about the changes to the process for the enforcement of awards when fees are introduced. The enforcement of employment tribunal awards is fast-tracked through the civil courts. There are no plans to make any changes as part of the introduction of fees. However, separately the Government have commissioned new research covering England and Wales and Scotland, and the findings are due to be published next year.

The noble Lord asked whether there will be guidance for those paying fees. We will ensure that all users are clear on the obligation to pay fees or to apply for a remission. Existing HMCTS guidance for employment tribunals will be updated to highlight the stages at which fees are payable. There will be fees and remission leaflets to explain the fees payable, how to pay and where to apply for remission.

[Lord Beecham]

Can the noble Lord say whether they will be in force by 29 July? Will they be available by that date?

[Lord McNally]

If they are not, I will write and tell the noble Lord. The noble Lord also raised the question of whether the Government know what the impact will be. It is difficult to predict the impact that the introduction of fees will have on behaviour. It may be reasonable to assume that if people who are thinking about bringing a claim have to pay to do so, they will more carefully consider whether they wish to do so and their chances of success than they would if the process was free. If this is a valid assumption, we would expect the number of speculative claims—and therefore the number of claims overall—to fall. We will review the impact post-implementation to ensure that the remissions system acts to ensure that only those who can afford to pay fees do so. To ensure that the fee-charging process is simple to understand and administer, we will examine impacts on equality groups in the light of experience and will verify the amount of fee income raised.

The noble Lord asked how we will review fees. Fees will be kept under review as part of an ongoing review of fees across the justice system. The review will seek to ensure that the remission system acts to ensure that only those who can afford to pay do so. The noble Lord, Lord Beecham, asked if redundancy payments will be taken into account in a remission of application. No, this is considered a capital payment under the current scheme. We are considering whether to change this as part of our recent consultation on remissions.

The noble Baroness, Lady Turner, raised a number of matters. Let me make it clear: we do not want a frightened or submissive workforce, as she implied. We want a highly skilled, adaptable, highly productive workforce that can compete in the world. It is important that the noble Baroness understands that introducing fees into these tribunals is not an attempt to deter individuals from bringing claims, and we do not believe that the provisions in the order will do so. Given the importance of the issues at stake, we believe, as I said, that it is unlikely that fees alone—

[Lord Lea of Crondall]

The Minister says that it is not likely to deter people. However, the memorandum states that that is the intention.

[Lord McNally]

We will not play with words. Of course, numbers will fall, so in that sense it will deter people. It will enable people to make better-informed decisions about what they are doing.

I pay tribute again to the vast experience the noble Baroness, Lady Donaghy, has of ACAS. I believe that making ACAS a first stop is a step forward and one to be much welcomed. Like all Members of the House I always regret when we are not able to receive the wisdom of the noble Lord, Lord Sugar, in person, but I note that he is in favour of more conciliation. The noble Baroness asked if the introduction of fees undermines the aims of early conciliation. We do not believe so. Fees can encourage parties to resolve their disputes as early as possible. In addition, respondents will be aware of the financial implications of losing a claim, including the ability of tribunals to order them to reimburse a claimant’s fee. Therefore, if a respondent waits to see if the claimant pays the fee, it could increase the respondent’s own cost. The noble Baroness also asked if this is designed to prevent weak and vexatious claims. We do not intend fees to prevent claimants bringing forward claims they believe to be genuine. We intend only that users who can afford to do so should contribute to the cost. If fees were to discourage those bringing speculative claims from doing so, this would be a positive consequence.

The noble Baroness, Lady Drake, acknowledged that this is a simplified scheme, and that is to be welcomed. It neither tilts the balance against workers nor closes the tribunal door. The noble Baroness also made the point that it was particularly disadvantageous to vulnerable people. Our initial analysis suggests that BME groups, women, younger people and disabled people are more likely to fall into the lower income bracket, so these groups are more likely to qualify for partial or full fee remission. The Government believe that it is right and fair that users of the Employment Appeal Tribunal, as with the employment tribunals, make a contribution towards the cost of their case when they can afford to do so. There are clear public policy reasons not to place the full burden on the taxpayer to subsidise fully a user who has already had the benefit of a previous judicial decision.

The noble Baroness, Lady Drake, also asked how fees will incentivise business to settle if only the claimant pays fees. Businesses will be conscious of the financial implications of losing a case, as well as the wider power of the employment tribunal judiciary to impose financial penalties on businesses that act unreasonably. Businesses will also be aware of the power of the tribunal to order them to reimburse the fees paid by the successful claimant.

The noble Lord, Lord Monks, intervened to tell us that, quite rightly, unions will support their members. I think that he was unfair in dismissing the impact of the remissions scheme. He asked whether we are trying to introduce Beecroft by the back door. No, we are not.

Is the court remissions scheme suitable to be used in employment tribunals? Yes, the remissions scheme is based on an individual’s ability to pay and the principles are the same as those that arise in the civil courts.

I fully acknowledge the point made by the noble Baroness, Lady Whitaker, that discrimination occurs in the workplace. That is why we need employment tribunals. There is a danger in overstating the impact of the decisions that we are taking tonight. I take on board the comments that have been made; however, as the noble Lord, Lord Young, said, this will enhance the role of ACAS. The truth is that people who wish to resolve an employment dispute have access to an independent tribunal, which is part of a justice system that is highly respected throughout the world. However, proceedings before the tribunals are costly and the Government believe that it is unfair that taxpayers have to shoulder all of that cost. To share the burden, we are proposing to charge fees to cover about a third of the cost of the tribunal. That, it seems to us, is both reasonable and right.

Those who can afford to will pay a fee dependent on the claim type they are bringing. Because of the remissions scheme we will put in place, no one should be denied access to the tribunal because they cannot afford it. The fees and the safeguards that we have built in represent a fairer way to share the costs of tribunals while fully preserving the principle of access to justice. I commend these orders to the House.

Motion agreed.