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Employment tribunal fees gone, claims up unless…

Two weeks ago, the Supreme Court ruled that the policy of charging employment tribunal (ET) fees of up to £1,200 prevents workers, especially those on lower incomes, from accessing justice and disproportionately affects women.

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The Association of Recruitment Consultancies - ARC

The Court heard that since the introduction of these significant fees in 2013, the number of ET claims brought had fallen by over 70%. It follows that the removal of these charges is likely to result in an equivalent increase, since there is no basis for arguing that the number of potential claimants will have reduced during the same period. Indeed, employment rights have increased since 2013, with the addition of further shared parental leave rights, holiday pay on overtime and so on. Employment law firms will be tickled pink, but is the decision on its own helpful to employers, hirers or recruitment agencies?

Certainly, allowing more people access to justice has to be a good thing and indeed should be a guiding principle. However, one of the reasons the government initiated the review into the workings of the ET in 2011 (in which we at the Association of Recruitment Consultancies (ARC) participated), was what we call ‘the blackmail effect’.

It was and remains (were it not for the fees charge) all too easy for disgruntled workers/employees to make spurious claims. Indeed, some of you may recall that in 2011/12 a number of individuals made it their practice to issue multiple race or sex discrimination claims against recruitment agencies off the back of false CVs containing made up names and race or sex identifiers.

‘The blackmail effect’ is that it is cheaper for the party against whom the allegations are made to pay out, rather than to fight the case, so rewarding a litigant whose case has no merit.  This happens partly because there is little process for the ET to review a claim before it is issued. Whilst there is a post-issue process, the Respondent is already clocking up big legal fees and wasted time. During my meetings with the then Justice Minister he clearly understood this, but unfortunately the need to fund the ET took higher priority.

It’s true that the government introduced a pre-application process for ACAS. However, that organisation has no decision-making role, so cannot reject claims even in the most obvious cases. Indeed, ACAS reported to us at the time that 90% of settled cases involved a payment out by the ‘employer’ in any event, so leaving the blackmail effect intact.

In the Supreme Court judgment, Lady Hale notes that ‘setting the fees at the rate they have been set […] has deterred meritorious claims at least as much as, if not more than, unmeritorious claims’. This effectively recognises that unmeritorious claims exist, not that this needs proving.

Some claims are more obviously unworthy than others and for that reason we at ARC argued in 2011 that there should be an early sifting process, before proceedings can be issued. Where the Applicant cannot produce any supporting evidence for an allegation, for example claiming employment against an agency or hirer, when the contracts record a different arrangement and there are no other factors, the claim simply should not be allowed.

I noted that Matthew Taylor in his report recently advocated addressing status as a preliminary point at an early stage, so there is a consensus that this needs reform. However, a review after issue is clearly not as desirable as a clear filtering process before. Sifting could weed out unnecessary multiple claims and cases where there is no tangible evidence for the basis of the complaint.

Early sifting may increase administration, but will undoubtedly reduce the number of claims. This would not only result in reduced cost of the ET, it would also help avoid costly and wasteful litigation. A consequence of this, apart from anything else, would be to help build trust in work relationships, a significant positive outcome. 

We have written again to the Ministry of Justice to resurrect our proposals and await its reaction to the judgement beyond cancelling the existing fee regime.

Finally, ARC was the only recruitment trade association to address this issue and participate in 2011. The recruitment industry will benefit from the arrangement we suggest were it to be adopted and I invite support from all agencies. By working together, we surely can better achieve the result that is needed.

Adrian Marlowe
Chairman
Association of Recruitment Consultancies (ARC)