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05th January 2012

Consultation on Tribunal Fees Launched

The Ministry of Justice has issued a consultation document on charging fees in the Tribunal system. The consultation process closes on 6 March 2012.

Current Position

In 2010/2011 the Tribunals system received 218,000 claims and 2,048 appeals at a total cost of £84.2m. Currently bringing a claim or an appeal is free for users with the full cost being met by the taxpayer, the majority of whom will never use the service.

The aim of the current consultation is to redress this imbalance and transfer some of the costs burden from the taxpayer to the user, forming part of the Government's introduction of wider reforms to support and encourage earlier resolution of workplace disputes.

Proposals for Reform

In relation to the Employment Tribunal there are two alternative options proposed:

Option 1

The amount of the fee depends on the nature of the claim, there being three levels:

Level 1: generally sums due on termination (e.g. unpaid wages, notice, statutory redundancy pay, etc)

Level 2: unfair dismissal

Level 3: discrimination including equal pay and whistle blowing It is proposed that fees would be payable at two stages, issue and hearing, with indicative fees of between £150 and £250 at issue and £250 and £1250 at hearing depending on the level of the claim.

If the Government adopts this option, fees could be charged from 2013.

Option 2

This option introduces a fourth level of fees where the Claimant is seeking an award of compensation over £30,000. It would mean, however, that where a Level 4 fee has not been paid, the Tribunal would not be able to award compensation over £30,000. The relevant fee is payable on issue only with indicative fees being between £200 and £1750.

The Government would need to pass legislation before this option could be adopted and therefore would not be likely to be introduced until 2014.

The consultation paper sets out further details regarding the two options in addition to indicative fees for multiple claims, fees for specific Tribunal procedures (e.g. applications for written reasons or dismissal of a claim), fee waivers for those who may not be able to afford it and fee refunds.

Under both options the Tribunal would have the opportunity to order that the loser pays the winner's fees.

In relation to claims brought in the Employment Appeal Tribunal, indicative fees include an issue fee of £400 and a hearing fee of £1200.

Comment

The main difference between the two options is that under Option 2 claimants will be required to decide at the outset if they are seeking an award above or below £30,000.

Not only will this provide employers with greater certainty regarding their potential financial liability but, as there is only one fee payable at issue, it is simpler to understand and easier to administer. It will, however, require claimants to assess the value of their claim early on which may be easy for some claims (such as equal pay).

With Option 1, as there are two stages at which fees are payable, there are two opportunities to incentivise settlement.

Generally speaking, the introduction of fee charging in the tribunals is likely to be welcomed by employers with upfront payment of a fee likely to encourage claimants to think twice before filing a claim and encourage early settlements.

For more information contact Lynne Woodhead on lynneadams@hewitsons.com or on 01604 233233

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