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Scotland to abolish employment tribunal fees.

The introduction of tribunal fees saw a sharp decline in the number of tribunal applications. Unison (the public sector union) claim the fees are a barrier to justice, employers claim fees have dissuaded weak and vexatious claims. Are we about to see changes in England and Wales and what will it mean for small employers?

In the recently released ‘programme for Scotland’ the SNP quietly announced (one line on page 6, no dates) that tribunal fees were to be abolished in Scotland. During the general election the Labour party undertook to review fees if they won government and Jeremy Corbyn has made clear that abolishment would be his preferred action. In July a Commons Select Committee launched an enquiry into tribunal fees and a Ministry of Justice review is also underway. A gathering tide may indicate that the fee regime is about to be revised or abolished. But frankly, does it matter?

Prior to tribunal fees being introduced the number of cases held more or less steady at around 180,000 claims per annum. There was a brief spike in claims in the first half of 2013, perhaps an indication of claimants trying to get in ahead of the fee regime in July, but the last quarter statistics in 2013 revealed a collapse in numbers and overall claims remain at 64% below pre-fee norms.

Employers argue that the old system failed to discourage weak and vexatious claims which, while having no cost implications for the employee, generated significant legal costs for employers to defend the claim. Employees on the other hand claim that the fees, up to £1,200 in England, are effectively (and particularly for poorer people) barriers to justice, the access to which is a basic right under the Human Rights Act.

So far public sector union Unison has failed to convince successive courts of the employee argument, in the latest challenge the High Court (who rejected their case) expressed nevertheless a ‘strong suspicion that so large a decline [in claims] is unlikely to be accounted for entirely by cases of ‘won’t pay’ and [that] it must also reflect at least some cases of ‘can’t pay’. Leave has been given for Unison to appeal to the Supreme Court and a further unsuccessful action there may see an escalation to the European Courts for final rulings on the matter.

Labour are calling on their MPs to support abolishment, the Greens call for a reduction in fees and the Liberal Democrats want a review and so may be satisfied by those reviews already announced. The SNP has already made its mind up though and Scottish claimants will be returned to a fee-free regime at some point in the future.

Should England and Wales decide to abolish fees it will be smaller businesses who will again bear the brunt, but as with so many things in life, the reality is that the fear of receiving a tribunal claim, even in a fee-free regime, will be that much greater than the possibility of it actually happening. Employment lawyers and ‘HR’ companies will bombard small employers with fear marketing, frightening stories of vengeful ex- employees and six figure settlements, and will encourage them to sign up to insurance policies for their peace of mind.

But even before the fee system was introduced, only 180,000 actual claims were lodged each year. Of these, only about 60,000 were ‘individual claims’, the type smaller employers (who collectively employ the majority of UK workers) are likely to see. With more than 25 million employees working for smaller companies, 60,000 cases was a tiny pin prick, just one claimed lodged each year for every 417 small business employees in the country. Add to this the fact that most claims were settled inexpensively, or withdrawn or lost and the need to fear a tribunal claim appeared weaker still.

The increased fear of a claim is the real danger to smaller business and to the economy generally, and it is that increase in fear that will be the most noticeable side effect of the abolishment of the fee system, should that happen. Larger employers don’t fear claims – they have lawyers and expect to incur fees routinely. Smaller employees though will be tempted to sign up for insurance policies that promise 24 hour support and protection. Unfortunately the advice provided by these is often so risk averse that some employers find themselves failing to tackle resolvable issues because of poor advice and unnecessarily convoluted HR processes, perhaps motivated by the insurer’s desire to minimise their own exposure.

It is vital for the UK that small employers are able to manage efficiently and capitalise on their ability to make good decisions quickly. Losing some of this edge because of a fear of claims generated by the ‘fear marketeers’ is the largest likely side effect of the withdrawal of the fee-system. Perhaps the real debate here is not whether or not the fee regime should stay, but what should be done about the companies and law firms who seek to capitalise on fear at the very real expense of our small businesses. When do sharp tactics become unlawful misrepresentation? In our view that line has already been crossed by some Companies offering employment and legal litigation protection insurance designed for small companies – it is these that should be scrutinised by parliament, whatever the decision on tribunal fees may be.

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