Monday 9 December 2013

Christmas comes early for the CBI and the payday loan companies?

This time two years ago, the Confederation of British Industry cheered on the government’s proposals to bring in fees for using Employment Tribunals whilst arguing that this would only weed out “more of the weak and vexatious claims” and “shouldn’t be a barrier to justice”.

As you know, ET fees came into effect on 29th July and the vast majority of employees do not qualify for “remission” (where the fee is waived or reduced) meaning they will have to pay the full fees. This means a low paid worker who has say £250 withheld from their last pay packet, has to pay £390
[1] in fees to recover the £250 without any guarantee that the £390 in fees will be recovered. An unfair dismissal claim costs £1,200 in all[2] and again there can be no guarantee this will be repaid if the employee wins. It goes without saying that a worker who’s owed money or an employee who’s just been dismissed is not going to be in the best position to fork out hundreds of pounds to bring a claim and with typically only a 3 month time limit within which to issue, they need to find the money fast (the pay day loan companies will no doubt be happy).

Even if the ET orders that the employee is repaid the ET fees if he or she wins some months later, there’s a real risk the employer will not pay up – the latest government report
[3] shows that 51% of successful employees either received only part of the awarded compensation (16%) or none of it (35%).

If that was not bad enough, the latest government statistics on the number of ET claims issued since ET fees were introduced in July, currently show a 75% fall in claims in comparison to last year – for example, in September 2012 there were 3,078 ET claims issued, in September this year 681
[4].

The next few months will tell us whether this is a temporary blip or a sign of a permanent fall – this is because many ET claims were issued in the run up to ET fees being introduced and, for example, an employee who was dismissed on say 28th July (and who would normally have had until 27th October before limitation expired) may have issued the fee that day so as to avoid paying a fee the day after. That would mean that there was a bunching of claims in July and a gap before new claims began to be issued from September onwards. However, if the October – January statistics, when published, show similar levels to September 2013 we have a real barrier to justice and no-one in their right mind can argue that the missing 75% is simply made up of weak and vexatious claims.

I’ve no doubt that the CBI may be happy with that but in my view it will be society as a whole that suffers.
[1] £160 to issue and £230 to go to a hearing.
[2] £250 to issue and £950 to go to a hearing.
[3] The Payment of Tribunal Awards 2013 Study
[4] Ministry of Justice 'provisional management information'
David Sorensen - Partner

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