THE IMPACT OF EMPLOYMENT TRIBUNAL FEES AND THE EARLY CONCILIATION PROCESS ON EMPLOYMENT DISPUTE CLAIMS

On the 29th July 2013, the HM Courts & Tribunals Service introduced new compulsory tribunal fees to bring an employment dispute case to tribunal. Previously any individual could bring a claim without funding the upfront cost and the introduction of the fees has been an attempt to reduce the amount of frivolous claims heard at tribunal. The fee levels are as follows:

 

Type A Claims

Type B Claims

Issue Fee

£150

£260

Hearing Fee

+£230

+£950

 

The issue fee is payable at submission of the claim to the tribunal, whilst the hearing fee is payable when advised by the tribunal, but before the hearing date. As an enhancement to our Family Legal Expenses Insurance (LEI) policy, we have expanded our Employment Disputes coverage to include the cost of Employment Tribunal (ET) fees.

The majority of employment claims made under a Family LEI policy will fall under category B, meaning these fees potentially represent a significant additional cost to employment claims. To put these new fees in perspective, an additional cost of £1,210 for the Issue and Hearing Fee for Type B claims would result in a 63% increase on the average cost of an employment claim.

There is provision within the fee rules for recovery from the opponent, however this is entirely discretionary and with many cases settling before the tribunal hearing itself, our early data suggests that we are recovering fees in less than 15% of successful cases.

In addition to the introduction of ET Fees, the Early Conciliation (EC) process was introduced as part of the Enterprise and Regulatory Reform Act in 2013. The aim of the process was to ‘find an acceptable solution to a dispute to both employee and employer to avoid the need of an Employment Tribunal claim.’ The process is administered by the Advisory Conciliation and Arbitration Service (ACAS) and it became a legal requirement from 6th May 2014 for all employment claims to be registered with the scheme before proceeding to tribunal.

We have developed our Family LEI product to extend the legal advice helpline to include access to our panel solicitor’s employment team, who will assist customers throughout the conciliation process, including:-

  • Reviewing the customers’ case and providing early guidance on prospects in a tribunal claim
  • Completing the notification form for the customer
  • Advising the customer throughout the conciliation process
  • Advising the customer on any settlement offer made by the employer

We have designed this new feature to react to the changing employment dispute process, providing customers with additional assistance under the policy.

Since the introduction of Employment Tribunal fees and other changes, such as the increased minimum threshold for unfair dismissal claims to two years employment, there has been a 79% reduction in the number of ET applications. ACAS have also reported that 16.5% of disputes were settled during the EC process in the 3 months post implementation.

Our data however shows a much lesser impact on employment claim numbers by employees, suggesting a circa 10-15% drop. With the extension of the LEI policy covering the new fees, this was anticipated.

In addition, many Trade Unions only fund the new fees until successful conclusion for the employee, with a requirement for the employee to repay the fees to the Trade Union out of any financial reward achieved. Customers with both LEI and Trade Union membership are therefore now more inclined to use the funding of the LEI policy, rather than the Trade Union, to bring an employment claim.

Whilst the reported number of disputes resolved during the EC process is more or less in line with our own data, as there is only a requirement to contact ACAS prior to a Tribunal Application and participation is entirely voluntary, where an individual has the backing of LEI, they will feel more confident to opt out of the conciliation process and proceed straight to the ET as coverage is available.

Richard Finan, Director of Arc Legal comments: “Whilst the full impact of ET fees on claim costs is not yet known, it is clear that by expanding our cover to include the cost of these fees we have increased the value of our LEI policy, by ensuring that policyholders are not left out of pocket when making genuine employment dispute claims. Good LEI products are now the only funding method available to individuals that want to protect any financial settlement from cost deductions.
 
“The introduction of the ACAS Early Conciliation process is already having a positive impact on resolving employment disputes. Whilst the process is designed for both parties to find a solution without the need for solicitors, we have expanded the Legal Helpline service to ensure that policyholders have access to advice throughout the conciliation process.”
 
For further information about the introduction of ET fees and the ACAS Early Conciliation process, please contact your Account Manager, or alternatively email marketing@arclegal.co.uk.

Call us on 0344 770 9000