Plans to lower the £84 million cost to the taxpayer through the introduction of fees for employment tribunals were announced today.
Last year, the taxpayer footed the full £84 million bill of running the tribunals, despite the fact that most people will never use the service.
The consultation being launched today puts forward two sets of proposals that will ensure that those who use the system make a financial contribution but which will also protect access to justice for those on low incomes or limited means.
The Government is planning to relieve pressure on the taxpayer by ensuring that those who use the service pay towards it. It will also help businesses by discouraging unmerited and unnecessary claims and encouraging early settlement of claims.
Under current arrangements, employers complain that claims significantly disadvantage blameless businesses, with few incentives for complainants to choose conciliation or mediation.
Excessive claims may in turn be a barrier to employment and growth, with employers saying that they feel reluctant to recruit because of the risk that they are taken to a tribunal on a whim if things go wrong.
Justice Minister Jonathan Djanogly said:
‘Currently, the UK taxpayer bears the entire £84m cost per year of resolving other people’s employment disputes at tribunals. This is not sustainable.
‘We believe that people should pay a fair amount towards the cost of their case. Fee waivers will be available for people on low incomes to protect access to justice.
‘Our proposed fees will encourage businesses and workers to settle problems earlier, through non-tribunal routes like conciliation or mediation and we want to give businesses - particularly small businesses - the confidence to create new jobs without fear of being dragged into unnecessary actions’.
The consultation will put forward two options for consideration:
- Option 1: an initial fee of between £150-£250 for a claimant to begin a claim, with an additional fee of between £250-£1250 if the claim goes to a hearing, with no limit to the maximum award; or
- Option 2: a single fee of between £200-£600 - but this would limit the maximum award to £30,000 - with the option of an additional fee of £1,750 for those who seek awards above this amount.
In both options the tribunal would be given the power to order the unsuccessful party to reimburse fees paid by the successful party.
Many applications do not result in a full hearing or are settled out of court. Both parties spend time and money preparing for formal legal proceedings when around 80 per cent of applications made do not result in a full hearing.
The fee proposals, as well as reducing the cost to the taxpayer, aim to encourage both sides to consider carefully the strength of their case and whether they could resolve the matter outside the tribunal - saving time and money and reducing the emotional cost that tribunal proceedings can bring.
There were 218,100 claims to Employment Tribunals in 2010-11, a 44 per cent increase on 2008-09. The cost to the taxpayer rose from £77.8m to £84m over the same period.
Introducing fees will bring employment tribunals into line with civil courts where claimants already pay a fee to use the service. Just like in civil courts the Government will also continue to fund a system of fee waivers for those who cannot afford to pay.
The Government will continue to fund the cost of ACAS, which helps people in employment disputes reach agreement without the need for legal proceedings, and is free to users.
The consultation will close in March 2012, with a view to introduce the fees not before 2013-14.
Notes to editors
- Read the consultation Introducing fees in employment tribunals and Employment Appeal Tribunal
- For more information, please contact Ministry of Justice press office on 020 3334 3536.