So what lies ahead for employers as a result of this decision?
Immediately following the decision, the government announced that it would cease charging fees in the Employment Tribunal with immediate effect, and would begin the process of reimbursing fees already paid.
This is likely to be a complex and time-consuming process, particularly bearing in mind that if a Claimant succeeds with their claim, normally the Respondent will be ordered to repay the Claimant the fees they have incurred. So in those cases, it is the Respondent, not the Claimant, who needs to seek reimbursement. Some Respondents may have ignored the Order and not paid the amounts they were supposed to. Inevitably the individual circumstances of each case will need to be examined, taking into account both the Claimant’s and Respondent’s positions.
Any claims being processed at the moment are likely to incur a delay as a result of the already strained Employment Tribunal system being put under further pressure with an increased number of claims, plus queries regarding fees for current and previous claims.
An area where there is very likely to be litigation is where an individual who is out of time for a claim they could previously have brought, now argues that the reason they did not submit it is because of the financial hardship that the fees would have caused them. An Employment Tribunal has the discretion to extend time limits in certain circumstances (with a wider discretion in the case of discrimination claims, where it can extend time where it is “just and equitable”). The decision as to whether to extend time will depend on the employee’s individual circumstances and the type of claim they had wanted to bring. Employers who previously breathed a sigh of relief because the deadline for a claim from an ex-employee had passed may not now be feeling quite so comfortable.
A new regime?
It’s possible that the current fees regime will be replaced with a new one. In all likelihood, the government will issue a consultation paper to gather views on this, but politically it may be difficult to introduce a new fee system. Other options that have been mooted are changes to the deposit order and costs rules, or even requiring a Respondent to pay a fee on receipt of a claim. This latter option is likely to be very unpalatable to businesses. Watch this space for developments in this regard.
The Supreme Court’s decision could have a huge impact. Following the introduction of the fees regime, the amount of ET litigation fell by an enormous 70%, with fees being pointed to as the main culprit for this (although the change in the minimum length of service required to bring an unfair dismissal claim from one to two years in April 2012 would also have contributed, as would the introduction of Early Conciliation).
Undoubtedly Employment Tribunal litigation will increase, and employers should plan how they are going to deal with this. The costs of defending a claim can run into tens of thousands of pounds, and there is no guarantee that an employee will be ordered to repay those fees, even if their claim doesn’t succeed. Often the ‘best’ outcome is a significant legal bill and a decision in their favour.
Insurance covering Employment Tribunal costs and awards insurance is often the best way to cushion the blow that a Tribunal claim can bring and it is an option well worth exploring. If you wish to explore your business’ options in that regard, please make contact with a member of the SA Law Employment Department who would be happy to discuss this with you.