THE NEW FEES REGIME IN EMPLOYMENT TRIBUNALS

_________________________________ Iqbal Mohammed

St Philips Chambers

Introduction

1. As we all now know, the new costs regime came into force on 29 July 2013. The

relevant instrument is Employment Tribunals and the Employment Appeal Tribunal

Fees Order 2013 (the Order). Article 3 states: Fees are payable in respect of any claim presented to an employment tribunal, or an

appeal to the Employment Appeal Tribunal, as provided for in this Order.

2. There are two judicial reviews currently in litigation, one in England and Wales in

respect of the above instrument and another in Scotland in respect of its Scottish

equivalent. Both are expected to be heard this year.

The Basic Rules

3. Employment tribunal claims will be divided into two levels for purposes of fees: Type A

covers claims such as unauthorised deductions, breach of contract, failure to pay

holiday pay etc. These are defined exhaustively in Table 2, Sch. 2 to the Order. Type

B covers all other claims that are not listed in Table 2, Sch.2 being claims such as

unfair dismissal, discrimination and failure to consult. Anyone wishing to bring a claim

in the ET must pay the issue fee1 at the point of presenting the claim or make an

application for a fee remission. The issue fee rates are currently set at 160 for a

Type A claim and 250 for a Type B claim. The next stage at which a fee will typically

be levied is when a final hearing is requested the hearing fee - at which point a

notification of hearing date will be sent together with a date specified for payment of

the hearing fee.2 The hearing fee has been set at 230 for a Type A claim and 950

for a Type B claim. The final hearing, for which the hearing fee will be levied is 1 Art. 6. 2 Art. 7.

defined as the first hearing of the claim that will determine liability, remedy or costs3.

Where both types of claim are included in one claim form, the Type B fee will be

payable4. An Employment Appeal Tribunal fee is payable by the appellant at point of

issue (400) and upon a date specified in the notification of hearing letter (1,200) for

the hearing.5

Enforcement

4. It is made clear under Rule 11(1) of the new Employment Tribunal Rules of

Procedure (the New Rules) that a claim will be rejected if the fee or remission

application does not accompany the claim form; see also r. 40, in which it states that if

there is a non-payment of the fee (or failure to submit a remission application) the

tribunal will notify the party in writing specifying a payment date. Failure to comply with

this notification will result in dismissal of the claim without further notice, but the

claimant (or respondent as the case may be) can make an application for

reinstatement of the claim upon payment of the fee or presentation of a remission

application. There is therefore a second chance to pay, but after that, dismissal of the

claim is automatic.

Fee Groups (Table 4, Schedule 2)

5. Where there are a number of claimants bringing a claim jointly, the issue fee is

payable jointly by the claimants named on the claim form, and the hearing fee is

payable by all those who are named on the letter giving notification of the hearing date

(thus allowing for removal of claimants if their claims are settled or they otherwise

decide not to proceed). The fees payable in these circumstances depend on the

number of claimants (2-10, 11-200 or over 200). The sums payable range from 320

for the issue fee for 2-10 claimants, up to 5,700 for the hearing fee for a group in

excess of 200 claimants.

Remission Applications

6. Details of how remission applications shall operate are set out in Schedule 3 to the

Fees Order. The first, full, reason for remission is where the claimant is on certain

qualifying benefits. These are

a) Income support 3 Art. 2. 4 Art 9(a). 5 Art. 14.

b) Working tax credit (as long as no child tax credit is also being paid to the party)

c) Income based jobseekers allowance

d) Guarantee credit under the State Pension Credit Act 2002

e) Income related employment and support allowance under the Welfare Reform

Act 2007.

7. The second category of people who will be eligible for a full fee remission is those on a

low income. What amounts to a low income is set out in para. 3 of Schedule 3, and

differs according to whether the claimant is single or one or a couple, and how many

children s/he has. This ranges from 13,000 gross income for a single childless

claimant, to 29,720 for a claimant who is one of a couple and who has four children.

The amount increases by 2,930 for each additional child.

8. The third category for fee remission (in para. 4 of Schedule 3) and this can be a part

or a full remission is where the disposable monthly income of the party is 50 or less

each month. Paragraph 5 of Schedule 3 to the Fees Order sets out what deductions

from gross income may be made in the calculation of a partys disposable income.

These are

a) Tax

b) Income support payments

c) Rent or mortgage

d) Child care costs

e) Bona fide maintenance payments in respect of a child who is not a child of the

family

f) Living expenses of 315 each month for the claimant; 244 for each child and

159 for the partner if the claimant is one of a couple.

If in a couple, the claimants partners income is counted as part of the claimants

income for the purposes of this calculation, but if the partner receives benefits the

claimant is not entitled to a remission as a result.

9. When the application for fees remission is made, documentary evidence has to be

supplied to evidence:

i) the entitlement to the benefit, if remission is claimed under paragraph 2 of the

Schedule;

ii) the level of income and number of children of the family, if remission is claimed

under paragraph 3 of the Schedule; and

iii) income and all relevant deductions if the remission is claimed under paragraph

4 of the Schedule.

If the claimant does not have the requisite evidence available at the time the claim is

submitted they need to pay the fee but can apply for a refund within the following 6

months once they have gathered the evidence: Sch. 3, para 10(4).

Fees for Other Applications

10. Under art. 4(2) of the Order further fees will become payable if a party requests one of

a number of types of application (listed in Column 1 of Schedule 1). These fees

become payable on a date set out in a notice following the making of the application.

The applications for which a fee is payable are: the reconsideration of a default

judgment; the reconsideration of a judgment following a final hearing; a dismissal

following withdrawal; and an employers claim in contract contained in the response to

the claim. These fees range from 60 for a dismissal following a withdrawal to 350

for reconsideration of a final hearing.

11. Under rules 75(1)(b) and 76(4) of the New Rules, the tribunal has power to order the

respondent to pay back the fees incurred by the claimant (or respondent if they are the

paying party). The grounds upon which costs orders can be made remain the same

i.e. where a party has acted vexatiously, abusively, disruptively or otherwise

unreasonably in bringing or conducting the proceedings (new rule 76(1)). There is

nothing that specifically states payment of fees should normally follow the event,

although r. 78(1)(b) states that in determining the amount to pay, the Employment

Judge is permitted to make a detailed assessment of costs in the way that a county

court judge would. Nevertheless its clear that the fees following the event is the

governments intention: when introducing the idea of tribunal fees in its July 2012 press

release the Department of Business Innovation and Skills noted that

... the tribunal will have the power to order the unsuccessful party to reimburse the fee to the successful party. In practice, cases are often settled rather than there being a clear winner or loser and the issue of reimbursement would form part of the settlement.

More recently, in a General Debate of the First Delegated Legislation Committee on 10

June 2013, Helen Grant MP, Parliamentary Under-Secretary of State for Justice noted

that

Ultimately, it is for the tribunal judge to make the order. It is not a matter for me, although I think it is highly likely that costs will follow the event, as they do in the civil courts. It is a matter for the independent judiciary.

Although thats the intention, the mechanism it the New Rules does not lay this path

out specifically and it remains to be seen how the employment judges are going to

approach it in practice.

Challenges

12. There are currently two judicial review applications outstanding in relation to the

introduction of fees for employment tribunal claims: the Scottish action was heard in

July. The other claim has been brought by Unison. The issues raised by Unison are

(i) breach of the EU effectiveness requirement, on the basis that the fees will make it

virtually impossible or excessively difficult for a significant number of individuals to

pursue their EU rights, particularly where amounts awarded for such claims are small

in any event; (ii) equivalence, based on the fact that lower fees are charged for similar

claims in the county court, or none at all in claims brought by the First Tier Tribunal

(Health, Education and Social Care Chambers); (iii) breach of the public sector equality

duty a failure to adhere to s.149 of the Equality Act 2010; and (iv) indirect

discrimination. This last point was acknowledged to be a likely consequence of the

introduction of fees by Helen Grant MP at the debate of the First Delegated Legislation

Committee on 10 June 2013 referred to above.

13. It remains to be seen whether either of the two challenges will make any alterations to

the current fees regime.

IQBAL MOHAMMED

25 August 2013

St Philips Chambers

imohammed@st-philips.com