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Employment claims: is the flood still to come?

19 March 18

Discussion of the impact of the abolition of employment tribunal fees, and the likelihood of a deluge of historic claims

by Margaret Anne Clark

Legacy tribunal claims from former employees may be able to be brought in the employment tribunal, now that fees have been abolished. Potential claimants include those whose claims were rejected because they did not pay a fee or those who allege they were prevented from raising claims because of the cost.

Last year, the judicial review on employment tribunal fees was one of the biggest developments in employment law. Following the Supreme Court ruling in July 2017 that charges were unlawful, there was an unprecedented surge in claims, with a 64% increase recorded between July and September 2017 – reaching the highest number since fees were introduced in 2013.

The tribunal service has not yet confirmed how it will treat claims which were lodged in time but rejected because the fee was not paid (or because an application for fee remission was unsuccessful). Since the claims did not make it past the initial stage, employers may never have been made aware that they existed. It is believed that the tribunal service may be writing to these claimants – apparently some 7,500 in number – to ask whether they wish their claim to be reinstated. If the claims are reinstated, it is unlikely that an employer would be able to argue that they are time-barred.

New historic claims?

It is also unclear whether tribunals will consider accepting new claims in which the claimant alleges they were put off from taking court action because of the cost of fees. Guidance issued by the tribunal service suggests that new claims should be considered judicially “in the usual way”. By this it is assumed that claims will have to be raised now and would be treated as out of time. Claimants would have to show that there is a valid reason for overruling the current time limit, which states that claims must be brought within three months.

Initially it was assumed that new claimants would have to provide evidence to show that they could not afford to bring a claim at any time. However, we are aware of at least one recent case in which a tribunal allowed an out-of-time historic claim to proceed without requiring the claimant to bring detailed evidence about their inability to pay a fee during the currency of the fee regime.

Assuming that other tribunals take the same approach, the door could be open for a deluge of historic claims (whether they are reinstated or “fresh”) to find their way to tribunal. It is difficult to predict which ex-employees may come back to haunt their employers. However, while uncertainty remains, employers should consider conducting an audit of their records to identify high-risk dismissals made during the time that fees applied.

The effectiveness of the ACAS early conciliation service may also be impacted now that fees have been abolished. An independent study published in 2016 found that seven out of 10 claimants avoided proceeding to the hearing stage through use of the service. However, faced at that time with a fee of £950 for a hearing, the impact of the service may have been overstated.

For employers

In the meantime, practical steps for employers include investing in training for employees at management level and within HR teams on how to deal with tribunal claims. They may also want to revisit the tribunal litigation terms outlined in their insurance policies and consider whether these need to be adjusted.

When it comes to tribunal claims, there is no substitute for getting it right first time and avoiding a claim altogether. Training on disciplinary procedures, and a policy audit, are worth the investment when the alternative is a potential award or a costly settlement agreement.

Margaret Anne Clark is head of employment law at specialist employment law firm Law At Work

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