It may have passed a number of people by, but Monday 29 July 2013 was a significant landmark for employment solicitors. A handful of changes came into force which will forever (or until the Government decides it has a better idea) transform employment legislation and the way claims and settlements are conducted. From this notable day, compromise agreements will no longer be compromise agreements. They will now be known as (drum roll please) SETTLEMENT AGREEMENTS!
Granted, this is not the most significant change of the day, but we are sure plenty of solicitors have this week been finding themselves stumbling over the correct term each time they say the words “compromise agreement” out of habit. The more notable change is the introduction of fees in the Employment Tribunals for the first time ever. We have been expecting this for some time, and it is now upon us. What will it mean, though, for claimants and respondents?
The fees payable will depend on the type of claim being made. These will be split into two types: Type A claims, and Type B claims. Type A will be the more straightforward claims, such as unlawful deduction of wages, failure to make a payment in lieu of notice or redundancy pay, or an employer’s refusal of certain rights (such as time off to attend antenatal classes). Type B claims will usually be more complicated, and will cover unfair dismissal, discrimination and whistleblowing. Due to the potential complexity of the issues in these claims, the fees will be higher. Where there is more than one claim, the highest level will apply. Multiple type A claims will still carry the type A fees, but if any part of the claim falls within type B then the higher fee will be payable.
Once the type of claim is identified, two different fees may become payable: the Issue Fee, and the Hearing Fee. The issue fee will be payable by the claimant when the claim is submitted. The issue fee for type A claims will be £160, and £250 for type B claims. Only one issue fee will be payable irrespective of the number of claims made on the one form. The hearing fee will be payable following notice from the Employment Tribunal prior to the hearing. It is likely that this may not be until shortly before the hearing is due to take place, but the exact timescales are not yet known. However, claimants will receive a notice to pay and be informed of the deadline for payment. If they fail to pay by the deadline, the claim may be delayed or dismissed. The hearing fee will be £230 for type A claims and £950 for type B claims.
A common complaint regarding the introduction of fees is that it removes the general principle of fairness that allows everyone to have access to justice. However, for those who genuinely cannot afford to pay the fee because their income is below a certain level or they are in receipt of benefits, it will be possible to apply for a fee remission. That does not mean that all dismissed employees, who by definition no longer have an income, will be eligible for the fee remission. Annual income will be calculated by reference to the 12 months preceding the application, and if the claimant is part of a couple the income includes the claimant’s partner’s salary for the same period. The relevant limit varies based on the number of dependent children the claimant has. The unions complain that the limits are too low.
If a claimant’s claim is successful, the employment judge may order the respondent to pay the relevant fees in addition to any award made. However, the claimant will bear the cost if their claim is unsuccessful. Additionally, if the respondent has paid any fees and the claimant loses, the employment judge may order the claimant to pay these fees to the respondent if it is appropriate to do so.
Additional fees may be payable in certain circumstances, such as applying to the tribunal to reconsider a decision following a hearing, applying to set aside a default judgment or, rather interestingly, applying to dismiss a claim following a settlement between the parties. Whilst this last cost is a mere £60, it is surprising that the tribunal wishes to charge the parties where they have been able to reach a successful settlement (something that the tribunal has at all times strongly encouraged parties to achieve), and the sum will no doubt be taken into consideration as part of any deal to settle. The tribunal fees are not refundable, and so will also now usually form part of the settlement discussions.
It should be noted that Unison have been granted permission to seek a judicial review of the decision to introduce these fees. For now, though, claimants wishing to bring a claim should give serious thought to whether the value of their claim merits the cost of bringing it in the employment tribunal, and take such costs into account when determining the sum they would be prepared to accept under a comprom... sorry, a settlement agreement.
This article was first published as part of our Employment Law Update - July 2013. You can subscribe to receive these monthly updates by email. To join our mailing list, please email email@example.com.