Labour Research April 2012


Pricing justice out of reach?

Coalition proposals to introduce fees to access employment tribunals will further undermine black workers’ chances of obtaining justice, writes TUC race policy officer Wilf Sullivan.

The Con-Dem coalition believes that doing away with employment-related regulation will result in more employment opportunities for ordinary people. This has been the driving force behind its Red Tape Challenge which ministers see as “freeing up business and society from the burden of excessive regulation”.

Red Tape Challenge

The Red Tape Challenge (RTC) is designed to draw people into the process of deciding which rules and regulations should be scrapped, and encourages people to comment on regulation on the RTC website. The Department for Business, Innovation and Skills (BIS) produced its RTC discussion paper on employment regulation, Flexible, effective, fair, last autumn.

Yet the initiative appears to have its foundation in little more than anecdotes from the business sector. For example, the launch of the BIS paper saw business minister David Willetts pronounce: “Businesses regularly tell us that the burden of regulation is too high.”

And employment relations minister Edward Davey said: “We often hear from businesses that employment related regulation holds them back from growing their firms and employing more people.”

Prime minister David Cameron appeared to act as an echo chamber to these business claims when, in his introduction to the RTC, he declared that “these regulations cost businesses time and money”.What initiatives like the RTC expose is the ideological basis on which the coalition is operating.

As the TUC’s response to Flexible, effective, fair pointed out, the paper itself “does not provide robust evidence to support the claim that existing employment regulation acts as a barrier to employment growth”. And, the TUC emphasised: “If businesses are not recruiting new staff currently, this has more to do with the state of the economy and the outlook for growth.”

Overhaul of employment tribunal system

Undeterred, the government seems bent on using the RTC to undermine employment protections for employees, including an overhaul of the Employment Tribunal (ET) system which will see workers having to pay to pursue claims.

ETs and Employment Appeals Tribunals were originally established as a semi formal system where unrepresented workers could access justice easily and quickly to bring claims of unfair dismissal of discrimination, or for unpaid holiday pay an wages.

Unfortunately, over the last 30 years, the system has become increasingly formal and difficult to access, thanks to a number of factors.

These include the tendency of employers to “lawyer up” in response to a claim and to pursue every last technical argument, and government attempts to save money and keep employers happy.


Now, under the guise of austerity, the latest assault on workers’ ability to seek justice through the tribunal system has come in the form of government proposals to introduce fees to access ETs. The government has put forward two charging options.

Under option one, a claimant will pay an initial fee of £150-£250 to begin a claim, with an additional fee of £250-£1,250 if the claim goes to a hearing, with no limit to the maximum award. The size of the fee will vary depending on factors such as the kind of claim and the number of claimants.

The second option requires claimants to pay a single fee of £200-£600, with the maximum award limited to £30,000. Claimants seeking a higher award will pay an additional fee of £1,750, paying up to £2,350 in total.

Fees would be introduced in either 2013 or 2014 depending on which option is implemented.

Among a wide range of criticisms, the Equality and Human Rights Commission has slammed the fees as “prohibitively high” and has called for all discrimination claims to be exempted from the fees system.

Equality and human rights commission’s response

The Equality and Human Rights Commission (EHRC) has lambasted the government’s proposals for tribunal fees and has called for discrimination claims to be exempted from the fee system.

Among the EHRC’s many criticisms are that:

• the proposals will undermine the power of equality law to achieve broad systemic change in the workplace through its deterrent effect;

• the suggested fee levels are “prohibitively high”. Even in jurisdictions like Scotland where limited fees already exist, they are much lower and are paid by the employer as well;

• the fees indirectly discriminate against disadvantaged groups, and the proposed remission system is not a proportionate response, so it cannot be used to justify what is unlawful discrimination;

• requiring all employment disputes to go via the Acas employment conciliation service will not mitigate the adverse impact of the fees on disadvantaged groups.

This is because employers are unlikely to want to settle early when they know the worker will have to pay a fee in order to pursue the claim. In fact, fees are likely to have the opposite effect to that intended by the government — and to make employer brinksmanship and litigation more, rather than less, likely;

• the fee proposal is a potential breach of Article 6 of the European Convention on Human Rights — the right to a fair trial — which has been given “insufficient attention” by the government.

It is also likely to violate the common law constitutional right to access a Court; and

• demanding that claimants pay a fee to bring a discrimination claim is likely to breach the EU Equality Directive, by making it difficult for individuals to enforce their EU law rights.

Not only will the fees themselves infringe EU law by making it much harder to access the tribunal (as well as being disproportionate in amount), but also the idea that discrimination compensation can be capped at £30,000 unless a claimant is prepared to pay a higher fee is likely to breach EU law.

The practical effect of this threshold will be that many discrimination claimants are “compelled artificially to limit the value of their claim because they cannot afford to pay the [higher] fee”.

Under EU law, discrimination compensation is only “adequate” if it enables losses to be recovered in full. (Marshall v Southampton and South West Hampshire Area Health Authority No 2 1993 IRLR 445 ECJ). This is why (in contrast to unfair dismissal law) there is no cap on discrimination compensation.

In proposing these changes the government has, as ever, identified employer attitudes — as well as cost — as major influences for the reforms, and points to four reasons to justify them. These are:

• the tribunal service costs the taxpayer £84 million despite the fact that most people will never use it;

• people making a tribunal claim should pay a fair amount towards the cost of the case as this is what happens in other areas of civil litigation;

• employers complain that the system “can be a one way bet against them” and that there are not enough incentives to settle claims through conciliation, mediation or informal discussion; and

• employers say that they are reluctant to recruit new workers because of the risk of being taken to a tribunal on a whim of the new employees.

Wider role of tribunals ignored

But the idea that an individual should pay the cost of solving his or her employment dispute fails to grasp the vital wider role played by tribunals in redressing the fundamental imbalance between employers and employees, and deterring bad employer behaviour.

The role of tribunals was expanded from their original remit of dealing with training levy disputes to other areas of worker/employer dispute. This provided a route for individual workers to combat workplace discrimination and to bring claims of unfair dismissal or redundancy as well as other grievances relating to pay, hours, holidays and so on.

The idea was that workers would bring these individual claims in the ET as an alternative to resolving grievances collectively through industrial action. With the number of working days lost through strikes reaching an all time high of 12.9 million in the 1970s, it was seen as prudent to provide a less costly way of settling these disputes.

But the government appears to have accepted without challenge employers’ favourite argument that ETs are hostile to them and likely to find in favour of workers’ complaints. In reality in 2010-11, only 8% of unfair dismissal cases were successful. And when it comes to discrimination, the likelihood of success is even more marginal with the number of successful cases dropping from 7% in 2009-10, to 3% in 2010-11.

Discrimination cases

For black workers, these proposals will further undermine their chances of obtaining justice through the ET system. Under the option one proposals, the government is arguing that discrimination cases should attract a higher fee because they take more time and are therefore more costly.

This will have a directly disproportionate effect on black workers and other minority groups, because discrimination claims would be more expensive to submit.

And option two sees the introduction of a £30,000 cap for compensation and a proposal that ETs are prevented from making an award of £30,000 or more if the claimant does not pay the higher level fee. In practice, this will be the equivalent of a cap for compensation in higher value discrimination cases.

Fee "remission"

The government is presenting the charges as fair by pointing to proposals for a “remission” system involving means-tested fee waivers.

Remission already applies to the civil courts, and applicants would be entitled to claim back some or all of the fees depending on the level of their household income.

However, the government has failed to take into account the fact that the time limits for filing claims with an ET are shorter than for many other legal proceedings. This will make it exceptionally difficult to operate the complex fees and remission scheme in time.

There would therefore be significant risks that claimants would be unjustifiably barred from an ET.

Many workers will not want to give detailed financial information about their household to their trade union or anyone else in order to claim remission. And in reality, many will have to initially pay the fees in order to access the tribunal because there will not be time to complete the remission procedures before the tribunal claim has to be submitted.

Professional organisation the Employment Lawyers Association, representing lawyers who use the tribunal, accuses the government of “seriously underestimat[ing] the practical difficulties for claimants” of negotiating the remissions system, as well as the administrative burden on tribunals managing the scheme, “undermining the aim of saving taxpayers money”.

So government claims that a remissions policy will ensure claimants on low incomes will be able to access justice are misplaced and don’t bear scrutiny.

TUC response

Research commissioned by the TUC also suggests that a significant proportion of claimants who are paid at National Minimum Wage (NMW) and Living Wage rates will still be required to pay fees. Even the government’s own figures suggest that 36% of people who are part of households where the NMW is paid will not be entitled to remission.

In responding to the consultation on these proposals, the TUC has stated that it is fundamentally opposed to the introduction of fees for ETs. It believes such a system will not only price many workers out of access to justice, but that charging higher fees for more complex claims, such as claims under the Equality Act 2010, will have a disproportionate impact on those with protected characteristics.

The TUC has also pointed out that the government has failed to take account of the particular characteristics of ET users. These are that many claimants are not legally represented and do not have access to legal advice.

Many will have recently lost their jobs and are therefore likely to have experienced a sudden deterioration in their financial circumstances. Even in these circumstances they may not be covered by the proposals for a remission of fees, due to receipt of pay in lieu of notice or redundancy pay.

Government unconcerned about impact on disadvantaged groups

The government’s initial equality impact assessment does not deny that the proposals are likely to have an impact on disadvantaged groups. However, it argues that it is a proportionate means of achieving a legitimate aim — that’s to say, saving money — and that the remissions system will protect access to justice for those of low means.

For black workers, the effect of the introduction of fees will be compounded by the government’s decision to lengthen the qualifying period from one to two years before a claim for unfair dismissal can be submitted to an ET.

This will make the prospect of dealing with racial discrimination in the workplace through claims to a tribunal even more difficult. Currently, 18.7% of black workers miss out on unfair dismissal rights because they have less than 12 months’ service. This will rise to 32% of black workers when the extension of the qualifying period comes into effect this month on 6 April, and compares to 25% of white workers.

The government is, in effect, erecting barriers which unfairly favour employers, and doesn’t appear at all concerned by the disproportionate impact this will have on dealing with race discrimination in the workplace.

An insight into the government’s approach to race discrimination can be gained from communities secretary Eric Pickles’ recently-published race equality strategy. Quaintly entitled Creating the conditions for integration, it speaks volumes about the government’s view of black communities as it omits “tackling discrimination” as one of the five key factors on which the integration strategy is based.

These changes are part of a concerted attack on the individual and collective rights of workers, and are a clear indication that black workers cannot look to government or rely on the law to deal with the problems they face.

Achieving justice and equality through the tribunal system is now being priced out of reach. More than ever, black workers need to collectively organise within the trade union movement to deal with the systemic discrimination meted out by employers.