Employment Expert Comments On Release Of Report

LEADING UK employment lawyer, Tom Flanagan at Irwin Mitchell, has welcomed today’s launch (14 December) of the Government’s consultation relating to the introduction of fees for employment tribunals – but believes alternative proposals should be considered.

Justice Minister, Jonathan Djanogly, launched the process as part of plans to lower the £84 million cost to the taxpayer, and relieve pressure on businesses.

The consultation, which closes in March next year, asks for views on two possible scenarios. The first would be the introduction of an initial fee of between £150-£250 for a claimant to begin a claim, with an additional fee of between £250-£1250 if the claim goes to a hearing, with no limit to the maximum award.

The second option would see the introduction of a single fee between £200-£600, but with a limit on the maximum award to £30,000. If an award above this amount was sought, the claimant would pay an additional fee of £1,750. 

In both options, the tribunal would be given the power to order the unsuccessful party to reimburse fees paid by the successful party and there would be concessions to avoid hardship.

Tom Flanagan, Partner and national head of employment at Irwin Mitchell, said: “This consultation should be welcomed by the business community as it intended to remove barriers to growth and provide confidence when taking on new staff.”

“However, when looked at in detail, the proposals might not be workable, might not achieve the intended aims, could be seen as a barrier to justice and could even create additional costs in order to manage the proposed regime.

“It might be worth keeping an open mind on alternatives to charging across the board, including a combination of compulsory mediation with charging at a commercial level but only those who refuse to engage in mediation.”

Mr. Flanagan also believes such alternative proposals could work effectively alongside the introduction of a simple form of ‘no fault liability’ for dismissals other than discrimination.

Describing how the process could work, Tom explains: “During a probationary period, dismissal could happen for any reason, subject to the contract. After the end of the probationary period, dismissal could still happen for any reason, at any time.

“If there is ‘cause’ – something which would need to be defined but would probably be a combination of unfair dismissal and wrongful dismissal - the employer would not need to pay anything to the employee, apart from what is provided in the contract.

“If there is no cause, there would be a statutory ratchet of sums sufficient to be a deterrent. This could also be proportionate, to ease the burden on smaller businesses.

“The aim of the whole process is not to help employers to sack poor performers, but to create a simple and cost-effective process to manage dismissals with greater certainty of outcome for both employers and employees.  In fact this system might encourage better employee performance management.

Mr. Flanagan adds: “This process could replace the current law on unfair dismissal. It would not however apply to discrimination cases as they involve wider issues than dismissal, are too complicated and imposing an arbitrary cap on damages would be in breach of EU law.

“There were 218,100 claims to Employment Tribunals in 2010-11, a 44 per cent increase on 2008-09. The cost to the taxpayer rose from £77.8m to £84m over the same period. However, we should be careful about bare statistics. There was an increase in unfair dismissal cases during that period, but nothing like that percentage. A lot of the increase in the number of tribunal cases was caused by large multi-party cases particularly for equal pay.”