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The end of Employment Tribunal fees and the impact for employers

The Supream Court
The Supream Court

With the recent news that the Supreme Court ruled Employment Tribunal fees were unlawful and abolished with immediate effect, Blanchards Bailey has put together a double feature special - including essential information for employees and details of how this radical change will impact employers.

Here we look at the impact for employers – including the importance of processes in place when dismissing an employee, reducing the risk of a potential rise in Employment Tribunal claims and ensuring contracts of employment and procedures are up to date to protect your business.

If you are an employee and looking for advice, please read our separate article.

Background - the end of Employment Tribunal fees and why they were quashed

On 26th July 2017, the Supreme Court ruled that Employment Tribunal fees were unlawful.  The rationale behind this decision was that the fees prevent access to justice in that they deter people from asserting their statutory rights.

As a result of the judgment, the government has announced that it will immediately stop charging Employment Tribunal fees and reimburse those fees that have been paid in the past.  It is estimated that the government will need to reimburse up to £32 million worth of fees as a result of this judgment.

Employment Tribunal fees were first introduced in July 2013 by the coalition government.  The intention behind the fees was to reduce malicious or weak claims brought by individuals against their employers.  The introduction of fees led to a reduction in the amount of claims brought by around 70%.  However, the percentage of unsuccessful claims rose following the introduction of fees, which the Supreme Court believed showed that the measures had simply reduced the number of Employment Tribunal claims without reducing the percentage of unmeritorious claims.

What does this mean for employers?

It is now doubly important for employers to ensure that they get processes and decisions right, especially when dismissing an employee.  The abolition of Employment Tribunal fees is likely to see a rise in Employment Tribunal claims, which will be costly for businesses.  It is now more important than ever to take professional advice when disciplining or dismissing an employee, or where a grievance has been raised.  The removal of the barrier for employees to bring claims means that they will be tempted to try to seek compensation in all but the most watertight of cases.  It also means that there is a higher likelihood that a claim will be pursued even where there has been a slight procedural irregularity or error, particularly in unfair dismissal cases.  

It is important for employers to take advice early in relation to potential Employment Tribunal claims to reduce future risk and to take a more serious approach to the ACAS Early Conciliation process.  If Early Conciliation is not successful, employees will be more likely to pursue the claim in the Employment Tribunal as they will no longer face the financial obligation to start paying the Tribunal fees from that point.  

It is also highly advisable for businesses to ensure that their contracts of employment and policies and procedures in relation to disciplinary and grievance matters are in place and up to date.  These documents will provide you with a framework to follow when issues arise with employees and help to reduce the risk of future claims.  As there have been significant changes in employment legislation and case law recently, these documents need to be regularly reviewed to ensure that they are up to date in order to protect your business.  

If your business requires a review of its contracts and policies and procedures or if you are facing a potential Employment Tribunal claim please contact our employment law team on 01258 483601.

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