Employment tribunal claims up 90 per cent year on year

End of fees regime has led to leap in claims, as experts advise employers to take more care to avoid litigation

Single claims lodged at employment tribunals increased by a remarkable 90 per cent between October to December 2017 compared to the same quarter in 2016, according to new Ministry of Justice latest statistics published on 8 March.

However, the disposal of single claims – made on the basis of an individual claim such as unfair dismissal, rather than multiple claims – has increased by 21 per cent over the same quarter in 2016. The backlog of single claims going through the system also rose by 66 per cent. 

The figures followed a 64 per cent overall rise in new claims brought to employment tribunals after fees were first abolished following a Supreme Court judgment in July 2017 that overruled the government’s fee system.

The ruling found that the introduction of fees by the government was unlawful and discriminatory against women who were more statistically likely to have short term employment and therefore have to pay the required fees.

Helen Crossland, Seddons head of employment, said that the “incredible 90 per cent” rise in claims from the same period in 2016 following the initial rise in new claims being brought after the tribunal fees were scrapped has unfortunately “made for a corresponding backlog in claims”.

“One consequence [is] that parties will need to factor into their case strategy the fact they will have to wait much longer for hearings to be listed and for applications – including to address unmeritorious claims – to be processed.”

Since the second quarter of 2014/15, single claim receipts had remained relatively stable, averaging 4,200 claims per quarter. That trend changed in the second quarter of 2017/18 to 8,173, with the recent increase most likely due to the abolition of employment tribunal fees in July 2017, the report stated.

During the same three month period, the tribunal system disposed of 7,775 claims. Almost a third of jurisdictional complaints disposed of were Acas-conciliated settlements, 21 per cent were dismissed upon withdrawal, 12 per cent were withdrawn, and only eight per cent were successful at the hearing. 

The most common jurisdictional complaint disposed of was unauthorised deductions from wages. The mean duration of the disposal of single claims was down by one week to 26 weeks compared to the same period in 2016.

In what has been viewed as a statistical abnormality, multiple claims received have risen by 467 per cent, compared to the same quarter in 2016, partly as there were not enough 25,000 significant multiple cases lodged during the same quarter in 2016, often holiday pay cases that are filed in three month intervals, according to some commentators.

Multiple claims tended to be more volatile as they contained a high number of claims against an employer. In the most recent quarter, one multiple claim against an airline company resulted in approximately 30,000 new receipts.

Multiple claim disposals decreased by 55 per cent while the outstanding caseload increased by 27 per cent.  The mean age of multiple claims at disposal decreased to 150 weeks over the same period. 

Following the launch of a fee refund scheme in autumn 2017, as at 31 December 2017, the Ministry of Justice had made 3,337 refund fee payments, with a total value of almost £2.8m.

It received 4,800 refund applications, and 4,273 were processed from the abolishment of tribunal fees in October until the end of December. Of those refunds, 89 per cent related to cases in England, eight per cent to Scotland and three per cent were in Wales.

The refund payments included 3,256 related to single claims and 68 relating to multiple claims. There were also seven refunds which related to both single and multiple claims as each refund related to various fees paid by a claimant across many cases.

Alex Lock, partner and national Employment Group head at DAC Beachcroft, told People Management that as fees came in between July 2013 until July 2017, there were four years of fees to sort through.

Although at the first High Court hearing on the fees case there had been an undertaking that the principle of employment tribunal fees was unlawful and refunds might need to be made, there was still no mechanism in place until October-November 2017, when the government started processing refunds. 

According to the new figures, over 4,000 refund claims were made and processed over that ten week period till the end of December 2017, “but there is still quite a way to go”, Lock said. 

Lock said difficulties to be encountered were how to refund all these claim fees, given that the only information the government has is that provided at the time the claim was lodged. It relies on people coming to the government to claim refunds, and tracing the people who paid the fee previously. 

Issues for employers who might have to repay fees to a claimant who won but who paid the fee to lodge the claim, include whether the government refunds the claimant the fee they repaid at the onset, or if it refunds it to the respondent employer. Since many cases settled and did not proceed to hearings, questions of how those fees are repaid remains open.

As to the rush of people applying for fees refund, Lock said this may tail off over time. The bigger issue is from the employers’ view is what happens with the increase in claims now that people do not have to pay to lodge them.

A further concern is how the employment tribunal will cope with the number of claims being made since the tribunals were slimmed down to deal with an average of 40-50,000 claims a quarter. If claims grow to 100,000 in that same time frame, it will increase the time required to dispose of them, he added. 

Verity Buckingham, lawyer at Dentons UK and Middle East, told People Management it was likely that at some point, there will be an increase in claims to the level it was before the refund was introduced. 

The refund gives employees with more ‘frivolous’ claims the ability to lodge a claim, which creates more work for employers. “Employers should be aware of this and tread carefully, follow their policies and procedures and introduce more training for managers and HR”, she said. 

From the HR and managers’ perspective, as it takes longer for claims to go through, they will need to manage processes for the entire time it takes for claims to go through, while people might not want to cooperate. 

She also cited the problem that many tribunals have lost a lot of their part-time judges, and now that claims have been ramped up, the tribunal lacks the resources to cope. 

Buckingham said was scope for another fee regime to be introduced in the future, but that was unlikely to be for quite some time. Employers need to focus now on prevention instead of cure to avoid getting themselves to the tribunal, and possibly discussing a commercial settlement, if needed.

“There is no knowing how long a settlement might take and the damage that time can cause to your case or business. Do what you can to follow your internal policies and procedures before something becomes a problem.” 

Martin Chitty, partner at Gowling WLG said that in the report, the Ministry conceded that the most obviously explanation for the growth is that the fees order has been squashed.

“This undermines the government's claim that it wasn’t the fee at all. What’s been going on that the number of claims has been rising quickly. They knew it was happening, and people had time to file the claims.”