Theresa May has promised “the greatest expansion in workers’ rights by any Conservative government in history” if she wins on 8th June. She claims: “There is only one leader at this election who will put rights and opportunities for ordinary working families first.”
However, a recent report by the Ministry of Justice shows a stark contradiction between those words and the actions of her government.
In July 2013 fees for Employment Tribunals were introduced, meaning claimants had to pay up to £1200 to bring a case to court. Previously this service had been free to access. According to the government, this change had three objectives:
(i) Financial: to transfer a proportion of the costs of the ETs to users (where they can afford to pay);
(ii) Behavioural: to encourage people to use alternative services to help resolve their disputes; and
(iii) Justice: to protect access to justice.
Although not explicitly stated in these aims, a further objective was to tackle the perceived level of nuisance claims. The 2011 Resolving Workplace Disputes consultation issued by the Department of Business, Innovation and Skills and the Tribunals Service, said in relation to employment tribunal fees:
“a price mechanism could help to incentivise earlier settlements, and to disincentivise unreasonable behaviour, like pursuing weak or vexatious claims.”
So how successful were the changes in regard to the stated objectives? In January 2017, more than a year after it was scheduled to be released, the Ministry of Justice finally published its review of the introduction of fees in Employment Tribunals.
Its results and conclusions are staggering.
First, let’s set some rules for success based on the government’s own criteria.
1. Financial. We can use the government’s own success measure, in which the changes would reduce the total cost of the service by around a third from the roughly £75m before fees were introduced.
2. Behavioural. Following the introduction of fees, conciliation became mandatory for all claims presented after 6 May 2014. This introduced a one month period prior to the tribunal hearing during which an Acas conciliator must endeavour to promote a settlement. A behavioural change was therefore enforced. Consequently the number of cases heard by Acas jumped dramatically, with the majority of claims settling or being dropped before going to court. We might judge this objective a success if these changes do not negatively impact either access to justice or final outcomes for claimants.
3. Access to justice. In order for the government to claim that access to justice has not been significantly impaired by the introduction of fees, we would see strong evidence that claimants with reasonable cases had not been priced out of the system. This would be represented by a significant rise in the proportion of successful cases at tribunal, proving that weak or vexatious claims had been weeded out by the introduction of fees.
Let’s start with access to justice, which would be considered by most to be the prime consideration when evaluating such a change.
Since the introduction of fees the claim rate has fallen by around 60%, from 196,000 in the year to June 2013 to 75,000 in the year to September 2015. 120,000 fewer claims each year. According to the MoJ report this reduction has been “much greater than anticipated”
Some types of claims have fallen much more than this, with sex discrimination complaints falling 71% from year ending June 2013 to year ending September 2015.
Skills and Enterprise Minister Matthew Hancock celebrated these reductions as a victory for business over claimants. Writing in the Telegraph on receipt of the initial figures in 2014 he explained:
“Unscrupulous workers caused havoc by inundating companies with unfounded claims of mistreatment, discrimination or worse.”
Though it is not clear to which evidence he was referring in this statement.
Next, I particularly enjoyed his comparison of tribunal claimants to an infestation:
“Like Japanese knotweed, the soaring number of tribunal cases dragged more and more companies into its grip, squeezing the life and energy from Britain’s wealth creators.”
Now, if Matthew Hancock is right and the changes have reduced nuisance claims then it would of course be critical to show that success rates (i.e. in favour of the claimant) have substantially risen, proving that the system has, to use an expression Mr Hancock would appreciate, weeded out the bad cases. But the figures don’t show that. Success rates have actually fallen since the fees were introduced. That means there is no evidence that only people with weak cases are being put off. The MoJ itself concedes:
“Overall, we have concluded that there has not been a significant change in the outcomes of claims following the introduction of fees. ”
On the question of whether people have been priced out of the legal system, this is where the MoJ really starts to stretch belief. One section deals with evidence from people who report that the reason they didn’t bring a case is that they couldn’t afford it (let’s call them the ‘just about managing after a job loss’). The figures below relate to a single year, the first full year after fees were introduced. The report states:
“We acknowledge that the Acas evaluation of the early conciliation service has identified a group (which we estimate to be between 3,000 and 8,000 people) who were unable to resolve their disputes through conciliation, but who did not go on to issue proceedings because they said that they could not afford to pay. We do not believe, however, that this necessarily means that those people could not realistically afford to pay the fee. It may mean, for example, that paying the fee might involve having to reduce other areas of non-essential spending;”
In other words, those 8,000 people were wrong to say they couldn’t afford the £1,200 fees, they could just have bought less other stuff instead. The report offers no evidence of any kind to support this frankly staggering claim, and appears to be entirely oblivious to the fact that these people have recently lost their jobs.
On this point, the Council of Employment Judges (CEJ) in its 2015 report, ‘Submission on the Review of the Introduction of Employment Tribunal Fees’ states (emphasis added):
“There can be no doubt that there has been a decline in cases presented to Employment Tribunals but the EJs’ experience that there has been a particularly marked decline in the types of cases that had previously been brought by those in lower income brackets (those who might be termed ‘ordinary working people’), that is, claims for unpaid wages, notice pay, holiday pay and simple claims of unfair dismissal, is borne out by the statistics. The Council considers that there is clear evidence that fees are deterring meritorious but lower value claims, whether they be money claims, unfair dismissal or discrimination complaints where compensation for injury to feelings and lost earnings may be relatively low. High fees deter such complaints, act as a barrier to justice and, in the context of discrimination, undermine the aims of the Equality Act 2010. “
Remember, those ‘ordinary working people’ that the CEJ refer to, whose employment rights Theresa May is championing?
The CEJ then goes on to conclude,
“Fees have had no impact on weeding out weak claims: if they had done so the number of claims succeeding in front of EJs would have increased significantly.”
Judge Brian Doyle, President, Employment Tribunals (England & Wales) agrees, stating,
“Most significantly of all, we consider that the introduction of fees has had a damaging effect upon access to justice.”
“The standard track cases (typically unfair dismissal claims) attract a combined fee of £1,200 – which does not compare well with the mean and median awards made in successful unfair dismissal complaints. We conclude that the fees and remission scheme act as a very clear disincentive to bringing what might otherwise be claims that are not obviously weak or unmeritorious.”
So, the data tells us that people are being denied access to justice and the judges agree.
Now, let’s look at discrimination cases in particular, remembering that some types of discrimination claims have fallen by more than 70%.
The MoJ report states, “It is clear that fees have discouraged some people from bringing ET claims, including discrimination claims, but we have concluded that this has been broadly a positive outcome to the extent that it has helped a significant proportion of people to avoid the ETs by resolving their disputes through conciliation. There is no conclusive evidence that ET fees have prevented people from bringing claims. ”
In other words, even though many of those 8,000 people affected directly stated they weren’t pursuing a discrimination case because they couldn’t afford the fees, the Ministry of Justice rejects this evidence and says the reduction in discrimination cases is ‘broadly positive’. Though not, one might presume, to those who have been sexually or racially discriminated against.
We know that the CEJ disagrees with the Ministry’s assessment:
“High fees deter such complaints, act as a barrier to justice and, in the context of discrimination, undermine the aims of the Equality Act 2010.”
The Equality and Human Rights Commission (January 2017) concludes in its response to the MoJ review:
“The Commission considers that the introduction of ET fees of up to £1,200 (e.g. for a discrimination case to be heard) is compromising claimants’ rights under common law, Article 6 ECHR, and EU law. It is impairing the essence of the right to access the courts, and the Government has failed to show that the introduction of fees is a proportionate means of achieving a legitimate aim.”
So, both the CEJ and the EHRC conclude that the introduction of fees has meaningfully compromised workers’ access to justice under UK and EU law. Based on this, I think we can safely disagree with the Ministry of Justice’s own conclusions and mark this element as a solid fail.
Moving on to behavioural change, we know that more people are accessing the mandatory conciliation service (Acas) than before, rather than proceeding directly to a tribunal case. The Ministry hails this as evidence of success. However what we don’t know is how the outcomes from this service compare with those before fees were introduced. The CEJ has a response to this, and feels that rather than this change being a benefit for claimants, as a result some employers are in fact offering lower or no settlements in the knowledge that many claimants will be put off progressing the case due to the costs involved. The CEJ states:
“Fees have changed litigants’ behaviour but it is not the EJs’ experience that they have encouraged parties to seek alternate ways of resolving their disputes; on the contrary, claimants are more likely to be deterred from claiming and respondents more likely to make no or lower offers of settlement. The Council believes that the statistical evidence shows this too.”
So what’s the solution? After all, there can be few more serious conclusions than those which assert claimants are being denied access to justice. Helpfully, the MoJ review recommends a simple solution to this problem. The solution is to increase the monthly gross income threshold for fee remission from £1,085 to £1,250 for a single person, and slightly higher for families. However, if a claimant has disposable capital of more than £3,000 (including any money from redundancy payments), then the fees can still be payable in full. The report does not offer any evidence as to the size of the impact these changes would make.
And finally, what about the financial impact of the scheme? Remember that the aim of the changes was to recover about one third of the roughly £75m that the tribunal service costs.
The result is that the fees have generated a massive £9m per year. Together with the cost reduction due to fewer claims, the net cost of the tribunal service has reduced from £75m in 2012/2013 to £57m in 2015/2016. A reduction of £18m, or 24% – let’s call it a quarter. For deficit watchers, this saving represents a 0.02% reduction in the overall 2015/2016 budget deficit. Unsurprisingly, the MoJ marks its own paper again and concludes that this has “broadly met the main financial objectives set”. If one quarter is the same as one third in the eyes of the MoJ, it’s difficult to know what would have constituted failure.
So there we have it. Where the Ministry of Justice claims success against each of its three prior objectives, evidence from the actual data, the users of the system and the judges who administer it show an entirely different picture.
We should bear this in mind when we hear Theresa May promise the “greatest expansion in workers’ rights by any Conservative government in history”. Since the fees were introduce in 2013, between 3,000 and 8,000 people every year are being knowingly denied access to justice. This denial contradicts their existing rights under UK and EU law. The Council of Employment Judges states that ordinary working people have been disproportionately affected. The savings are minimal, and far lower than expected. The only response from the Ministry of Justice, in the face of clear failure of all of its main objectives, is to herald the policy a success and propose a small tinkering at the margins.
As ever, measure Theresa May and her government not by their words, but by their actions.
Judge Brian Doyle: https://consult.justice.gov.uk/digital-communications/review-of-fees-in-employment-tribunals/supporting_documents/judgebriandoyleresponse.pdf
Ministry of Justice Review: https://consult.justice.gov.uk/digital-communications/review-of-fees-in-employment-tribunals/supporting_documents/Reviewofintroductionoffeesinemploymenttribunals.pdf
Resolving Workplace Disputes: A Consultation https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/31435/11-511-resolving-workplace-disputes-consultation.pdf