The one in which the Minister says it does not cost £1200 to pursue an ET claim for discrimination

In the House of Commons yesterday, it was looking as if yet another session of oral questions to the Department for Business, Innovation & Skills (BIS) was going to pass without Vince Cable and his ministerial team being pressed on arguably the most damaging element of the Coalition’s erosion of workplace rights: the hefty, upfront employment tribunal (ET) fees introduced last July.

But then up popped Labour backbencher John Cryer with this poser (scroll down to column 438): “The Minister confirmed just a few minutes ago that women who become pregnant can and do face discrimination at work.  Why, then, are the Government going to charge those women £1,200 to go to an industrial tribunal?”

Glossing over the fact that employment tribunals haven’t been called ‘industrial tribunals’ since 1998, the response by Jenny Willott – the Liberal Democrat MP covering as BIS employment relations minister during Jo Swinson’s maternity leave – is worth setting out in full:

 I am disappointed that this figure is being bandied around yet again. It does not cost women more than £1,000 to go to a tribunal.  It costs only £250 to start a claim, and most cases are finalised well before a hearing.  For those who end up going to a hearing, fee remission applies in many cases, and if the women win their case, costs are often awarded against their former employers.  It does not cost what the hon. Gentleman suggests, it is scaremongering by Labour Members, and I am concerned that this will put women off taking cases against their employers when they have been unfairly discriminated against.

Now, it’s true that it costs “only” £250 – the equivalent of a week’s wages if you’re on the national minimum wage, but clearly little more than loose change to a Parliamentary Under-Secretary of State – to start a claim for pregnancy, maternity or any other form of discrimination.  But there’s little point paying to start a claim unless you intend to finish it, and if the respondent employer doesn’t settle your claim that will cost you another £950 – or another four weeks’ wages if you’re on the minimum wage.  And why would the respondent employer settle your claim before seeing whether you are prepared to pay the £950 hearing fee on top of your £250 issue fee?

Then again, according to Ms Willott, that shouldn’t be a problem because “fee remission applies in many cases”.  It does?  I’d like to hear Ms Willott’s definition of ‘many’, because the only figures the Ministry of Justice has been willing to release to date show that 80 per cent of fee remission applications are rejected, and that just four per cent of claimants actually receive any fee remission.  It’s entirely possible that the latter proportion has increased in recent months, but in that case why has the Ministry of Justice repeatedly declined to release more recent figures?

So, not much chance that you’ll get any fee remission then.  But at least “costs are often awarded” against losing employers.  They are?  According to the official ET statistics, in 2011-12 costs were awarded to just 116 (0.005 per cent) of the some 24,000 claimants who won their case in the tribunal (either at a hearing, or through a default judgment).  Call me picky, but I wouldn’t say that was “often”.  Indeed, claimants are somewhat more likely to have costs awarded against them.

So, will many women who have been subjected to pregnancy or maternity discrimination by their employer be ‘put off’ from bringing an ET claim by John Cryer’s parliamentary question?  I guess that comes down to whether you share the Minister’s rather unusual definition of ‘many’.  But I think we can be sure that a great many more will be put off by having to fork out up to £1,200 in upfront fees, with little chance of any fee remission and – should they win – almost no chance of having costs awarded to them by the tribunal.

Have the Government Made Another Mistake on ET Fees

In the Judicial Review brought by Fox and Partners in the Court of Session in Scotland in respect of employment tribunal fees, the Lord Chancellor conceded that Equal Pay claims were type A claims for the purposes of the Fees Order because they are complaints in relation to a breach of the sex equality clause  in terms of section 66 of the Equality Act 2010. This is despite the Fees Order saying they were Type B claims attracting the higher fee on issue and hearing.  It was suggested this was a drafting error and Ministers would want to amend the Fees Order.

I think I may have spotted a further drafting error.  I recently chaired a working party for the Employment Lawyers Association responding to the ACAS consultation on amending paragraphs 15 and 36 of the code of practice on Discipline and Grievance following the EAT decision in Toal and another v GB Oils Ltd UKEAT/0177/13DM.  If you are interested, you can find our response here

It is necessary for the Chair of the Association to approve any response before it is submitted.  He approved our response but asked me whether a fee was payable to bring a claim under Section 10 of the Employment Relations Act 1999, where an employer refuses to allow a worker to be accompanied by a companion of their choice at a grievance or disciplinary hearing.  I knew the answer to that was “yes” but I couldn’t answer the follow up question which was what was the level of fee.  I always assumed it was a type A claim.

I went to the fees order and was very surprised to see the claim was not listed in Table 2 of Schedule 2 as a type A claim, attracting the lower fee of £160 on issue and £230 for hearing.

This means that an worker wishing to bring a claim under S.10 of the Employment Relations Act 1999 must pay an issue fee of £250 and a hearing fee of £950.

Bearing in mind that the remedy for breach is compensation of an amount not exceeding 2 weeks pay and a weeks pay has the usual maximum of £450, a worker will have to spend £1200 to get back £900.  Of course, if they succeed they should have their fees paid by the losing party, but this is not automatically the case.

But it is worse, as a result of the decision in Toal  we now know that the word “compensation” in S.11 (3) of the Employment Relations Act 1999 requires the worker to prove they have suffered actual loss and nominal damages may be appropriate where no actual loss can be proven.

Type B cases are meant to be the more complex and costly claims.  I cannot believe the Government assessed S.10 claims are complex and so more costly.  Currently, who is going to speculate £1200 to win a maximum of £900 in compensation?  The right under S.10 becomes meaningless.

So is this a further example of the rushed nature of introducing the legislation on employment tribunal fees last July leading to errors in drafting?  Will the MoJ agree to remedy the error in the same way as they did with Equal Pay claims?

NMW ‘naming & shaming’: Vince Cable gives hostage to fortune

You may by now have forgotten – always assuming you noticed in the first place – that, last Wednesday, Labour devoted one of their precious Opposition Day debates to the National Minimum Wage (NMW).  And you’d be in good company, for the entire Labour front bench seem to have done their best to forget it too.  And with good reason.

The most obvious reason is George Osborne’s brilliantly-timed NMW coup on Thursday evening, which seemed to catch shadow ministers not just napping but comatose.  And the real genius of Osborne’s strike was in crudely tossing aside the 15-year-old political pact that setting the NMW rate will be left to the Low Pay Commission (and, bar a few growls from the CBI, getting away with it).  For Osborne knew Ed Miliband couldn’t use his set-piece speech on the economy the following day to launch a counter-attack – “I’ll see your £7.00 per hour, George, and raise you £7.50 per hour”, perhaps – without the trade unions throwing their toys out the pram.

But even before Osborne launched his coup via Nick Robinson and the BBC, shadow work and pensions secretary Rachel Reeves, who kicked off Wednesday’s debate, had blasted both barrels of her shotgun through Labour’s own feet by launching a puerile and ill-informed ad hominem attack on business secretary Vince Cable, over his non-attendance at crucial votes on the then National Minimum Wage Bill in 1998.  An admirably restrained Cable initially declined to rise to the bait, but when he did it was both dignified and devastating:

Vince Cable: The Honourable Member for Leeds West [Rachel Reeves] made a great deal of the fact that, as she put it, the Conservatives opposed the national minimum wage and many Liberal Democrats opposed it. She speaks with all the self-confidence of somebody who was not here at the time.

Chris Bryant (Labour): You were and you didn’t vote.

Vince Cable: I did not particularly wish to raise this, but I am being asked personally to explain why I did not vote [in 1998]. It had a lot to do with the fact that my late wife was terminally ill at the time and I was in the Royal Marsden hospital. That is why my voting record at the time was poor on that and other issues.

As Isabel Hardman noted in a scathing Spectator blog post the following morning, “it’s not the first time someone has made the mistake of assuming that non-attendance at a vote has a sinister rather than sad explanation, but it rather blunted Labour’s attack on the Liberal Democrats” and was “all the more surprising given [Labour’s] recent rage over a Sun article describing Lucy Powell as ‘lazy’ when she had in fact been on maternity leave”.  Both Reeves and Chris Bryant later apologised to Cable.

For Labour and the hapless Reeves – who must surely be looking for a new researcher – it was all downhill from then on, and I’d be very surprised if anyone in Labour ever mentions this car crash of a debate ever again.  Cable was even able to parry Labour’s pledge to increase the civil penalties for non-compliance with the NMW (or ‘fines’, as shadow ministers wrongly insist on calling them) by confirming plans, first announced by the Prime Minister in November, to substantially increase the penalties from next month.

However, before sitting down Cable himself made a comment that I suspect may also come to be seen as something of a mistake.  Without having been pressed to defend the fact that only one employer has been ‘named and shamed’ for non-compliance with the NMW by his department since he introduced the practice in January 2011, the business secretary volunteered that “new guidelines for the naming and shaming process were issued to HMRC in October” – as indeed they were.  And he went on to say:

“There is also the question of due process.  Companies that are about to be named and shamed can appeal, and it is estimated that that process takes roughly 150 days.  I imagine that a significant number of cases would begin to emerge by the end of February; we can test that when the issue arises.”

The new guidance issued to HMRC in October under “revamped plans to make it easier to clamp down on rogue businesses” is certainly wider in scope than the original, clearly duff scheme.  According to the BIS press release at the time, “the revised scheme will name employers that have been issued with a Notice of Underpayment (NoU) by HMRC. This notice sets out the owed wages to be paid by the employer together with the [civil] penalty for not complying with minimum wage law”.  And, every year, HMRC issues some 700 NoUs.  So, were every employer issued with a NoU to be ‘named and shamed’ under the new scheme, then allowing for Cable’s 150-day due process we might indeed expect a first tranche of some 60 employers to be ‘named and shamed’ in late February or early March.

However, shortly after this revamp of the naming and shaming scheme came into force in October, the BIS employment relations minister, Jo Swinson, let slip on Twitter (in an exchange with the magnificent @HRBullets) that employers will not be ‘named and shamed’ via some kind of central, publicly-accessible register, as one might reasonably expect, but “through [BIS] press releases to maximise coverage” in “local [and] regional newspapers”.  So, either BIS will be issuing an awful lot of ‘naming & shaming’ press releases each month, or it will be releasing one or two press releases each containing the names of dozens of employers.  And, frankly, neither scenario sounds terribly likely to me.  Certainly, Jo Swinson didn’t take the opportunity provided by the Twitter exchange to confirm that all employers issued with a NoU by HMRC will be ‘named and shamed’ by BIS.

Whatever, as Vince Cable says, come the end of February, we will be able to test the issue.  And I will be very happy to be proven a cynic.

Postscript: Since posting the above, I have come across this written statement by Jo Swinson’s maternity cover, Jenny Willott, in the House of Commons yesterday in response to a PQ by Paul Maynard MP:

The revised NMW Naming and Shaming scheme which came into effect on 1 October 2013 made it easier to name employers that break national minimum wage law. By naming and shaming employers it is hoped that bad publicity will be an additional deterrent to employers who would otherwise be tempted not to pay the NMW. We anticipate naming employers very soon.

Has the Low Pay Commission jumped the shark?

It is a truth not previously acknowledged that one way to unite the TUC and CBI in outrage is to suggest that the Low Pay Commission has outlived its original purpose, and that control of the national minimum wage (NMW) rate might now be best reclaimed by the people we elect to run the country.

I know this because, late on Tuesday evening, after a day of ever more surprising media reports of machinations within the Coalition over a possible ‘inflation-busting’ hike in the NMW rate, I was impertinent enough to make such a suggestion on Twitter.

Within a few minutes, my tweet had prompted sharp responses from both Nicola Smith, Head of Economic & Social Affairs at the TUC, and Neil Carberry, Director of Employment & Skills at the CBI.  This in itself was intriguing, as neither Nicola nor Neil had previously exhibited any great inclination to respond to anything I might have said or written.  But what most tickled my interest was the degree of solidarity Nicola and Neil showed in seeking to pour a large bucket of cold water over my impertinence.

Every year since 1999, the Low Pay Commission has laid waste to a small forest in producing an inch-thick report on the NWW that is read by few if any outside a small circle of NMW policy geeks (and the handful of unfortunate civil servants charged with drafting the government’s response).  In my last job I had a whole shelf of these reports, and laid across a road they would easily have stopped a marauding tank.

But have these hefty reports, and the existence of the Commission itself, done much in recent years to improve the plight of the five million or so workers in the UK economy who now languish on low pay?  The Commission is, after all, the Low Pay Commission, not the Minimum Wage Rate Commission.

Well, with all due respect to the hard work and undoubted integrity of the individual members of the Commission, I’m not sure that low paid workers have been terribly well served by the Commission in recent years.  A succession of paltry, below-inflation NMW rate increases since 2009 have resulted in an hourly rate some 45 pence below what it would be if it had risen with the cost of living since June 2010.  The critical issue of enforcement of the NMW has been woefully neglected.  And where has the Commission been in debate about the shocking growth of in-work poverty?

How dare I even think such heresy! “Over time NMW workers have done better than both inflation AND wages”, retorted Neil Carberry.  However, as the Low Pay Commission itself noted in its 2012 report, “most of the real and relative increases in the minimum wage occurred as a result of the comparatively large up-ratings from October 2001 to October 2006. Since that time, the adult rate of the minimum wage has risen more or less in line with average earnings, but has lagged price increases”.  The largest up-ratings were in 2001, 2003 and 2004, and those relative hikes were entirely justified given the excessively cautious (i.e. low) rate at which the NMW was introduced.

Nicola Smith, meanwhile, was even more extravagant about the recent influence of the Commission: “without the LPC would we even still have a NMW?”  Well, yes, I’m sure we would Nicola, as I don’t think even Nick Clegg could have convinced his MPs, let alone his party membership, to tolerate abolition of the NMW itself – always assuming that the Liberal Democrats would have needed to take such a stand.  Any mooting of abolition by deep blue Conservative ministers would have faced strong internal opposition from MPs and think tankers such as Matthew Hancock, Guy Opperman, Robert Halfon and Ryan Shorthouse.  And, as of this week, Conservative ministers and MPs of all shades of blue are madly trying to outbid each other both in their regret for their party’s past opposition to the NMW, and in their personal enthusiasm for a substantial hike (of as much as £1.00 per hour) in the NMW rate now.

So, given where we are now, with all three main parties scrabbling to position themselves as the shoutiest champion of the NMW, what are the “very big risks to ending the Commission approach” that so alarm the TUC and CBI?  Apart from, that is, the terrible risk of the TUC and the CBI having a tad less direct influence on government policy.

Well, I’m not sure that I can see any significant risks. The Commission and its plodding, bipartisan approach were products of the excessive caution and timidity of the first New Labour government in relation to any policy that might possibly fetter corporate power.  And, in the early years of the NMW, that approach undoubtedly served a valuable function: to take the politics out of the NMW whilst it bedded in.

But to my mind the NMW is now safely cemented into the UK’s labour market policy architecture.  In the words of the Conservative pressure group, Bright Blue, “there is now a strong academic consensus that a sensible minimum wage does not cause unemployment.  Firms adapt well: reducing profits or pay differentials, or boosting productivity”.  And, armed with data, analysis and advice from civil servants, advisory bodies and political advisers, our elected politicians routinely take positions on, and make decisions about, any number of economic issues at least as consequential as what the NMW rate should be.  In short, the Low Pay Commission has – just like the Happy Days of my youth and Sherlock last weekend – jumped the shark.

It’s time to put politics back into the National Minimum Wage.

Tribunal fee remission: a very small fig leaf?

In response to widespread concern about the detrimental impact on access to justice of the employment tribunal fees regime introduced on 29 July last year, Coalition ministers have repeatedly claimed that low-income claimants will have their access to justice protected by the accompanying fee remission scheme.  In late October, for example, just days after the Ministry of Justice published provisional statistics indicating a sharp fall in the number of individual claims since July, the BIS employment relations minister, Jo Swinson, stated (in a letter to Maternity Action):

“The Government believes that all users of the tribunal system should make a contribution to the costs where they can do so, regardless of the type of claim.  Where claimants cannot afford the fees, the remission system ensures that nobody will be denied access to the tribunal.”

However, the  tribunal fee remission scheme, under which a claimant can receive full or partial exemption from the fee, is simply a revised version of the pre-existing County Court fee remission scheme, which in 2012 was condemned by Citizens Advice as “not fit for purpose” on account of its complexity and maladministration by HM Courts & Tribunals Service.  Under this revised scheme, any individual living in a household that has £3,000 or more in savings will not be entitled to any fee remission. This eligibility criterion applies to everyone, including those out of work.

And let’s not forget, the upfront fees introduced last July are substantial.  To issue and pursue a claim for unfair dismissal, for example, costs £1,200 (an issue fee of £250, and a hearing fee of £950).  Will summarily dismissed workers who have acted prudently to protect their family from sudden financial shocks by building up moderate savings of just £3,000 want to risk £1,200 of those savings on a tribunal claim for unfair dismissal, when there is no guarantee that the employer will repay the fees even if the claim is ‘successful’?  As recent government research has shown, half of the workers awarded compensation by a tribunal do not receive their award in full, and there’s no reason to think that those employers who fail to pay an award will be any more forthcoming when it comes to the repayment of hefty fees.

Furthermore, the upper income limits, above which claimants will not receive even partial remission of the fees, are set extremely low.  An analysis by economist Howard Reed, commissioned by the TUC, shows that “even among households where someone is earning just the national minimum wage, fewer than one in four of these workers will receive any [fee remission] and will have to pay the full fees”.  Reed’s analysis further suggests that just one in nine disabled workers, and one in 20 workers aged 50-60 (i.e. those most at risk of age discrimination) would qualify for full fee remission.

So, has the fee remission scheme protected access to an employment tribunal since the introduction of fees in July?  Last week, I stumbled across a Ministry of Justice response to a Freedom of Information request, published on-line by the Ministry in November (FoI 86412) but, as far as I can tell, not otherwise reported by whoever it was that submitted the request.  This states that, of “the 852 employment tribunal fee remission applications submitted nationally between 29 July and 11 November, 672 were rejected”.  That is a rejection rate of 79 per cent.

In other words, during the first three months of the fees regime, just 180 tribunal claimants received full or partial fee remission.  And we know that, in the same period, there were some 4,500 tribunal claims by individual workers (i.e. single claims; I have left multiple claims out of this analysis).  So, only 22 per cent of all single claimants applied for fee remission, and just four per cent of all single claimants received full or partial fee remission.  Yet as recently as September 2013, in its final Impact Assessment on the revised fee remission scheme, the Ministry of Justice suggested that 31 per cent of all claimants would be eligible for full (25 per cent) or partial (six per cent) fee remission.

Furthermore, the figure of 4,500 individual claims in the three-month period August to October is substantially lower than the average number of such claims prior to the introduction of fees.  But for the introduction of fees, we could have expected about 13,200 single claims in that period.  So a mere 1.4 per cent of the individual claimants we might have expected in the first three months of the fees regime received full or partial remission of the fees.

Whichever way you look at it, the fee remission scheme didn’t do a great deal to preserve access to justice in the first three months of the fees regime.  That said, the fee remission application rate may have risen in subsequent months, and the rejection rate may have fallen, as legal advisers became more familiar with both the fees regime and the fee remission scheme.

Well, maybe – time will tell.  But there’s certainly no room for the sort of ministerial complacency exhibited by Jo Swinson in October.  If the numbers don’t improve significantly, and soon, the fee remission scheme is going to look a very small fig leaf.