ET fees: BIS gives ad hoc succour to Ministry of Injustice

Sitting in Court 3 of the Royal Courts of Justice last week, I was surprised to hear Susan Chan, counsel for the Lord Chancellor in his defence of UNISON’s judicial review of the ET fees regime introduced in July 2013, calling in aid a new, specially-produced statistical analysis of ET claims by the Department for Business, Innovation & Skills (BIS). For I’d always got the impression – not least from a series of tweets by the BIS employment relations minister, Jo Swinson – that BIS ministers regard ET fees and their impact on access to justice as a matter not for them, that their own hands are squeaky clean. But here was BIS, proactively aiding and abetting the Ministry of Injustice in the High Court.

This BIS statistical analysis was so new that it hadn’t been included in Ms Chan’s detailed grounds of defence, let alone published. Indeed, Ms Chan wasn’t even able to produce a copy of it in court for the judges and UNISON’s counsel, Karon Monaghan, to examine. However, Ms Chan gave a solemn undertaking that BIS would publish the analysis at the same time she submitted a copy to the Court.

And so it was that, just before 6pm on Friday evening, BIS published its ad hoc statistical analysis.  Based on findings from the Survey of Employment Tribunal Applications (SETA) 2013, published in June, the eight-page document sets out “further analysis based on the [SETA] survey dataset on the characteristics of claimants who would have been required to pay a fee at the time of their claim, if the current fee regime had been in force.”

Most of the document’s eight-pages are taken up with guff demonstrating the reliability of its few findings. If you think it’s about time you learnt about 95% confidence interval lower and upper bounds, then the BIS document is as good a place to start as any other. The first of these findings is that 75 per cent of the single claims in the SETA sample group would have attracted the higher Type B fees (a £250 issue fee, and a £950 hearing fee), and only 25 per cent the lower Type A fees (a £160 issue fee and a£230 hearing fee).  And the document goes on to give the following breakdown of cases in the sample group, by fee-type and gender.

Women Men
All cases 43% 57%
Type A fees 36% 64%
Type B fees 45% 55%

It’s not entirely clear to me how or why Ms Chan thinks these figures support her defence against UNISON’s case that the fees regime is indirectly discriminatory to a protected characteristic group such as women (one of the two grounds of UNISON’s claim for judicial review, the other being that the fees regime breaches the principle of ‘effectiveness’), but the overall 25/75 breakdown by fee-type is certainly a very interesting finding. Because it’s pretty much the exact opposite of the breakdown of cases by fee-type that the Ministry of Injustice projected in May 2012, in its final regulatory impact assessment of the fees regime. (Please note that my term ‘pretty much’ is not the same as ‘within a 95 per cent confidence interval’).

That Ministry of Injustice projection – set out in paragraph 4.10 of the RIA, and based on the allocation of cases by HMCTS into short, standard and open tracks – was that 64 per cent of cases (i.e. single claims + the relatively small number of multiple claimant cases) would attract the lower Type A fees, and 36 per cent the higher Type B fees.

So who is right? If the Ministry was right with its 64/36 projection, then the BIS ad hoc statistical analysis, and its breakdown of claims by fee-type and gender, is quite possibly nowhere near as reliable as BIS claims. Indeed, it could well be a pile of pants. But if BIS is right with its 25/75 breakdown, then the Ministry misled Parliament (and everyone else) with its projection. Ms Chan’s job is now done, at least until the judicial review progresses to the Court of Appeal, but maybe now that BIS has made ET fees its issue too the previously elusive Ms Swinson can give us a few answers. At the very least, BIS should now offer an explanation of why it chose to overlook this glaring discrepancy when handing its findings over to the Ministry, and when publishing them in such unseemly haste on Friday evening.

And when she’s about it, perhaps Ms Swinson can also tell us when Autumn ends. In her detailed grounds of defence, Ms Chan informed Lord Justice Elias and Justice Foskett that the greatly anticipated review of the ET fees regime by the Ministry of Injustice (perhaps now with the help of BIS) will “take place this Autumn”. Maybe they operate to a different seasonal structure in government, but there are only 58 shopping days left until Christmas. Which in my house is not an autumnal event. And they haven’t even started the review yet.

Perhaps they are secretly hoping that Lord Justice Elias and Justice Foskett will save them the trouble.


How should we deal with ex-offenders?

Public debate about whether professional footballer Ched Evans should return to his job as a professional footballer following his release from prison for rape, provides a topical example of a wider problem. Over 9.2 million people were known to the police with a record on the police national computer in 2009/10: around 15% of the UK population. Research by Working Links suggests that three quarters of all employers would not employ anyone with a criminal conviction and that 74% of all newly released prisoners remain jobless. In relation to the purpose of employment in the wider criminal justice system, the CIPD found that

…employment is the single most important factor in reducing reoffending. Of the 144 HR professionals who have knowingly employed ex­offenders, only 8 have reported cases of reoffending. In addition, two­ thirds of HR managers state that employing ex­offenders has been a ‘positive’ experience.

Whilst many espouse the view that once locked up, the key should be thrown away, in 99% of cases this will simply not happen. This blog is not specifically about whether Ched Evans should be allowed to return to the game, or indeed on the necessity or desirability of those who have been convicted of very serious offences being back in the public eye,  there is enough comment elsewhere on this. What this is intended to address is how we deal with ex-offenders as a society. There is no substitute for Working Links’s research, but some of the most interesting parts of the paper deal with the reasons for employers either being reluctant, or refusing outright to employ ex-offenders.

In most cases, if not the lowest down on the list, a direct bad experience with ex-offenders was usually well towards the bottom. Of those who had knowingly employed an ex-offender, only 7% indicated a consistently “worse than expected” performance. Generally however, most employers expressed the view that they would be more likely to employ ex-offenders if there was more support and information for employers during the recruitment process and safeguarding thereafter.

What is worth taking from the majority of employers’ experience of employing former convicts however, is that the majority of the time, negative perceptions are not backed up by actual experience. The low employment rate amongst former offenders is undoubtedly a direct costs to the public purse in respect of jobseeker’s allowance, but also in respect of increased indirect costs by a higher level of reoffending. Ex-offenders who had a job to go to on their release from prison had  45%reoffending rate compared to a 58% overall: the lowest rate of reoffending of all of the groups for which employment status on release was recorded.

It is undoubtable that increased employment for ex-offenders is desirable, both from a societal self-interest point of view, as well as a more altruistic one. An interesting proposal has been the implementation of an “Offender Discrimination Act”, presumably along the same lines as the Equality Act, although the political will for this is never likely to be sufficiently strong to see any progress through Parliament.

There is limited protection in the form of section 4 (3) (b) Rehabilitation of Offenders Act 1974 which provides:

a conviction which has become spent or any circumstances ancillary thereto, or any failure to disclose a spent conviction or any such circumstances, shall not be a proper ground for dismissing or excluding a person from any office, profession, occupation or employment, or for prejudicing him in any way in any occupation or employment…

This provides very little comfort to those whose convictions are not spent, or those without qualifying service (caselaw on section 4(3) found it was an automatically unfair reason for dismissal but those employees had qualifying service and there have been no cases yet on the extent of any exception to section 108 (1) Employment Rights Act 1996). Bearing in mind the very real problems that unemployed offenders cause, perhaps this is something that needs addressing as part of a more in depth consideration of the purpose of the criminal justice system. I suspect there are doubts that vast numbers of unemployed ex-offenders are a good thing.


UPDATE: Jamie Oliver has also hit the headlines since I wrote this post. His restaurant Fifteen, which donates all profit to charity, has taken on an apprentice who was previously sentenced to 4 years in a young offenders institution for rape of a child under 13. A representative of the restaurant has been quoted as saying.

…we decided that as he had served his sentence he should be allowed a place on the programme.  He has so far been an excellent student.

Earth calling Remission Control … come in, Remission Control … is anyone there?

Back in January, I noted on this blog that the tribunal fees remission scheme was providing ministers with a very small fig leaf as they sought to fend off increasingly alarmed suggestions that the hefty employment tribunal fees introduced in July 2013 were blocking workers’ access to justice. And today we learned – from the Ministry of Justice’s reply to a written PQ by shadow business secretary Chuka Umunna – that just 3,913 ET claimants (a mere six per cent of all claimants) were granted fee remission between 29 July 2013 and 30 June 2014 [but see also Postscript, below].

As the super-brained and hyper-cool Michael Reed of the Free Representation Unit was first to point out – please note that Michael and I were separated at birth, but he had the more privileged upbringing – the Ministry’s reply raises a number of questions.

The first being, why did it take the Ministry three months to answer the PQ, which was tabled by Umunna on 15 July? It’s not as if the PQ was especially complicated. It simply asked how many ET fee remission applications have been made and granted since 29 July 2013, and at what administrative cost. You’d think a cost-cutting Justice Secretary like Chris Grayling would have made sure he had such data at his fingertips.

The second question – posed by my long lost twin in his blog post – is: why did grants of fee remission increase so substantially from March this year, despite the number of ET cases (and claims) continuing to plumb the depths? From just 144 in December 2013, and 114 in February 2014, grants of remission shot to 753 in March, and 754 in May. Did awareness of the fee remission scheme (and so the number of applications) suddenly increase? Or did HMCTS’s decision-making suddenly become less severe? We simply cannot say, because we don’t have the necessary data on fee remission applications.

And that takes us to a third question: why was the Ministry unable to say, in its reply to Umunna’s PQ, how many fee remission applications were made between 29 July 2013 and 30 June 2014?

The long answer to this question is set out in my multi-part post on this blog in February. In a nutshell, in 2013 the Ministry of Justice shelled out some £2m on a shiny new ET fees & remission database with, er, no reporting tools. That is, an ET fees & remission database incapable of producing any basic data such as the number of fee remission applications made. And, as well as pocketing £2m of hard-working taxpayers’ dosh, the company that delivered this duff database – Jadu Ltd – got nominated for an award. Did someone mention justice?

So perhaps the most shocking revelation of the Ministry’s reply to Umunna’s PQ is that, 15 months after Jadu’s £2m ET fees & remission database went live in late July 2013, those basic reporting tools still don’t exist (or, at least, have “not yet been assured to sufficient standards”). Who the **** in the Ministry is overseeing this project? Clearly not the same minister or official overseeing the legal aid budget.

And the last question is, how does Michael always get his blog post out first? Do they not have any actual work to do at the Free Representation Unit? You know, representing all those vulnerable workers subjected to wage theft by rogue employers in their tribunal claims. Oh, hang on …

Postscript (21 October): Today we learned, from the Lord Chancellor’s evidence to the judicial review of his ET fees regime in the High Court, a few details on remissions that the Ministry of Justice somehow managed to leave out of its reply to Chuka Umunna’s PQ. It seems that just 2,178 (56 per cent) of the 3,913 remissions granted between 29 July 2013 and 30 June 2014 were to individual (i.e. single) ET claimants – the other 1,735 remissions being to claimants in multiple claimant ET cases (1,530) and to applicants to the EAT (205). I’m somewhat surprised that so many remissions have been to claimants in multiple claimant cases, but let’s leave that point for another day. For we also learned that the figure of 2,178 remissions granted to single claimants includes 232 remissions of the hearing fee.

While we cannot be certain without seeing more detailed figures, it seems reasonable to assume that very few if any of the 232 claimants granted remission in relation to the hearing fee will not also have had remission for the issue fee. In other words, 232 those remissions were double counted in the total of 2,178 claimants. Which means only 1,946 (7.7 per cent) of all 25,284 single claimants obtained some remission (full or partial) in relation to their case.

Now, 7.7 per cent is a long, long way below the 31 per cent predicted by the Ministry of Justice in September 2013, in its final impact assessment of the remission scheme, even before we allow for the much greater fall in ET claim/case numbers than the Ministry anticipated. In 2012/13 there were 54,704 single claims, and it is against such figures that grants of remission should really be judged, as that is (roughly) the number of single claimants we could have expected in the 12 months up to June 2014 were it not for the deterrent effect of fees. That is, only 3.6 per cent of those who might have been expected to make an ET claim in the 12 months up to June 2014 had their access to justice protected by the fee remission scheme.

The ET fees remission scheme has so far been a very small fig leaf.

New parlour game: hunt the ET fees review

For much of this year, whenever the justice-denying impact of the employment tribunal fees introduced by the Ministry of Justice in July 2013 has been raised in public with business secretary Vince Cable or BIS employment relations minister Jenny Willott (covering Jo Swinson’s maternity leave), they have shielded themselves from any criticism by suggesting that the fees regime is under review.

For example, at a conference of employment lawyers in April, just weeks after the release of the first full set of quarterly figures showing a dramatic fall in the number of cases, Jenny Willott reportedly deflected questions from the floor by stating that “the level of fees” will be one of several issues considered under a review of the fees regime.

And, in the House of Commons in mid-July, just two weeks before the first anniversary of the fees regime coming into force, Vince Cable responded to an intervention by Labour MP Debbie Abrahams, drawing attention to the drop-off in the number of cases in the months up to 31 March, by stating:

“Yes, I am aware of a substantial fall in numbers. There are several reasons, which we are currently investigating, one of which could be connected with fees. Another reason is that earlier legislation sought to introduce an arbitration mechanism through ACAS as a first port of call.” (Hansard, House of Commons, 16 July 2014, col. 909)

Let’s leave aside the fact that the system of early conciliation by Acas to which Dr Cable was referring did not come into force until 6 April, so played no part in the dramatic fall in tribunal cases in the six months up to 31 March, and focus on that phrase “we are currently investigating”. Not ‘we will consider as part of a review at some point in the future’, but “we are currently investigating”.

The MPs who listened to Dr Cable that day in July, and anyone who subsequently read the Hansard record of the debate, could be forgiven for concluding from this that the government (or, at least, that part of the government in which Dr Cable includes himself) has been ‘investigating’ the tribunal fees regime for at least the last three months.

Except that … it hasn’t. At least, not according to Jo Swinson, who returned from maternity leave to her role as BIS employment relations minister over the summer.

Asked on Twitter last Thursday to confirm whether she agrees with Liberal Democrat Policy Paper 120 – adopted at the party’s conference in Glasgow earlier in the week – when it states that the “high level of tribunal fees presents too much of a barrier” to justice, Ms Swinson dodged the question but volunteered that the “lead department on this is [the Ministry of Justice] not BIS so they will be launching the review [of the fees regime]”.

Er, they will be launching the review?

Yes. Asked to clarify whether her earlier tweet meant that the government’s review of the fees regime is in progress or has yet to start, on Friday Ms Swinson tweeted confirmation that the review has “yet to start”. And, asked to say when it might start, Ms Swinson declined to answer but suggested the question be directed to the Ministry of Justice.

So, contrary to the statement made by Dr Cable to the House of Commons in mid-July, no one in government is yet investigating the “substantial” fall in tribunal cases since July 2013 (at least, not in any meaningful sense). And this despite just about everyone outside government – including the CBI and the Federation of Small Businesses – having concluded that the dramatic fall in the number of cases is entirely due to the fees being set far too high.

Ministers at the Ministry of Justice may start ‘investigating’ these matters at some point in the future, but if they have a timetable for doing so they don’t appear to have shared it with the BIS employment relations minister.

Which begs the question: what the **** are they waiting for? It’s not as if there is that much to ‘investigate’. Fees came in, and the number of cases dropped off a cliff that no one in government saw coming. End of.

It’s perhaps worth adding that, according to the answer to a written question in the House of Lords given by justice minister Lord Faulks, the Ministry was “currently finalising arrangements for the timing and scope of the review” as long ago as 24 June. Almost four months have passed since then. What are they doing? It’s not as if they are being asked to rerun the Hutton Inquiry.





Hard Labour’s guide to UKEMPLAW election pledges

May of next year brings an election. Elections bring manifestos. Manifestos bring pledges. Some of them relate to what (over)-excites us here at Hard Labour: UK Employment Law. In the run up to the election we will be maintaining a page dedicated to Employment Law-related pledges. You can find it here or by clicking the link at the top of the page.

As always we welcome your input in keeping it as comprehensive and up to date as possible. To be included information must meet three criteria:

  • It must be an explicit pledge (e.g. we know Labour does not want to repeal the Human Rights Act 1998, but the table stays blank until there is a specific commitment on the issue);
  • The pledge must be officially made by or on behalf of the party; and
  • It must be available on the internet so that our readers can check it for themselves.

Have your say on the Small Business, Enterprise & Employment Bill

After a slow start – nothing much happened until early 2011 – the Tory-led Coalition has kept us employment policy wonks pretty busy over the last four years. We’ve had one significant piece of primary legislation – the Employment & Regulatory Reform Act 2013 – and several pieces of secondary legislation providing for extensive reform of both employment law and the employment tribunal system. We’ve had an overhaul of the employment tribunal rules of procedure, some tinkering (yet to come fully into force) with the law relating to parental leave, and a major consultation on how to tackle the proliferation and abuse of zero-hours contracts. And, last but not least, we’ve had the introduction of hefty, upfront fees for tribunal claimants that have demolished access to justice on workplace rights.

However, with the Tories and Liberal Democrats having arranged for the nation to enjoy a full five years of coalition government, irrespective of what the nation might want, ministers have decided there’s still time for a tad more employment law reform.

Well, I say ‘reform’, but the handful of clauses on employment law in Part 11 of the Small Business, Enterprise & Employment Bill – which starts its committee stage in the Commons on 14 October – are more tidying-up than fundamental change. And at least three of them are likely to make little if any practical difference, however sensible and welcome they might seem at first glance.

Given the scope and arguably more fundamental nature of the rest of the 142-clause Bill, it seems unlikely that these employment provisions will receive more than limited scrutiny by MPs and peers. But the Committee of MPs that starts work next week is keen to receive external input, and if you have the time and the inclination you can submit your views and comments up until 6 November.

I urge you to do so. And, for what it’s worth, the following is what I have submitted to the Committee, covering clauses 136, 138, and 139.

Clause 136: Financial penalties for non-payment of an ET award

Clause 136 provides for the imposition of a financial penalty of up to £5,000 on an employer who fails to pay a tribunal award (or Acas-conciliated settlement), the aim being to discourage such non-payment.

During my time at Citizens Advice (2000 – 2013), I researched and wrote three reports on the widespread non-payment of tribunal awards: Empty justice (2004); Hollow victories (2005); and Justice denied (2008). So I warmly welcome the financial penalty mechanism provided for in clause 136, not least because it is pretty much the same mechanism that I proposed to ministers in 2012, during the passage of the then Enterprise & Regulatory Reform Bill. Ministers were not (sufficiently) impressed by the idea then, but pressure from the opposition front bench did lead to BIS minister Jo Swinson commissioning further research on the issue (replicating the research commissioned by the Ministry of Justice, in direct response to Justice denied, in 2009). And the damning findings of that BIS-commissioned research have evidently led to a ministerial change of heart.

Some have been quick to note that clause 136 would not solve the problem of non-payment of awards and Acas settlements. Indeed it would not, but then no single measure would, as the problem is extremely complex. There are other steps that BIS and the Ministry of Justice could and should take, such as ‘naming & shaming’ those employers who fail to pay up. But, by creating a meaningful financial disincentive to non-payment of an award, clause 136 could be expected to at least reduce the rate of non-compliance.

Except that, the kind of relatively low-value claim for e.g. unpaid wages, holiday pay and/or notice pay that has in the past often culminated in a hollow victory for the claimant when the employer fails to pay up, is also the very kind that has been eviscerated by the hefty, upfront tribunal fees introduced by the Ministry of Justice in July 2013.

Not surprisingly, vulnerable workers subjected to wage theft by a rogue employer have proven to be reluctant to throw up to £390 of good money after bad. So the number of claims for unpaid wages etc. has tumbled, from an average of 4,587 per month in the nine months immediately before the introduction of fees, to an average of just 1,073 in the nine months up to June 2014.

In short, thanks to the tribunal fees introduced in July 2013, the longstanding problem that clause 136 seeks to (partly) address is no longer quite the problem that it was. So, while BIS might now seek credit for trying to close the stable door, most of the horses have been galloping around the fields since July 2013, and will continue to do so until such time as the tribunal fees regime is substantially reformed.

Clause 138: Maximum financial penalty for breach of the NMW

Clause 138 provides for an increase in the maximum financial penalty that can be imposed by HMRC for breach of the national minimum wage, from £20,000 per employer (technically, £20,000 per Notice of Underpayment), to £20,000 per underpaid worker.

On the face of it, clause 138 is welcome. Fifteen years after its introduction, there can be no excuse for not paying the NMW. But the practical impact of clause 138 would be negligible, for two reasons.

Firstly, as the average underpayment (and penalty imposed) per worker was just £205 in 2013-14, the number of employers who pay even the current maximum penalty of £20,000 is small: just 52 (eight per cent) of all 652 employers penalised in 2013-14. So the number liable to receive a penalty anywhere near the proposed maximum of £20,000 per underpaid worker would be even smaller.

Secondly, HMRC already can in effect impose a penalty of up to £20,000 per underpaid worker, by the simple expedient of issuing more than the normal one Notice of Underpayment to the employer. This practice was adopted in March 2014, when the penalty percentage was increased from 50 per cent to 100 per cent of the total underpayment, and the maximum penalty was increased from £5,000 to £20,000. (I am not aware of any published figure for the number of employers issued with more than one Notice of Underpayment since March 2014, but the Minister may be able to provide that figure to the Committee).

In short, all that clause 138 would do is align the statutory power to set the maximum penalty with the practice adopted by HMRC in March 2014 (in order to meet the Prime Minister’s announcement in November 2013 that penalties would be both increased and imposed on a ‘per worker’ basis). According to the associated BIS Regulatory Impact Assessment, this would save HMRC some £250,000 per year in administrative costs associated with serving a small number of employers with more than one Notice of Underpayment.

However, that would be the sum total of the impact of clause 138. And, as it is not clear from the Regulatory Impact Assessment how HMRC (or BIS) arrived at the total costs figure of £250,000, even that figure might well be an over-estimate.

Clause 139: Banning exclusivity clauses in zero-hours contracts

According to a BIS facts sheet on the Bill, clause 139 would “make exclusivity clauses in zero-hours contracts invalid and unenforceable,” the aim being to address the abusive use of zero-hours contracts.

Such exclusivity clauses – which prevent an individual on a zero-hours contract from working for a second employer, even when no work is on offer from the first – are easily labeled as unfair. But even if clause 139 achieved its aim of making such clauses “invalid and unenforceable” – a rather large ‘if’ – it would still have little if any impact on the abusive use of zero-hours contracts, for the simple reason that such exclusivity clauses are far from essential to that abuse.

In practice, all that an abusive employer has to do is let it be known that taking work with another employer will result in no further work being offered. Employment law specialist Mark Tarran has put it this way:

Zero-hours contracts before [clause 139]: “If you work anywhere else you will be in breach of contract and I won’t give you any more work.”

Zero-hours contracts after [clause 139]: “If you work anywhere else you will not be in breach of contract but I still won’t give you any more work.”

It is worth noting that, according to BIS, only 125,000 – about one in ten – of the estimated 1.2 million zero-hours workers have an exclusivity clause in their contract. And why would employers not have bothered to insert such a clause into nine out of ten zero-hours contracts? They didn’t, because they don’t need to. Take away the exclusivity clause, and the worker is still on a zero-hours contract, with no guarantee of work from one week to the next. And that is what makes them vulnerable to abuse.

To my mind, zero-hours contracts are best viewed as one (very nasty) symptom of a killer disease: the abuse of vulnerable workers by exploitative employers. That disease has become more prevalent and more virulent in recent years. But treating a symptom will not cure the disease, even if it makes the doctor feel more comfortable.

[Postscript: my submission has now been published by the Bill Committee]