At remission control, the lights are on but nobody’s home

Previously on this blog, I have examined parts of a rather grand dismissal of concern about the impact of ET fees by the Parliamentary Under-Secretary of State for Justice, Shailesh Vara. Responding to a question by Diana Johnson MP, in which Ms Johnson noted the drop in ET sex discrimination claims of some 84 per cent since July 2013, Mr Vara said:

The situation is a lot more complex than the honourable Lady makes out. First and foremost, anyone who does not meet the financial criteria has a waiver and can go to court. Secondly, there have been a lot of pre-determinations by Acas. Employment is going up and there are fewer applications. There are a lot of factors and she does herself no credit by simplifying matters.

In this post I’m going to focus on the hapless junior minister’s reference to what he calls ‘a waiver’, but which most of us know as fee remission.

Now, as The Smiths sang, it is easy to laugh and to hate, but it takes guts to be gentle and kind. So let’s be gentle and kind to Mr Vara, and recognise that – terminology aside – what he says on fee remission is all of a piece with what other ministers have said on many occasions. Here, for example, is business secretary Vince Cable in November 2011, during the speech in which he announced the Coalition Government’s intention to exploit a legal power slipped through by Labour ministers in 2007, in order to shamelessly introduce ET fees without any parliamentary debate on the principle of doing so:

I want to make it very clear that for those with a genuine claim, fees will not be a barrier to justice. We will ensure that there is a remissions system for those who need help.

And, most recently, here is BIS minister Baroness Neville-Rolfe in the House of Lords earlier this week (during debate on the Small, Business, Enterprise & Employment Bill):

It is important to emphasise that the Government have been very careful to ensure that fee waivers are available for those people of limited means in order that they are not excluded from seeking redress through tribunals.

Unfortunately, anecdotal evidence from employment law practitioners, and the very limited amount of statistical data released by Mr Vara’s Ministry of Injustice to date, indicates that fee remission has done very little indeed to protect the access to justice of “those of limited means” since July 2013. As described elsewhere on this blog, until this week pretty much the only published data was that on grants of remission set out in the Ministry’s partial reply in October last year to a parliamentary question by shadow business secretary Chuka Umunna. Together with a bit more information on grants of remission included in the written evidence of a Ministry official in defence of UNISON’s second application for judicial review of the fees regime, that PQ reply told us that just 1,946 (10.4 per cent) of all 18,660 single claimants in the 11-month period 29 July 2013 to 30 June 2014 obtained some remission (full or partial) in relation to their case.

However, this week, in reply to a further parliamentary question by shadow BIS minister Ian Murray, the Ministry provided figures on grants of remission for July to December 2014. This tells us that there were 3,459 remission grants to single claimants in that period. However, we know from the breakdown given in the Ministry official’s evidence to the High Court that some 10 per cent of those grants will have been in relation to the appeal fee. And as a claimant granted remission for the appeal fee is also very likely to have received remission for the issue fee, those grants are double-counted. So we need to reduce the figure of 3,459 by 10 per cent, to 3,113. (Yes, the ’10 per cent’ may have gone up or down in recent months but, as there’s no way of telling from the Ministry’s reply, let’s just run with it).

I imagine Mr Vara would want us to dwell on the fact that, applying this 10 per cent reduction to the most recent quarter for which both the ET claim and remission grant figures are available – July to September 2014 – about 1,400 (33 per cent) of the 4,252 single claimants obtained full or partial fee remission. Which is a lot more respectable than the 10.4 per cent figure above.

To my mind, there are three possible explanations of this increased respectability: the number of remission applications has increased in recent months; or the Ministry’s decision-making has become less severe in recent months; or the extent of double-counting of claimants granted remission in respect of both the issue and the appeal fee has increased in recent months.

Indeed, we do know that the Ministry relaxed the evidence requirements for fee remission applications at the end of June 2014, and we can expect that to have increased the success rate, even if only slightly. And I would’t be surprised if the extent of double-counting has increased, but we won’t know until the Ministry provides a breakdown of remission grants to single claimants by issue fee and hearing fee.

Unfortunately, we also have no idea how many applications for fee remission were made, and how many were refused, in any of these time periods, because the Ministry of Injustice paid some £2m for a new ‘ET fees & remission’ database that, thanks to a lack of functional reporting tools, has yet to produce any reliable data, almost 18 months after it went live on 29 July 2013. (The above figures on remission grants are taken from a separate, finance system database). It seems we have to wait at least until publication of the next set of quarterly tribunal statistics, in early March, for the first figures on fee remission applications, grants, and refusals from that database.


Whatever, the latest figures on remission grants are more meaningfully judged not against the actual number of claims in that period, but against the number of claims we might have expected to see, had fees not been introduced in July 2013. In my previous post on the other parts of Mr Vara’s reply to Diana Johnson, I set out two alternative (but ultimately very similar) projections for the number of single claims we might have expected to see in 2013/14.

Applying the most recent remission grant figures (for the six months July to December 2014) to the average of those two projections, we get a figure of 12.4 per cent of the single claimants we might have expected over a full year obtaining remission in relation to their case. Which is not so respectable, and certainly still well below the 31 per cent that the Ministry predicted in late 2013, in its final impact assessment of the (revised) remission scheme.

So, as with the rest of Mr Vara’s reply to Diana Johnson, the Parliamentary Under-Secretary of State for Justice does himself no credit by claiming that “anyone who [meets] the financial criteria has a waiver and can go to court”. The fee remission scheme appears to be protecting access to justice for only one in eight of the workers we could expect to be issuing a (single) tribunal claim, had fees not been introduced.

Which is entirely to be expected, given the complexity and narrowness of the eligibility criteria – the fee remission application form and explanatory notes run to 30 pages. Perhaps most significantly, any claimant in a household which has been prudent enough to build up modest savings of £3,000 or more will not qualify for any remission. So much for all those ministerial speeches about the need for people to take personal responsibility and put money aside for rainy days. If you and your partner have saved up £4,000 to help with the cost of the baby you’re soon to have, and then your employer unlawfully selects you for redundancy because you are pregnant, you’re probably not going to risk £1,200 of those precious savings pursuing a tribunal claim.

Finally, if you’re wondering why I haven’t included a nice little graph charting the number of remission grants in each month from July 2013 to December 2014, it’s because the figures for July to December given by the Ministry in its reply to Ian Murray are not compatible with the figures for the 11 months up to June 2014 given by the Ministry in its reply of 15 October to Chuka Umunna. The former include grants in multiple claimant cases (just 31 in six months), whereas the latter include all the claimants in multiple claimant cases (1,530 in 11 months), though we only know this from the Ministry official’s evidence to the High Court.


The complex life of a Parliamentary Under-Secretary of State for Justice

Unlike his boss, the book-banner and serial law-breaker Chris Grayling, junior justice minister Shailesh Vara is rarely seen or heard in public. But every now and then he pops up in the House of Commons to deny that the dramatic decline in employment tribunal cases since July 2013 is more than tangentially related to the ET fees regime introduced by the recidivist Grayling in, er, July 2013. Most recently, on 16 December, during the ‘topical questions’ session immediately following oral justice questions, the Parliamentary Under-Secretary of State for Justice grandly swatted away a question from Labour MP Diana Johnson:

Diana Johnson: Since the Government introduced employment tribunal fees, there has been a drop of 84 per cent in the number of women who have been able to bring discrimination claims. Does the Minister accept that, because of the up-front fees of £1,200, many women are being denied justice under his Government?

Shailesh Vara: The situation is a lot more complex than the honourable Lady makes out. First and foremost, anyone who does not meet the financial criteria has a waiver and can go to court. Secondly, there have been a lot of pre-determinations by Acas. Employment is going up and there are fewer applications. There are a lot of factors and she does herself no credit by simplifying matters.

We might ask just how much credit the PUSS for Justice does himself by wrongly referring to fee remission as ‘a waiver’, to the tribunal as the ‘court’, to Acas early conciliation as ‘pre-determination by Acas’, and to claims/cases as ‘applications’. But that would be harsh. Since joining the Ministry on 7 October 2013, Mr Vara has had only 15 months in which to master his complex brief. And he’s only a solicitor.

So, let’s just concentrate on the “lot of factors” that make the situation so complex. But before we do so, let’s remind ourselves of the situation, which is that, immediately following the introduction of fees on 29 July 2013, the number of new ET cases (single claims/cases + multiple claimant cases) fell off a cliff, and in recent months has settled at about one-third of the pre-fees level. Here’s a chart with which you may be familiar (so, to keep your interest going to the next paragraph, I’ve changed both the colours and the chart style).


So, what might be the “lot of factors” explaining the fall in ET case numbers shown in this chart?

Possible Factor #1: “There has been a lot of pre-determination by Acas”

It is indeed true that a system of early conciliation of potential ET claims by Acas came into force on 6 April 2014. And, as that system was intended to reduce the number of ET claims/cases, it is fair to say that the picture does get a bit complicated from 6 April 2014 onwards.

So, let’s just ignore the ‘new case’ figures for the months April to September 2014. That way, we can dispense with Mr Vara’s Possible Factor #1 entirely.

And, whilst we’re at it, let’s ignore the three months July to September 2013, which saw a big spike in July as claimants and claimant representatives lodged claims earlier than they would have done in order to beat the introduction of fees, followed by a compensatory cliff-like drop in August and September. Such an atypical period does not really help us with explaining the shape of the chart above.

That leaves us with the six-month period 1 October 2013 to 31 March 2014, otherwise known as Q3 and Q4 of 2013-14, to compare with earlier periods. And, as the number of multiple claimant cases is relatively very small, let’s also focus on single claims/cases. As noted elsewhere on this blog, this is in any case the measure of ET claims favoured by the Ministry of Injustice itself in the High Court, in the two unsuccessful applications for judicial review of the fees regime brought by trade union UNISON.

Possible Factor #2: “Employment is going up and there are fewer applications”

What Mr Vara was trying to say here, I think, is that the economy has been picking up in recent years, so the number of ET claims/cases was already in decline before the introduction of fees. And it’s certainly true that the number tends to rise during times of economic crisis, and decline when the economy is doing better. So this is a thesis not as patently daft as Mr Vara’s ‘pre-determination by Acas’.

Now, unemployment has been declining since October 2011, when it peaked at 2.7 million. So we might expect the number of ET cases to have been declining from about the same time. And – lo! – that is indeed what we find when we chart the annual number of ET single claims/cases.


From this chart we can see that, having peaked in 2009-10 at the height of the economic turmoil and wave of redundancies that followed the global financial crisis of 2008, the number of ET single claims/cases declined slowly but steadily from 2010-11. By 2012-13 – the last full year before the introduction of fees – the number of single claims/cases was pretty much back to its pre-recession level. And it is at this point that we should pause to admire the masterful comic irony of Mr Vara’s Possible Factor #2.

In late 2011 and throughout 2012, ministers justified their plans to introduce hefty, upfront tribunal fees by stating – repeatedly and in cataclysmic terms – that the number of claims/cases was not just increasing, but going through the roof. Here, for example, is business secretary Vince Cable in November 2011: “Workplace disputes are increasingly being settled through tribunals [and] we are in danger of getting away from the principle that they should be the last resort, not the first option.”

In fact, even as Dr Cable uttered those words, the number of ET single claims/cases was going down, and it continued to decline as the Ministry of Injustice finalised and then implemented its fees regime in July 2013. And now that decline is used by Mr Vara and others to haughtily dismiss concern about the impact of the fees regime on access to justice. Yes, I’m lovin’ that irony.

But back to the chart above. In 2012-13, the number of single claims/cases was down 7.7 per cent on 2011-12. Clearly, we don’t know how many such claims/cases there would have been in 2013-14, had fees not been introduced one-third of the way through the financial year, but the blue column in the chart is a projection based on a further decline of 10 per cent on 2012-13. That would have brought the number of single claims/cases to its lowest level this century. So much for the “danger” imagined by Dr Cable in 2011: ministers could have ‘achieved’ a record low in ET case numbers without even going into the office.

And, if you don’t feel comfortable with me plucking a 10 per cent decline in case numbers out of thin air, the orange column is a projection for 2013-14 based on Quarter 1 of that year (April to June 2013). This still sneaks under 2005-06 to set a record low this century, despite equating to just a 6.9 per cent decline on 2012-13.

The final, green column is a projection based on the six-month period 1 October 2013 to 31 March 2014, scaled up to 12 months. Is it credible that the slow rate of decline evident in the red (and blue or orange) columns, which certainly appears to fit with Mr Vara’s Possible Factor #2, suddenly accelerated – just as fees were introduced in mid-2013 – so as to reduce the number of single claims/cases to a level less than half that in every other year this century?

To put it another way, does the PUSS for Justice do himself any credit by suggesting that the rate of decline in ET case numbers due to the slowly recovering economy increased from 2.3 per cent in 2011-12, to 7.7 per cent in 2012-13, then leapt to 61.3 per cent in the months immediately following the introduction of fees? Despite no corresponding great change in the rate of fall in unemployment? I do not think he does.

I suggest that Mr Vara would do himself more credit by accepting that the recovering economy is no more than a relatively minor factor in the dramatic fall in ET case numbers since July 2013, most likely accounting for less than one-tenth of the drop-off. And on we go to Mr Vara’s Possible Factor #3 and the other nine-tenths of the fall in ET case numbers since the introduction of fees.

Possible Factor #3: Er ….

Oh. Mr Vara didn’t say what Possible Factor #3 is. Let alone Possible Factors #4, #5 and #6. He just left Diana Johnson, the rest of the House of Commons, and us dangling with the suggestion that there are “lots” of Possible Factors. So, what might these other Possible Factors that Mr Vara chose not to mention be?

Possible Factor #3: “Lots of tribunal applications have gone to the Shire Courts”

Mr Vara might well have said this, had he bothered to suggest to Ms Johnson that the introduction of tribunal fees has displaced some claims/cases to the County Court, where the claimant fees are (currently) somewhat lower. Unfortunately, the official County Court statistics are so primitive that, short of someone conducting some in-depth research, there is no obvious way of knowing for sure how significant this displacement factor might be. But some people – not least the former President of the Employment Tribunals, David Latham – believe there has been at least some displacement due to fees.

However, we can at least estimate the maximum possible influence of such displacement on overall case numbers, because only a few types of tribunal claim can be brought in the County Court. In fact, of the 20 main jurisdictions identified by the Ministry of Injustice in its tribunal statistics, just four can be brought in the County Court: breach of contract; unlawful deductions from wages (UDW); equal pay; and breach of the national minimum wage. (The ever helpful Michael Reed of the Free Representation Unit advises me that, technically, a UDW claim cannot be brought in the County Court but, in practice, almost all such claims can instead be brought in the County Court as a breach of contract claim).

The Ministry’s tribunal statistics tell us that, in 2012-13, these four transferrable jurisdictions accounted for 32.3 per cent of all ET jurisdictional claims. (Note that here we are back not just to all claims, including all those in multiple claimant cases, but to all jurisdictional claims, of which there were 332,859 in 2012-13, due to each claim including an average of 1.7 jurisdictions). So, even if every such claim/case had been displaced to the County Court by fees, that would still only account for about one-third of the overall fall in ET case numbers.

Now 32.3 per cent is not an insignificant proportion – equal pay and unlawful deductions from wages are two of the most commonly claimed jurisdictions. But it is very unlikely indeed that anywhere near all of those jurisdictional claims would disappear off to the County Court, not least because many are brought in conjunction with other jurisdictional claims – such as unfair dismissal, and discrimination – that can only be brought in the tribunal. And, indeed, the Ministry’s tribunal statistics show that, in our six-month period October 2013 to March 2014, the four transferrable jurisdictions accounted for 29.8 per cent of all 48,283 jurisdictional claims. (We can even extend our period to September 2014, because the impact of Acas early conciliation is largely irrelevant here, and then we get a figure of 33.6 per cent).

Were a significant number of tribunal claims/cases disappearing off to the County Court to take advantage of the lower claimant fees there, we could expect the proportion of all jurisdictional claims accounted for by the four transferrable jurisdictions to have headed down towards zero. So, whilst the fact that it has remained constant does not prove that tribunal claims/cases are not being displaced to the County Court in significant numbers, it certainly doesn’t help anyone – such as a PUSS for Justice – wanting to suggest that such displacement is a significant factor in the dramatic fall in ET case numbers from July 2013 onwards.

Possible Factor #4: “Only weak or unfounded tribunal applications have been deterred by the fees”

Again, Mr Vara didn’t say this. But he might have done, because it’s a line of argument that’s been trotted out by BIS minister Matthew Hancock and his pals in the press. However, were it a well-founded line of argument, we could expect to see the proportion of successful claims/cases rising towards 100 per cent. And, as set out elsewhere on this blog, the Ministry’s tribunal statistics show it going down, not up, whichever way we measure ‘success’. So, we can dispense with Possible Factor #4.

Possible Factor #5: “Thanks to the Employer’s Charter launched by our fabulous Prime Minister in 2011, most bad employers disappeared from the UK economy in a puff of purple smoke early in the morning of 30 July 2013”

There’s not really anything to say here, other than: Why do we never hear from ministers about the Employer’s Charter, on which David Cameron really did spend hard-working taxpayer’s money in 2011?

And … well, that’s it. I really can’t think of any more Possible Factors. But maybe next time the PUSS for Justice leaps to his feet in the House of Commons, he will enlighten us further. Or, assuming he knows how to use a computer and access the interweb thingamajig, he could post a comment on this blog.

Meanwhile, in my next post I will examine Mr Vara’s somewhat convoluted assertion that “anyone who does not meet the financial criteria has a waiver and can go to court”.







Do BIS & HMRC care about the care sector?

There was much ministerial self-satisfaction in evidence yesterday, as BIS named & shamed a further 37 employers for breaches of the national minimum wage. This brings the total number of firms named since the scheme was rebooted in October 2013 to a less than impressive 92. Or just 90, if you allow for BIS wrongly naming, so not actually shaming, two of the 25 firms it named in June last year.

“Paying less than the minimum wage is illegal, immoral and completely unacceptable,” said BIS minister Jo Swinson. “If employers break this law they need to know that we will take tough action by naming, shaming and fining them as well as helping workers recover the hundreds of thousands of pounds in pay owed to them.”

Or the average of £4.82 in pay owed to them, in the case of the 540 workers to whom retailer H&M failed to pay a total of some £2,600. It was this case that – no doubt to the delight of press officers at BIS and the chagrin of those at H&M – most national media chose to focus on, presumably because H&M were unlucky enough to be the first (and so far only) household-name retailer to be shamed by BIS. Never has so little been owed to so many by “time-logging errors in some stores”.

Of course, household-name corporations like H&M – which, according to the Independent, made profits of “more than £600m in the last quarter alone” – could avoid the risk of such adverse publicity by paying their staff a living wage, rather than just the legal minimum.

However, it was another of the 37 shamed employers that caught my eye. Ultimate Care UK Ltd, in Ipswich, became the first of Britain’s 35,000 adult social care employers (i.e. both residential and domiciliary care providers) to be named & shamed by BIS, for failing to pay a total of £613.79 to seven workers. With just 15 care staff, and having won a National Home Care Employer of the Year (< 250 employees) award in 2011, Ultimate Care are probably feeling as aggrieved as the corporate fat cats at H&M at being shamed by BIS when there are clearly a great many bigger fish in Britain’s pool of minimum wage rogues.

Indeed, just two days before BIS dumped on Ultimate Care, Jo Swinson’s Liberal Democrat colleague Paul Burstow – a former health minister (2010-12), and chair of a Commission on Home Care – used a Westminster Hall debate to highlight a number of challenges in the adult social care sector, including “the low pay, low status culture that pervades the sector.” Noting that the National Audit Office estimated in early 2014 that as many as 220,000 (15 per cent) of the sector’s 1.5 million workers are illegally paid below the minimum wage, and that “the problem is getting worse, not better”, Mr Burstow called for action to ensure that “those who are exploiting their workers” are “properly and vigorously pursued.”

Mr Burstow is far from alone in contrasting the evidence of systemic flouting of the minimum wage in the sector, with the apparent lack of effective enforcement action against the employers in question. In March 2013, a number of MPs – including Simon Hughes, Liz Kendall, and Alison McGovern – expressed concern about the exploitation of their constituents during a Westminster Hall debate initiated by Labour MP Andrew Smith. And in August that year, a report by the Resolution Foundation think tank highlighted the “national scandal” of care workers being illegally paid as little as £5 per hour:

While headline pay rates for care workers who visit clients at home are set at or above the national minimum wage of £6.19 an hour, in practice those workers often lose at least £1 an hour because they are not paid separately for the time spent travelling between appointments and because providing decent care often takes longer than the time allocated by the employer for each visit. This would mean that over the course of a year, a care worker who spent an average of 35 hours a week at work for 48 weeks would lose out on more than £1600.

In November 2013, an evaluation by HMRC of its enforcement work in the social care sector in 2011/12 and 2012/13, including both complaints made via the Pay & Work Rights Helpline and targeted enforcement against 40 residential care providers and 40 domiciliary providers, concluded that inspectors had “identified higher and increasing levels of non-compliance with minimum wage legislation than has been previously found in the sector.” HMRC noted:

[We] are concerned that many employers had failed to keep sufficient records of working time to demonstrate that workers are being paid at least the national minimum wage, particularly given that non-payment of travelling time for workers in domiciliary care was commonplace [sic].

In May 2014, the Kingsmill Review – a report into working conditions in the sector by Baroness Denise Kingsmill, commissioned by Labour leader Ed Miliband – concluded that “the low status of care work and poor treatment of workers has led to a vicious downward spiral, with widespread exploitation.” Two months later – in response to the March 2014 NAO report cited by Paul Burstow – the Public Accounts Committee of MPs said they were “astonished that up to 220,000 care workers earn less than the minimum wage and little has been done to rectify this.”

In November 2014, Andrew Smith initiated a second Westminster Hall debate, during which Labour MPs queued up to express their concern at the lack of government action on the issue. And, last month, launching a campaign and petition calling on ministers to “end the scandal of illegally paid care workers”, the trade union Unison noted that:

In 2011 and 2013, HMRC investigated the care sector and found that only half of care providers were paying [at least] the minimum wage. Thanks to those investigations, several companies were forced to pay care workers the money that they were owed.

Now, because of the ongoing cuts to care budgets and a lack of follow-up action from HMRC, the situation has become worse. This is in part because most care workers are on zero-hours or temporary agency contracts, with the employers cutting out paid time wherever they can. A full day on the job can translate into only a handful of paid hours.

In short, pretty much everyone who has considered the issue has concluded that exploitation, including non-compliance with the minimum wage, is rife in the social care sector. So why were investigations completed in relation to just 70 residential care homes in the four-year period 1 April 2010 to 31 March 2014? Why has the overall number of investigations by HMRC (i.e. not just the care sector) fallen in each of the past three years, from 1,140 in 2010-11, to 680 in 2013-14? And why does the Government say, in its recent evidence to the Low Pay Commission, that “non-compliance as a result of gross exploitation is very low”? Something’s not right here.

In response to Paul Burstow’s Westminster Hall debate, BIS minister Jo Swinson said:

Proactive investigations happen. There was a particular period of targeted enforcement in the care sector, from 2011 to 2013. We recognise that the issue is important and are returning to the care sector for proactive work. That process is now under way, so more will happen. Currently, 94 employers in the care sector are being investigated for national minimum wage issues, and when those investigation conclude, we will see whether they have broken the law. If so, there are tough penalties, including naming and shaming, and we have taken steps to increase the resources available to HMRC for that vital work.

Presumably, one of those 94 care sector firms is the former employer of Debra Claridge, who made a complaint to HMRC about prolonged payment below the minimum wage (due to non-payment for travel time between appointments) as long ago as November 2012, but – astonishingly – has still not had her case resolved.

Ms Swinson has (laudably) made a habit of including the phone number of the Pay & Work Rights Helpline in her contributions to House of Commons debates and replies to written parliamentary questions, but it makes a mockery of the minimum wage enforcement system for those who follow the Minister’s advice and call the Helpline – as Mrs Claridge did – to then wait two years or more for HMRC to conclude its investigation and recover the arrears owed (or close the case and explain why).

All in all, there is a clear need for a step-change in enforcement of the minimum wage, not least to tackle the “commonplace” but unlawful practice in the domiciliary care sector of not counting travel from one work assignment to another as working time. In a letter to Jo Swinson co-signed by 36 other MPs, Andrew Smith has now requested an urgent meeting to “discuss how BIS, in tandem with HMRC, the Department of Health, and the Department for Communities and Local Government, can ensure that care providers operate within the law and that all care workers are legally paid.”

The £3 million increase in HMRC’s enforcement budget for 2015-16 that BIS announced alongside the naming & shaming of H&M, Ultimate Care and 35 others – an increase not to be sniffed at in these days of austerity and cuts – is clearly welcome, and will no doubt make a difference. But even £12.2 million per year is a piddling sum, given the (growing) size and nature of the challenge. The next government is going to have to do a lot more than name and shame a single social care employer.





BIS, you had one job!

Previously on this blog, I have noted how the revamped BIS scheme for naming & shaming employers found to have breached the National Minimum Wage has struggled to get beyond second gear since it came into force 15 months ago, with only 55 (mostly small) firms being named to date.

Now – after months of side-stepping questions by MPs Caroline Lucas and Stephen Timms – BIS has finally conceded that, in June last year, it somehow managed to wrongly name & shame two long-dissolved firms. Among the 25 firms named & shamed by BIS on 8 June, Michael at Zoom Ltd (company registration no: 08311831) was wrongly named as Zoom Ltd (04906202, dissolved in April 2010), and Masterpart Distribution Ltd (04153440) was wrongly named as Master Distribution Ltd (06878211, dissolved in November 2010).

Unfortunately, because NMW-flouting firms are named & shamed only by means of a BIS press release, with no central on-line register of those named, there is no way for BIS to publicly correct these elementary errors, other than to include the two right names in the next press release – whenever that might be. Until then, the number of ‘NMW rogues’ actually named & shamed stands at 53.




The penalty spot miss that should go to the Court of Appeal

Customarily, the dawn of a new year is a time for looking forward, to what the future might bring. But, employment law-wise, 2015 looks so bleak that I’m going to kick the Hard Labour year off by looking back, to the Enterprise & Regulatory Reform Act 2013 and its creation of a power for employment judges to impose a financial penalty of up to £5,000 on employers found to have breached a worker’s rights in a way that “has one or more aggravating features.”

First mooted in the January 2011 BIS consultation on ‘resolving workplace disputes’, the penalty regime was presented as a key plank of the Enterprise & Regulatory Reform Bill unveiled by Vince Cable in May 2012. However, unloved both by the employer bodies and by the trade unions, the then clause 13 was the subject of some debate at the Bill’s Commons Committee Stage in July, and also at Report Stage in October, by which time it had become clause 14 (it would go on to become section 16 of the 2013 Act).

During the latter debate, Jo Swinson, who had replaced fellow Liberal Democrat Norman Lamb as BIS employment relations minister just a few weeks previously, told MPs:

“When we first proposed the introduction of [the financial penalty regime], we had thought to make the imposition of the penalty automatic when there was a finding in favour of the claimant, but we listened to the concerns expressed by business during the resolving workplace disputes consultation last year and revised our proposals to give the tribunal discretion to decide when a penalty was appropriate. Good employers—those who try to do right by their employees—have nothing to fear, regardless of their size. A genuine mistake will not be grounds for the imposition of a penalty. However, those businesses which the tribunal considers have acted deliberately or maliciously will rightly, I believe, face the prospect of a financial penalty. They will no longer be able to gain a competitive advantage over businesses that abide by their obligations.

This is not some kind of revenue-raising scheme; it is about ensuring that the right incentive structure is in place by creating a further penalty for businesses that deliberately flout the law. That will incentivise the right kind of behaviour. That will be fairer on the vast majority of businesses that are good employers and that should not lose out to those employers that gain some kind of advantage by treating their employees badly.

Although they make up a small portion, there are clearly too many employers who do not comply properly with their obligations. I think that it is quite right that we send a clear signal and make it clear that those employers can expect to face a bigger consequence at a tribunal than those well-intentioned employers who try to do the right thing but fall foul of the law because of an error—after all, we are all human.”

We are indeed – even those of us who are government ministers prone to make grandiose claims for their draft legislation. And it is fortunate for Ms Swinson and her Coalition colleagues in HM Treasury that section 16 of the 2013 Act was not ‘some kind of revenue-raising scheme’. Because, in reply to a written question by shadow BIS minister Ian Murray, Ms Swinson has just revealed that the number of financial penalties imposed since the regime came into force on 6 April 2014 is … none.

Yep, nine months, and not a single section 16 penalty. Nada. Zip. Rien.

Which could be good news, of course. Maybe the financial penalty regime has so incentivised the right kind of behaviour that there are no longer any businesses deliberately flouting the law to gain some kind of advantage over their law-abiding competitors. Rejoice!

However, I doubt even Ms Swinson would claim that is what has happened. I imagine the Minister might try to suggest that the fault lies with the employment judiciary, for failing to take up the tool so cleverly crafted for them by Vince Cable, Ed Davey and Norman Lamb. But it seems unlikely that a judiciary so often criticised (mostly by employer bodies) for an alleged lack of consistency would have acted quite so … well, consistently.

A far more likely explanation, it seems to me, is that the hefty, upfront tribunal fees introduced by the Ministry of Injustice in July 2013 have eradicated exactly the kind of tribunal claim that Cable, Davey and Lamb evidently had in mind when they came up with the section 16 penalty regime: a relatively low value claim (because the claimant is or was low paid) against a deliberately exploitative employer. For why would a vulnerable, low paid worker subjected to ‘wage theft’ of a few hundred pounds gamble up to£390 on trying to extract the unpaid wages or holiday pay from their rogue (former) employer?

Which means that the deliberately exploitative employers supposedly targeted by section 16 of the 2013 Act are able to break the law with near impunity. And that is something that really ought to be of concern not just to Dr Cable and Ms Swinson, but to the Court of Appeal when it hears UNISON’s appeal against the High Court’s dismissal of its two applications for judicial review of the fees regime.

(As an afterthought, it is worth noting that, during those two Commons debates in July and October 2012, Norman Lamb and then Jo Swinson firmly resisted amendments tabled by shadow BIS ministers that would have reworked the unloved s16 penalty regime to focus it on those employers who fail to pay a tribunal award. Having belatedly seen the light on that long-standing issue, Ms Swinson has sought to make amends by including provisions to establish a parallel penalty regime to exactly that effect in the Small Business, Enterprise & Employment Bill, currently in the House of Lords.)