ET fees: the wrong plan, in the wrong hands

Back in January, I noted on this blog that employment judges had yet to use the power, granted to them nine months previously under section 16 of the Enterprise & Regulatory Reform Act 2013, to impose a financial penalty of up to £5,000 on an employer found to have breached the claimant’s rights in a way that “has one or more aggravating features.” In late December, in response to a parliamentary question tabled by then shadow BIS minister Ian Murray (now the only Labour MP in Scotland), the then employment relations minister Jo Swinson had confirmed that no section 16 penalties had been imposed since the power came into force on 6 April 2014. And I argued that the most likely explanation for this lack of section 16 penalties 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 [former business secretary] Vince Cable [and former BIS employment relations ministers] Ed Davey and Norman 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?

In response, at least one #ukemplaw luminary suggested that I was being a bit premature, given that employment judges had had the power for only nine months. And, while I countered that we could have expected at least some penalties to have been imposed, I had to concede that it would be “interesting to ask BIS the same question again in three or four months time.”

Well, five months have passed, and BIS has been asked the same question, this time by Caroline Lucas MP. BIS doesn’t seem to have an employment relations minister as such any more, but skills minister Nick Boles has now replied, confirming that the number of section 16 penalties imposed to date is … just three. Of which two remain unpaid.

As when I wrote on this issue in January, it is theoretically possible that this is simply a good news story: the threat of a financial penalty has incentivised employers to avoid breaching their workers’ rights in a way that has “aggravating features”. But it seems much more likely that my original theory holds true. That, thanks to fees, employment judges are no longer seeing many of the kind of ‘rogue employer case’ at which the section 16 provisions were aimed.

And – just for once – I am not alone. In April, Nic Elliott of respondent law firm Actons blogged about having recently spent four days in the tribunal, successfully defending his employer client against a claim with “little merit from the outset, but just enough to warrant four days with an employment judge”:

This was a claim my client thought ‘misconceived’. Perhaps the type of unmeritorious claim the [then] government was trying to weed out with the introduction of tribunal fees. However, the claimant was a high earner and could easily afford £1,200 in the hope he would make a return on this investment. It seems those employees with entirely valid claims, with little means to pursue them, may not be so lucky.

Nic concludes that “the fees regime introduced [in July 2013] really isn’t hitting the mark and preventing claims with little merit entering the system. There’s also a significant risk that those with genuine claims are being prevented access to justice because they can’t pay their way”. And, last month, top employment barrister (and founder of this blog) Sean Jones QC suggested to the CBI and others that “perversely, it is fast track, high merit, low value claims that fees have seen off”.

If we are right, this would explain why – contrary to what we could expect if fees were simply deterring ‘vexatious’ and unmeritorious claims – the overall success rate of ET claims has fallen significantly since July 2013. In short, like the protagonist in Depeche Mode’s classic “Wrong” – who answered “the wrong questions with the wrong replies” – Coalition ministers appear to have “reached the wrong ends, by the wrong means, with the wrong method and the wrong technique”.

However, if the current ET fees regime was, indeed, the “wrong plan, in the wrong hands”, then at least the new crop of ministers has an opportunity to make amends. The government’s recent reply to another parliamentary question by Caroline Lucas suggests ministers are still committed to carrying out the long-promised review. All we need now is a date.

2 thoughts on “ET fees: the wrong plan, in the wrong hands

  1. Pingback: Another Coalition miss from the penalty spot? | Labour Pains
  2. Pingback: It’s only words…. | The Big Conversation….

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