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.

 

 

 

 

MoJ’s new line on ET fees as spurious as the old one

As if further proof were needed, the latest set of quarterly tribunal statistics – released by the Ministry of Justice on Thursday – confirm the dramatic impact of the employment tribunal (ET) fees introduced in July last year. For the third quarter in a row, the number of new ET cases is down by 65 per cent or more, compared to the same quarter a year ago. Over the nine months immediately prior to the introduction of fees, 44,000 employers had an ET case brought against them. But over the nine months up to June 2014, just 15,750 did.

As can be seen from the following chart, this is unquestionably a sudden and dramatic decline. Back in March 2013, the Department for Business, Innovation & Skills (BIS) noted that ET cases are “relatively rare”. They’re a lot rarer now.

Chart 1: Single claims/cases & multiple claimant cases (= total number of respondent employers), April 2012 to June 2014

casesSource: Table C1 of Annex C to Tribunal Statistics: April to June 2014, Ministry of Justice, September 2014.

Think of it this way: on average, each of the UK’s 1.21 million employers now faces an ET case just once every 58 years.

In the face of such evidence, the Ministry of Justice now seems to have abandoned its laughable initial line that this pattern is no more than a long-term downward trend. Conservative ministers such as Matt Hancock now proudly acknowledge the scale and suddenness of the decline, but seek to suggest it is no cause for concern as all the thousands of cases ‘lost’ to fees since July 2013 are simply vexatious or spurious claims that should not have been brought anyway.

Until the release of this week’s set of tribunal statistics, this was not an argument that was readily susceptible to disproof by analysis or chart, as that requires data on claim/case outcomes and – due to the time taken to process cases through the system – such outcome data lags at least two quarters behind that on new claims made. But the latest quarterly data – relating to the period April to June this year, so up to almost one year after the introduction of fees – allows us to start putting the new ministerial line to the test. For we can be reasonably confident that the great majority of the claims resolved in this quarter will have been issued after July 2013, not least because the dramatic fall in the number of cases has reduced the average time taken to resolve most types of claim.

If ministers are right, and fees have simply cut out all the vexatious and spurious claims, but have had no effect on access to justice by workers with meritorious claims, we would expect to see substantial shifts in the proportion of cases that are ultimately successful (whether at a hearing, by a default judgment, or through settlement), or unsuccessful. Indeed, we would expect successful claims to be heading towards 100 per cent, and unsuccessful claims towards zero.

So, what does the this outcome data tell us? Well, the following chart compares outcomes in the period April to June 2014, to the same quarter a year ago (i.e. immediately prior to the introduction of fees), and to previous full years. And from this it is clear that the introduction of fees has had no significant impact on outcomes (at least, not yet). Whilst the proportion of successful claims has increased slightly since the same quarter a year ago, from 13 per cent to 17 per cent, it’s still no higher than in any full year since 2007-08. And the proportion of unsuccessful claims is down, but only marginally so. (Note that the only significant changes evident in the chart – those in the proportion of cases settled by Acas, and withdrawn – not only cancel each other out, but pre-date the introduction of fees in any case).

Chart 2: Outcomes of ET claims (singles & multiples).

outcomesSource: Table 2.3 in Tribunal Statistics: April to June 2014 (Tables), Ministry of Justice, September 2014.

In short, not only is there no evidence whatsoever to support the new ministerial line – hardly a unique occurrence under this evidence-averse government – but the only available evidence shows it to be a pile of pants.

I imagine that some in government (and elsewhere) will try to claim that it is still too early to tell. But that is a weak argument that will get ever weaker with the release of each new set of quarterly tribunal statistics.

Or, as Alice might have said, spuriouser and spuriouser.

Ministry spinning out of control on ET fees

While last month’s anniversary of the introduction of employment tribunal fees passed without the comment we might reasonably have expected from shadow ministers such as Sadiq Khan and Chuka Umunna, two articles in the Daily Mail and Sunday Express kept the #ukemplaw community busy debating which of the two is the worst thing ever written about the origin and impact of the fees regime.

Both articles are indeed wondrously dreadful, but their greater significance lies in what they tell us about the spin we can expect from the Ministry of Justice in the coming weeks, as it completes and announces the conclusions of its long-planned Post-Implementation Review (PIR) of the fees regime.

In the Daily Fail – under the headline “Hallelujah! The gravy train’s derailed: as workers are made to pay £1,200 fee, discrimination cases plunge by 75%” – Steve Doughty trilled that “the multi-billion pound industry built on vexatious discrimination claims against employers has virtually collapsed … with sex discrimination claims down 80% and race claims by 60%”. And “the spectacular decline follows a simple reform introduced by Justice Secretary Chris Grayling last summer – the charging of fees to workers who want to make a claim against their employer”.

Don’t you just love that ‘simple’, and the implication that only someone with the intellect of Chris Grayling could have come up with such a straightforward policy solution? Presumably, Doughty was still at journalism school in 2011, when the fees regime was in fact dreamt up by Grayling’s predecessor as Justice Secretary: the now much-lamented (by some) Kenneth Clarke.

“In the first six months of the new fees system”, Doughty continued, “the number of claims dropped from 109,425 to 20,678. The fall is a major boost for businesses, which were previously spending around £1.6 billion a year in defence costs. There were 191,000 employment claims in the financial year to March 2013”. And the article ended with two photos of unsuccessful ET claimant Stella English, who just happens to be female and blonde.

Meanwhile – under the headline “An end to abuse of the employment tribunal system” – Leo McKinstry informed readers of the Sunday Express that “a gigantic racket fuelled by whingeing trade unions, parasitical lawyers and money-grabbing litigants” has been “dramatically transformed by a reform introduced by Justice Secretary Chris Grayling, in a move distinguished by its simplicity”. Ah yes, the simplicity.

“At a stroke”, McKinstry continued, “the compensation gravy train has been sent into the buffers. Before Grayling’s reform, the flood of employment litigation was unceasing. In 1998, there were 80,000 [ET] cases, an annual total that had risen to over 200,000 in recent years. Yet in the first six months since fees were imposed the number of cases plummeted to 20,678, compared to 109,425 in the previous two quarters”. And, naturally, the article included a nice big photo of the female and blonde Stella English.

These stunning examples of journalistic garbage would be best ignored and quickly forgotten, were it not for their remarkably similar wording, their use of identically precise figures for the number of claims in six-month periods before and after the introduction of fees (109,425 and 20,678) that I cannot match up with any of the figures set out in the Ministry’s most recent statistical bulletin (see endnote), and their misplaced crediting of Chris Grayling.[i]

To my mind, these curious coincidences suggest the articles were based on private briefing by none other than Chris Grayling (or a junior minister, special adviser, or press officer acting on his behalf). And, if I am right, that in turn betrays a 180° change of direction in the Ministry’s spin on fees.

In March this year, when the Ministry’s quarterly tribunal statistics revealed a 79% fall in ET claims in the period October to December 2013, compared to the same quarter in 2012, ministers spun the line that this cliff-shaped decline was in fact no more than the anticipated continuation of a “longer term downward trend” in the number of claims. In other words, the introduction of fees had had little if any impact on the number of claims.

But with the next set of quarterly tribunal statistics, released in June, confirming a similar evisceration of ET claims of all types and jurisdictions in the period January to March 2014, and the Ministry’s patently bogus line being easily blown apart by a few simple charts, ministers appear to have changed tack.

In short, the Ministry’s original line of ‘nothing to see here, move along please’ has given way to a story in which clever Chris Grayling has saved the nation from an ‘unceasing flood’ of (vexatious) ET claims with a ‘simple’ but highly effective reform. And I imagine we are going to hear much more about Grayling’s heroics over the coming weeks. So it is worth taking a few moments to note the flaws in the Ministry’s new spin, which is no more credible than its old spin.

Firstly, there have never been “over 200,000” ET cases a year, as McKinstry suggests in the Sunday Express. Nor were there 191,000 cases in the financial year to March 2013. There were some 191,000 claims in 2012-13, but that headline figure includes all the claimants in the relatively small number of multiple claimant cases, each of which is brought (on the same grounds) against one employer. And, if the concern is the overall impact of ET claims on businesses, then it is the total number of cases (single claims/cases and multiple claimant cases) that is most meaningful, since that is also the number of employers affected.

In 2012-13, for example, the headline total of 191,541 claims consisted of 54,704 single claims/cases brought against 54,704 employers (or slightly fewer than that, in fact, as some claims would have been against the same employer), and a total of 136,837 multiple claimants in just 6,104 multiple claimant cases brought against 6,104 employers. Furthermore, many – perhaps most – of those 6,104 multiple claimant cases were equal pay claims brought by trade unions and law firms against local authorities and other public sector bodies. So they didn’t impose any burden at all on ‘businesses’.

So Doughty’s “£1.6 billion a year in defence costs” for businesses in 2012-13 – which he calculates by multiplying his (or Chris Grayling’s) average cost per claim figure of £8,500 by 191,000 – was more like £0.5 billion (£8,500 x 60,808 cases) spread across just 60,808 employers in both the private and the public sector.

Secondly, the number of ET cases was not an ‘unceasing flood’ until Grayling’s heroics in July 2013. On the contrary, there was a long(ish)-term downward trend in the number of cases, and especially the number of single claims/cases – though that trend does not explain the sudden drop-off since the introduction of fees. Indeed, as the following chart shows, not only had there had been a steady decline in the number of cases since a recession-induced peak in 2009-10, but by the first quarter of 2013-14 (i.e. April to June 2013) the rate of new cases was at its lowest level for more than a decade. So, hardly a situation requiring heroic (and drastic) ministerial action.

Chart 1: Single claims & multiple claimant cases, 2000-01 to 2013-14*

cases

Source: Ministry of Justice. *The figure for 2013-14 is a projection based on Quarter 1 (April to June 2013) only.

Now, it is true that, in the late-2000s, the average number of claimants involved in each multiple claimant case increased significantly, largely due to trade unions and law firms trawling for claimants to join equal pay claims brought against local authorities and other public sector bodies. So the headline, total number of claims grew accordingly. But the number of such multiple claimant cases (the red area in Chart 1, above), and therefore the number of employers affected, remained relatively small. But in any case, as the following chart shows, since peaking in 2009-10 even the number of multiple claimants has been in decline.

Chart 2: Multiple claimants, 2000-01 to 2013-14*

multiples

Source: Ministry of Justice. *The figure for 2013-14 is a projection based on Quarter 1 (April to June 2013) only.

The third – and perhaps most significant – flaw in the Ministry’s new spin, of course, is the assumption that every single one of the tens of thousands of claims lost to fees since July 2013 was a ‘vexatious’ claim. That is not an assertion that is susceptible to proof (or disproof) by chart – you are either stupid and/or gullible enough to accept it, or you are reasonably intelligent and know that it is wholly implausible. Prior to the introduction of fees, not even the wackiest of the employer lobby groups ever suggested that 80% of all ET claims were vexatious.

The real test of Grayling’s new spin will be not whether he can feed willing journalists at the Daily Mail and Sunday Express – any idiot can do that – but whether he can bamboozle Parliament on this point when he announces the conclusions of the Ministry’s Post-Implementation Review.

Time will tell. But at least now it is common ground that the ET fees regime has had a dramatic impact on the number of claims/cases. In these grim days of evidence-free, ideological policy-making, that has to count as progress.

 

[i]             According to Table C.1 of the quarterly tribunal statistics published by the Ministry of Justice in June 2014, there were 21,809 ET claims (singles and multiples) in the six-month period October 2013 to March 2014; 32,292 such claims in the period September 2013 to February 2014; and 36,399 such claims in the period August 2013 to January 2014. Similarly, there were 102,066 such claims in the six-month period February to July 2013; 108,049 such claims in the period January to June 2013; and 94,937 such claims in the period December 2012 to May 2013.

Beware of Douceurs

On the 30th July, the Unison website carried news of a successful tribunal claim against Bromley Council under the headline

“Tribunal orders council to compensate workers offered cash to sign away rights”.  

This got my interest.  I read on.

“Bromley Council has been ordered to pay more than £64,000 in compensation to 18 of its staff after an employment tribunal had offered cash incentives to sign new contracts that took them out of existing collective bargaining agreements.”

A frisson of deja vu.  Were these not the exact same facts as in Wilson & Palmer & others v Associated Newspapers & Associated British Ports, a case with which I was very familiar.  This had led to the European Court of Human Rights case of Wilson and Palmer and others v UK [2002] IRLR 568.  That in turn had led the then Labour government to pass a series of amendments to the Trade Union and Labour Relations (Consolidation) Act 1992 including section 145B which provides;-

Inducements relating to collective bargaining

(1) A worker who is a member of an independent trade union which is recognised, or seeking to be recognised, by his employer has the right not to have an offer made to him by his employer if—

(a) acceptance of the offer, together with other workers’ acceptance of offers which the employer also makes to them, would have the prohibited result, and

(b) the employer’s sole or main purpose in making the offers is to achieve that result…

Unison kindly put a link to the decision at the end of the report. It is here:-

https://www.unison.org.uk/upload/sharepoint/Toweb/3683_001%5B2%5D.pdf

It makes very interesting reading.  Bromley made a series of concessions so the only issue for the tribunal was whether their sole or main purpose in making the offers was to achieve the prohibited result.  The prohibited result is defined thus:-

(2) The prohibited result is that the workers’ terms of employment, or any of those terms, will not (or will no longer) be determined by collective agreement negotiated by or on behalf of the union…

The tribunal had little difficulty in finding that Bromley’s purpose was prohibited as their own documentation and witness evidence confirmed that they intended to do away with the existing collective bargaining of terms of employment and to achieve this workers had to be induced to sign new contracts of employment where pay was not determined by collective bargaining.

Paragraph 54 of the decision is very revealing.

The Tribunal was surprised that neither the officers of the London Borough of Bromley, nor the officers of the unions involved, were aware of the provisions of section 145B of the Act during the course of the events described above.  Both parties may well have conducted themselves very differently had they been aware of these provisions…”

There is still a debate to be had as to the width of the term “purpose” in Section 145B.  On 7th March Eversheds published a briefing about Section 145B of the 1992 Act and a tribunal case in which they successfully acted called Wyer v Pembrokeshire County Council.    It is referred to in the Unison case.  http://www.eversheds.com/global/en/what/articles/index.page?ArticleID=en/Education/Education_HR_e-briefing_572_Do_trade_unions_have_a_monopoly_position

They boast that the Council was able to adduce detailed witness and documentary evidence to persuade a tribunal to take a broader view of the Council’s “purpose” in seeking to implement a new pay and grading structure outside the collective bargaining process.  However they caution that on similar facts another tribunal  in a case called Whitaker v Buckinghamshire County Council, accepted the trade union submission that you take a narrow view of the “purpose” and once the employer seeks individual worker’s agreement to changes to terms and conditions outwith the collective agreement, then Section 145B engages.

In Unison case, Bromley had the additional hurdle of offering to workers a financial incentive (or “Douceur” as the Court of Appeal referred to them in the Wilson & Palmer case) to sign the new contract giving up the right to have their terms of employment determined by collective bargaining.

With the Government encouraging the breakup of national collective bargaining arrangements and the recent changes to TUPE referred to in a previous article on Hard Labour by Jim Wright

https://hardlabourblog.wordpress.com/category/tupe/

we can expect a lot more discussion about the intricacies of section 145B and the other provisions introduced following the ECtHR decision in Wilson & Palmer.

ET fees income: don’t spend it all at once, Chris

In recent months, faced with a strong aversion to transparency and openness on the part of the Ministry of Justice, there has been much speculation about just how much money the Ministry is making from its justice-denying ET fees regime. Well, there has been in my house. Back in 2012, officials indicated that they were looking to receive at least £10 million a year in ET fees, whilst the Ministry’s original ‘cost recovery’ target of 33 per cent implied an annual fee income nearer to £25 million. But, with the startling drop in the number of claims since the introduction of fees in July last year, even the lower of these two figures has looked increasingly unrealistic.

In May, the justice minister, Shailesh Vara, declined to answer a parliamentary question by shadow justice minister Andy Slaughter seeking a fee income figure to date, on the grounds that “financial information relating to fees and remissions in the ET system will be published [in July] by HMCTS in its Annual Report and Accounts”.  Well, that 108-page report, covering the financial year 2013-14, has now been published by HMCTS.  And, buried away on page 85, there are some interesting figures on ET fee income and remission up to 31 March 2014.

In the eight-month period 29 July 2013 to 31 March 2014, gross income from ET fees was £5.149 million, of which £0.680 million (13.2 per cent) was foregone in fee remission.  That represents an actual ‘cost recovery’ of just 6.7 per cent of the ET system’s total cost of £76.364 million, well below the Ministry’s original target of 33 per cent.

The proportion of fee income foregone in fee remission (13.2 per cent) is also strikingly low, given that, as late as September 2013, the Ministry was predicting that 31 per cent of all ET claimants would qualify for full (25 per cent) or partial (six per cent) fee remission.

Furthermore, we already know, from one of the parliamentary questions by Andy Slaughter that the Minister did deign to answer in May, that the Ministry spent £4.4 million on new IT systems to “support the processing of fee receipts and remission applications across the ET system”. Take that away from the net fee income (gross income – remission) of £4.469 million, and Chris Grayling was left with just £69,000 to cover the staff and other operational costs associated with processing fees and remission applications over the eight months up to 31 March 2014.

In short, it seems highly likely that the Ministry made a net loss on ET fees in 2013-14. Clearly, things can only get better from now on, as most of that capital expenditure of £4.4 million will not be repeated in 2014-15 and beyond. And, of course, the above figures take no account of the operational cost savings to the Ministry associated with tumbleweed blowing through near-empty ET hearing rooms – the real policy intention. As recent speeches by BIS minister Matt Hancock and others have indicated, the Conservative side of the Coalition Government, at least, appears to be very pleased with the overall impact of the ET fees regime, including the 80 per cent drop in claims.

So I don’t expect Chris Grayling to be the least bit bothered about the somewhat less than impressive financial figures noted above. To my mind, their primary significance lies in the implications for any alternative fee regime that might be brought in by any alternative government elected in May 2015. Assuming the number of claims remains at much the same (low) level as now, a net fee income over eight months of £4.469 million implies an annual net income of some £6.7 million. Unless that £6.7 million can be found from savings made elsewhere in the Ministry’s budget, any alternative fees regime is likely to have to generate at least most of it.

Then again, the Lord Chancellor may be humiliated by UNISON in the Court of Appeal later this year, and this blog post will not even rate a footnote in history. I’ll settle for that.

ET claims & fees: a few more charts (sorry)

If you feel that you’ve already seen enough charts detailing the evisceration of the employment tribunal system by fees in recent days, then this post is not for you. Go and watch some football or something.

For those still with me – Hi Mum! – I’ve been looking at the regional breakdown of single and multiple claims included in yesterday’s statistical release by the Ministry of Injustice. And they make for some striking charts that put in context all those anecdotes from employment lawyers of tumbleweed blowing through the corridors and hearing rooms of regional ET centres.

This is the North East, where the average monthly number of claims (singles and multiples) has fallen by 85.5 per cent, from 1,561 in the 18 months prior to the introduction of fees in July 2013, to just 227 in the six-month period October 2013 – March 2014:

ET North East

And this is the South West, where the average monthly number of single claims has fallen by 63 per cent, from 445 in the 18 months prior to the introduction of fees, to just 166 in the six-month period October 2013 – March 2014:

ET South West

This is Scotland, where the average monthly number of claims (singles and multiples) has fallen by 67.4 per cent, from 945 in the 18 months prior to the introduction of fees in July 2013, to just 308 in the six-month period October 2013 – March 2014:

ET Scotland

And this is Wales, where the average monthly number of claims (singles and multiples) has fallen by 71 per cent, from 404 in the 18 months prior to the introduction of fees, to just 117 in the six-month period October 2013 – March 2014:

ET Wales

And even London – with all those high-value discrimination claims from the City – is pretty much a wasteland, with the average monthly number of claims (singles and multiples) having plummeted by a staggering 88.5 per cent, from 7,952 to just 912:

ET London

But no need to worry as, according to the Ministry of Justice, this is all just a long-term trend, nothing to do with the fees regime introduced last July.

A long-term trend? Really? Let’s do a couple more charts. As suggested to me by Daniel Barnett, these show the rolling three-month average number of claims over the period March 2012 to March 2014. That is, each month’s figure is the average of that month and the previous two months. Such a rolling average smooths out the inevitable ups and downs from month to month, to give a more reliable indication of any longer-term trend.

And this is what we get on single claims:

ET rolling singles

Does that look like a long-term trend to you? It looks more like a cliff-edge to me. And applying the same approach to multiple claims, we get this little shocker:

ET rolling multiples

Again, if that’s a long-term trend, then I’m a banana.

But if anyone in the Ministry of Injustice is reading this – unlikely, I know – and would like to send me or Sean Jones some alternative charts showing their long-term downward trend, we would be very happy to reproduce them here on Hard Labour. I have of course seen Figure 3 on page 8 of the Ministry’s commentary on the quarterly statistics, which purports to show a long-term downward trend in both single claims and multiple claims encompassing the drop in claims since July 2013, but actually shows no such thing.

First of all, by cramming five years of data into one very small chart, the Ministry makes it difficult to distinguish very long-term (but shallow) trends from shorter-term, steeper movements such as that since July last year. Viewed from the moon, the Great Wall of China looks like a smoothly curved line, but viewed from a helicopter it clearly wiggles all over the place.

In any case, in terms of multiple claims, the Ministry’s pathetic little chart simply shows a mountain range of fluctuations, with no discernible trend whatsoever since as long ago as early 2011 until … the autumn of 2013. Sure, there were a couple of higher peaks in 2009 and 2010, not replicated since, but then there was a little difficulty in the economy at that time.

As for single claims, yes there was a steady but shallow decline from the peak in mid-2009, right the way through 2011 and 2012.  Indeed, some of us tried hard (but failed) to get ministers to acknowledge that steady decline in 2012, when they were pushing through employment law and tribunal reforms predicated on allegedly explosive growth in the number of claims. But that shallow, long-term trend since 2009 does not begin to explain the cliff-edges shown in my (green) chart above.

Ironically, the Ministry’s chart leaves out the only type of case in which there was a significant downward trend in the 12 months prior to the introduction of fees: multiple claimant cases.  But, as the following chart shows, even that downward trend cannot conceal a marked acceleration of the fall in July 2013.

ET rolling multiple cases

 

 

ET fees: ball back in Lord Chancellor’s court

In February, when rejecting UNISON’s judicial review of the employment tribunal fees regime introduced last July – on the grounds that it was simply too early to reach a firm conclusion on the impact of the fees, the only available statistics being provisional figures for the month of September – the High Court noted that “if [these provisional figures] are anything like accurate, then the impact of the fees has been dramatic”. And the judges suggested that, should the Lord Chancellor’s optimism that the number of ET claims would soon bounce back to more ‘normal’ levels prove unfounded, then they would “expect the Lord Chancellor to change the [fees regime] without any need for further litigation”.

Within weeks, the accuracy of those provisional figures was confirmed, with tribunal statistics for the three-month period October to December (Quarter 3 of 2013/14) showing a dramatic fall in the number of ET claims by individual claimants, from an average of 4,460 per month in the nine months before the introduction of fees in July 2013, to just 1,000 in September, 1,620 in October, 1,840 in November, and 1,500 in December.

UNISON has since been granted permission to appeal to the Court of Appeal, but as of today the ball is back in the Lord Chancellor’s court, with the latest set of quarterly tribunal statistics – for the period January to March 2014 (Quarter 4 of 2013/14) – showing no significant rebound in the level of ET claims since December.

The headline number of ET claims, which includes both single and multiple claims and which was down 78 per cent in Quarter 3, was down again in Quarter 4, by 83 per cent compared to the same quarter a year ago. Based on past experience, this is the figure that will dominate reporting of the new set of statistics. However, as is clear from the following chart, this figure is arguably not the most reliable indicator of the impact of fees, given its evident volatility over time due to large variations in the monthly number of multiple claims (that is, the total number of claimants in multiple claimant cases). That said, the impact of fees seems reasonably clear.

Chart 1: ET claims (singles & multiples), July 2012 to March 2014.

Chart 1

The impact of fees since July 2013 is much clearer when we look at the number of single claims by individual workers, which was down 64 per cent in Quarter 3, and was down again in Quarter 4, by 58 per cent compared to the same quarter a year ago. While the Ministry of Justice will no doubt be highlighting the 13 per cent increase from Quarter 3 to Quarter 4, at 1,763 the average monthly number of claims in Quarter 4 is still just 39 per cent of the average over the nine months prior to July 2013 (4,460).

Chart 2: ET claims (singles), October 2012 to March 2014

Chart 2

Somewhat surprisingly – to me at least – the number of multiple claimant cases, which in theory should be less affected by fees, has also fallen dramatically since July 2013. Down by 65 per cent in Quarter 3, from 1,390 to 485, the number of such cases was down again in Quarter 4, by 68 per cent compared to the same quarter a year ago.

Chart 3: ET multiple claimant cases, October 2012 to March 2014

Chart 3

Given that claimants in the very largest multiple claim cases each pay only a tiny fraction of the fees, the most obvious explanation for this fall in the number of multiple claimant cases would be that fees have cut out those cases with relatively small numbers of multiple claimants. However, this would imply a significant increase in the average number of claimants in multiple claimant cases. And, as the following chart shows, with the exception of September (when, presumably, there were one or two very large cases), the average number of claimants in multiple claim cases has not only not risen, but has actually fallen since July 2013.

Chart 4: Average number of claimants in multiple claimant cases, July 2012 to March 2014

Chart 4

So, something else would appear to be going on here. Have the unions run out of equal pay cases?

Indeed, for me the main story from this latest set of statistics is that fees have had a dramatic impact not just on the number of single claims by individual workers, but also on the number of multiple claims and multiple claimant cases – which, in theory, should have been much less affected by fees.

Chart 5: ET claims (multiples), October 2012 to March 2014

Chart 5

All in all, it’s hard to see how the Lord Chancellor can credibly deny that the introduction of hefty, upfront fees in July 2013 has had a dramatic impact on the number of claims – both singles and multiples. Which means, if he does not now reform the fees regime (and substantially reduce the level of fees), he is likely to have to do so following an embarrassing defeat in the Court of Appeal at the hands of UNISON later this year (the appeal is currently scheduled for hearing sometime between 10 September and 10 December 2014).

The incredible shrinking fee remission fig leaf

In response to extensive criticism of the fees regime since July 2013, ministers have argued that access to justice is protected for low-income claimants by the associated fee remission scheme. However, the only figures on fee remission applications that the Ministry of Justice has been willing to release to date – covering the period up to 31 December – suggest that only about six per cent of all ET claimants obtain any fee remission.

According to these figures, provided by the Ministry in response to a series of parliamentary questions by shadow justice minister Andy Slaughter MP, just 600 “individuals or groups of individuals” were granted fee remission between 29 July and 31 December, while 1,800 fee remission applications were rejected. And in that period there was a total of 10,208 single claims (9,305) and multiple claim cases (903). So remission was applied for in just 23 per cent of all cases, and three out of four of those applications were rejected.

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 ET claimants would be eligible for full (25 per cent) or partial (six per cent) fee remission.

In short, the fee remission scheme has so far proven to be a very small fig leaf indeed, and seems unlikely to provide the Lord Chancellor with much cover in the Court of Appeal.

Acas early conciliation and time limits: let the confusion begin

Nothing gets employment lawyers going like a vigorous argument over tribunal time limits, and the new system of mandatory Acas early conciliation (EC) has provided the ideal excuse for several arguments. Here’s just one of them.

Where a prospective claimant has filed an EC form with Acas, the time limit for bringing a tribunal claim is paused on ‘Day A’ (the date the claimant submits the form) and restarts on ‘Day B’ (the date they receive an EC certificate). However, if the original time limit would have expired less than a month after Day A, there is a further extension so that the last day for lodging a claim is extended to ‘one month after Day B’. In short, you should never have less than a month after you receive the EC certificate to get your claim in.

HM Courts and Tribunals Service states, in its information leaflet Making a claim to an Employment Tribunal, that if the EC certificate is sent by email on 5 June (and presumably received the same day), Day B is 5 June and the last day for bringing a claim (under the one month extension rule) would be 4 July. Acas are apparently in agreement, on the basis that this is how the ordinary time limits in tribunal cases work (e.g. an employee dismissed on 5 April would normally only have until 4 July to bring a claim: three months less one day).

But is the HMCTS leaflet right? It ignores the ‘corresponding date rule’, a rule of interpretation used for calculating the start and end point of notice periods and other periods of time expressed in months. Under that rule, one month after 5 June is the ‘corresponding date’ in July, i.e. 5 July. This is the approach adopted by Practical Law (OK, I have to declare an interest there), Lewis Silkin (according to the excellent time limits calculator they posted on Twitter a few days ago), and Camilla Palmer who has written an article in ELA Briefing this month about early conciliation. I’m also informed that lawyers at BIS support the corresponding date approach.

Who’s right?

Acas are certainly right in their approach to the primary time limits (three months minus a day) according to the case law, and it would arguably make a lot of sense if there was a common approach to the one-month extension. However, there are good reasons, based on differences in the wording of the relevant statutory provisions, why tribunals should use the corresponding date rule.

The EC legislation requires the claim to be submitted within the period ‘ending one month after Day B’, whereas the primary limitation date in (let’s say) an unfair dismissal case is ‘before the end of the period of three months beginning with the effective date of termination’. The difference is that ‘one month after Day B’ means you start counting on the day after Day B (a rule of interpretation that, according to Lord Diplock in Dodds v Walker [1981] 2 All ER 609, has been ‘consistently applied by the courts since Lester v. Garland (1808) 15 Ves. Jun. 248’). On the other hand, ‘three months beginning with the effective date of termination’ means you start counting on the EDT. This crucial difference was explained by the EAT, in an admirably short judgment, in University of Cambridge v Murray [1993] ICR 460It’s worth a read.

Acas have highlighted that it’s safer to adopt a cautious approach. That, of course, takes no account of the fact that some employees may, if they leave it until the last minute, believe they are one day out of time when they are in fact still within time, so cannot present a claim. An employment judge could conceivably, without the benefit of contrary legal argument (and who can afford legal advice these days?), be led down the same path by the HMCTS leaflet.

Don’t get caught out

In view of this very unfortunate difference of interpretation, claimants should really adopt the cautious line followed by Acas and lodge a claim no later than one month less one day after Day B (4 July in the example above) and not risk leaving it until 5 July. Ultimately it will be for the appellate courts to decide, although ending up in the EAT over this is probably not in anybody’s interests.

With many thanks to Camilla Palmer for our email correspondence over this issue, from which I’ve shamelessly borrowed some of the wording for this post.

An alternative Employment Tribunal fees regime: let’s do the maths

The week before last, a ripple of excitement ran through some of the #ukemplaw Twitter community when one of its leading figures – I will spare them their blushes – mistook a blog post of mine in which I had set out some things I think the government elected in 2015 should do, including reform the ET fees regime introduced last July so as to reduce claimant fees to a nominal level, for an official policy pledge by the Labour Party. And, before the error could be corrected by its perpetrator, the fabulous Sean Jones QC (founder of this blog) had laid into the workers’ party in robust terms:

“Labour will reduce ET fees to ‘nominal’. If they do, costs of collection and remission [applications] will exceed income. Bizarre. Just abolish them.”

Which presented me with something of a dilemma. Because to suggest that Sean might be wrong is not a step taken lightly, especially by a humble policy wonk. Indeed, the very idea is so preposterous that, according to Sean, it recently caused Mrs Jones to “snort wine out of her nose”. [Actually, I think that was the opposite idea. Ed]

But … *takes big gulp of air* … I do think Sean might be wrong. Because I believe an alternative regime of nominal fees for both claimants and respondents could restore access to justice, without creating the kind of hole in the Ministry’s budget that would result from outright abolition of the current fees regime.

That hole would not be enormous: in 2012, Ministry officials indicated that they were looking to generate an annual income from fees of some £10 million. And, whilst we do not know how much the fees regime has actually generated since July – the Ministry has recently declined to answer my Freedom of Information request on that very point, on the grounds that to do so would “disrupt the [Ministry’s] consistent approach to communicating this information to the public” and might “lead to comments being taken out of context which as a result may lead to an inaccurate and misleading indication of the performance of the [Ministry]” – as if! – we can be certain that it will be somewhat less than £10 million over the first year of the fees regime, and perhaps as little as £5 million.

However, in the current fiscal environment, which we are told is likely to continue well beyond 2015, even £5 million would be hard for newly installed ministers to find from elsewhere in the Ministry’s budget (as the Treasury would no doubt insist upon, whoever is Chancellor). So, to my mind, outright abolition is simply not a realistic option and, if the current fees regime is to go – as it must – then we have to come up with an alternative way of raising up to £10 million, and probably at least £5 million, from a fees regime that does not obstruct access to justice.

So, let’s start with a nominal issue fee for single claimants of just £50. Over a full year, that would generate £1 million from  20,000 single claimants, based on the official claim statistics for Q3 of 2013/14.  But we know that the current fees regime has seriously depressed the number of claims. So let’s make a conservative assumption that the lowering of the issue fee to such a nominal level would increase the number of claims by 50 per cent. In that scenario, a nominal issue fee of just £50 would raise £1.5 million.

And, if the 30,000 claimants in the 3,000 multiple claim cases each paid a reduced fee of just £25, that would generate another £0.75 million. And why shouldn’t they each pay such a fee, if they are using the tribunal system? The trade unions and the TUC might protest, but that would be pure self-interest.

Next, a nominal fee of £50 for respondents to defend a claim would generate £1.65 million from 33,000 employer respondents (30,000 defending single claims, and 3,000 defending multiple claim cases). Perhaps slightly less, if the prospect of having to pay a £50 fee caused some employers to settle the case before doing so. Let’s say £1.6 million. And, with the introduction of Early Conciliation by Acas earlier this month, such a ‘defend’ fee for respondents would be entirely justifiable, as any employer who fails to resolve the claim via Acas is from that point on as much a ‘user’ of the tribunal system as the claimant(s).

All relatively small sums, granted, but together they add up to a fairly tidy £3.85 million.  And the cost of collecting this total sum would be relatively negligible, as the Ministry of Justice has already spent £4.4 million on the database and infrastructure for doing so. Furthermore, with claimant fees set at such a low level, it would be possible to dispense with fee remission or, at the very least, to have a much simplified remission scheme covering only the very poorest would-be claimants and/or the most simple wages claims.

Furthermore, if just one in three of the single claims, and one in two of the multiple claim cases proceeded as far as a hearing, a nominal hearing fee of just £50 for each party would generate another £1.15 million. Which brings the total to £5 million – probably sufficient to plug the hole that would be left by dispensing with the existing fees regime, and certainly well in excess of any costs associated with fee collection and administration.

However, if even this sum were not considered sufficient, then the final element in my alternative fee regime would be a ‘losing’ fee for those employers found by a tribunal to have breached the law – that is, those employers that create the need for an employment tribunal system.  Each year, about 12 per cent of all claims are successful at a hearing or result in a default judgement in favour of the claimant. That’s about 4,000 losing employers, based on the figures and assumptions above.

So a moderate ‘losing’ fee of just £250 would generate another £1 million, whilst a more hefty fee of £500 (still well below what many claimants have to pay now) would double that.  And if the employer lobby groups don’t like that, there’s an easy answer: don’t breach the law (and, if you do, at least have the sense to settle the ensuing tribunal claim before it gets to a hearing).

Yes, my figures (and assumptions) are crude. But they are no more crude than those in the Ministry’s voluminous final impact assessment (issued in May 2012) of the current fees regime, which have turned out to be way wide of the mark. And no one can predict with any accuracy what effect such a lowering of claimant fees, and the introduction of respondent fees, would have on the number of claims, hearings and judgments.

There are, of course, any number of variations on this theme. For example, if a remission scheme exempting, say, the poorest 20 per cent of claimants were considered essential, the £0.3 million in lost issue fees, and the associated administrative costs, could very easily be covered by upping my proposed ‘losing’ fee for employers found to have breached the law.  Indeed, applying the ‘polluter pays’ principle, there is a very good case for setting this ‘losing’ fee at a level far greater than the £500 suggested above.

And so, I humbly rest my case: Sean Jones might just be wrong. Another glass, Mrs Jones?

 

 

Disputed penalty: should ETs have the power to impose financial penalties on employers?

Well, it had to happen eventually. After many years as the Tweedledum and Tweedledee of the employment policy (under)world – virtually indistinguishable in our views on any number of policy initiatives and legal reforms – Michael Reed, of the Free Representation Unit, and I have had a policy disagreement. And not just a slight difference of opinion, but a full-blown parting of the ways. To quote Michael – something I will be doing a lot less of from now on, obviously – we are “complete opposites” in our view.

What? Complete opposites, after all those years of “I agree with Michael” and “I agree with Richard” in meetings with BIS and Ministry of Justice officials? Has one of us lost our marbles? Or taken the Beecroft shilling?

Our story

All was hunky dory with Michael and me, until last week. But then Acas went and tweeted a news article of theirs about the coming into force, on 6 April, of the new power for employment tribunals to order any employer found to have made a breach of the rules with ‘aggravating features’ – whatever that means – to pay a financial penalty of up to £5,000 (section 16 of the Enterprise & Regulatory Reform Act 2013). And, somewhat unthinkingly, I retweeted it. I’m like that, you see. Impulsive.

Almost immediately, my universe began to crumble. “Leaving aside the implementation, do you think financial penalties are a good idea”, demanded a tweet from Michael.

Through a veil of tears, I tweeted my pathetic reply: “Yes, though I doubt ETs will ever have the information they need to use the power effectively. I can see it being used very little”. Because, whilst I would have much preferred to see the power more narrowly framed and targeted at, say, repeat offenders and those who have failed to pay a previous award, I do think it a good thing that life might become a little harder (or, at least, a little more expensive) for rogue employers. And, let’s face it, since 2010 rogue employers have done rather well out of all the Coalition’s other reforms of employment law and the ET system.

And then he – Michael – said it: “Interesting. We’re complete opposites. I think it’s wrong in principle. And I think it’ll be used reasonably often”. Yep, you don’t get much more completely opposite than that. But enough from me. Let’s hear what Michael has to say.

Michael says:

First of all, Tweedledum and Tweedledee? I protest! We are the Butch and Sundance of employment law. Or, at the very least, the Laurel and Hardy.

But, through a veil of tears, I turn to the substance of our tiff. Should employment tribunals impose financial penalties on employers, separately to awarding compensation to employees? I start from the position that there’s a name for imposing a financial punishment on people because they’ve acted unlawfully. That’s called a fine.

And a fine is properly the province of the criminal justice system. Basically, I don’t think that the State should be extracting money from people in this way without the full paraphernalia of the criminal law — including proper legal aid and proving things beyond reasonable doubt. I realise that, in all sorts of areas, we’ve slid into this sort of civil penalty charge, but I disapprove of all that too.

The State, whatever its protests, is a 1000-tonne gorilla. It has immense resources and a monopoly on the use of force as a means of coercion. It has to be self-denying and self-limiting — willing to shackle itself to the rule of law. Or we’ll all end up in unpleasantness.

Now, of course, introducing employer penalties does not inevitably lead to a totalitarian dystopia. It’s not even on the top 10 things this government has done which might lead to a totalitarian dystopia.

In fact, I think it’s very unlikely to have any real negative impact in the wider sense at all. But the nature of this sort of principle is that it’s important enough that you follow it, even when pragmatically the danger seems non-existent.

Even if all of this is wrong, I just think the employment tribunal is the wrong place to be dealing with this sort of fine. A criminal sanction should be applied consistently. Which is why the police and CPS have guidelines about when to take cases to court. Shackling the sanction to unconnected civil litigation means that who gets fined will depend on who gets sued (and who settles). It’s built-in inconsistency.

Furthermore, shoehorning a criminal sanction into a civil trial isn’t likely to do either of them any favours. Tribunals have challenges enough dealing with all the issues of party vs party litigation, without bolting on a bit of party vs State for them to address as well. Does no one think of the poor judges?

Finally (and this might not be a matter of principle at all), I simply can’t stomach a government that imposes a draconian cap on the compensation that claimants can receive, while attempting to trouser a wedge of cash for itself.

The average UK salary is £27,000 (and therefore so is the unfair dismissal cap for the average employee). The maximum penalty is £5,000. The government position is that the cap is needed so people don’t have false perceptions of their likely award. This cannot be reconciled with trying to grab up to 18% of the value of the maximum award for the State. The government’s position on this is contemptible. Sufficiently so that my emotions run high and I couldn’t bring myself to support the financial penalty, even if I could put aside my virtuous principles.

To which Richard says:

Yes but no but yes but … darn it, you’ve convinced me. The section 16 penalties are wrong in principle, and employment tribunals the wrong arena. Can we be friends again?

However, I still think the power to impose a penalty will be rarely used, not least because the often low-value claims brought against the kind of exploitative employer at which the power is supposedly aimed, are precisely those claims that have been barred from the tribunal system by the outrageous fees introduced last July. Vulnerable workers subjected to ‘wage theft’ of a few hundred pounds are simply not going to gamble £390 on trying to extract the unpaid wages from a rogue employer.

Even where such claims do make it as far as the tribunal, I suspect the average employment judge will be no more minded to impose a penalty than they have been to date to impose a costs order. And, whilst the number of costs orders – and especially orders against claimants – has crept up in recent years, it is still very small.

Time will tell. As would the quarterly and annual tribunal statistics, were the good people at HMCTS to take the necessary steps to record use of the power. Unfortunately, it seems they have no plans to do so.

To which Michael says:

Darn it, I was hoping you’d turn me around. Then I could urge tribunals to award large penalties against my opponents with a merry heart (although one of the many minor issues with the scheme will be what, if anything, claimants and their lawyers should say about all this). But at least we’re friends again.

I’m much less dogmatic on the issue of how much the new power will be used. It’s really about our gut feelings on how judges will react. And, as anyone will tell you, judges are an unpredictable lot. But, from a judicial perspective, I see the financial penalties as looking more like an uplift for breach of the Acas Code than a costs order.

I think judges regularly get a sense of whether they think an employer is a proper wrong’un who has acted maliciously or just a bit of a ninny who made a mess of things. And the principled argument against the whole idea we’ve discussed above don’t bear on sitting judges. They may think the law shouldn’t be there but, since it is, they’ll have to consider it.

My guess is that, if they peg someone as a wrong’un and can point to something to describe as an aggravating feature, they’ll be willing to impose a financial penalty. In part, I think this is because it won’t require a lot of additional reasoning or fact finding for the tribunal. One of the reasons that costs are rarely awarded is that they often require everyone to embark on a new set of evidence and submissions right at the end of the case, when everyone just wants to go home (or already has).

In the case of financial penalties, things are much easier. All the evidence will be in as part of the liability trial. If, at the end of submissions, a judge thinks a penalty might be appropriate they can flag it with the parties and hear what they have to say. Which probably won’t be much, beyond the respondent arguing that, even if they lose, they haven’t gone as far as aggravated breach. Then the tribunal can cover it in a paragraph or two in their judgment. No muss, no fuss.

Of course, you’re right that the reduced number of claims will hold down the number of these penalties (which, come to think of it, is yet another reason why the tribunal is the wrong venue for this sort of thing). But I think, proportionally, we’ll see a reasonable number of these awards.

As you say, time will tell (particularly if we get the stats). Shall we schedule a follow-up post for about a year’s time?

One of us can crow and the other can explain why they weren’t really as wrong as it looks.

Please feel free to endanger the conscious recoupling of Michael and me by taking sides – leave a comment.