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November 22, 2015

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Will the Justice committee prove to be au fait with access to justice?

We should perhaps take encouragement from the fact that, on the same day it published the transcript of its oral evidence session on the impact of the Coalition’s disastrous employment tribunal fees, the Conservative-majority Justice Committee of MPs also published a scathing report calling on ministers to scrap the Coalition’s disastrous criminal court charge. However, even a quick reading of the transcript reveals deep levels of ignorance and prejudice on the part of some committee members that may yet prevent delivery of a double-whammy to everybody’s favourite justice secretary, Michael Gove.

In particular, several Conservative members of the Committee appear unable to shake off their irrational fear of the patently non-existent Vexatious Claim Ogre. “What is the solution for the employer facing a vexatious complaint? What is your solution to that particular issue, which affects lots of small businesses around the country?” demanded Philip ‘filibuster’ Davies, blithely ignoring a mountain of actual evidence, from the 2007 Gibbons review of employment tribunals – which concluded that “weak and vexatious cases make up only a small minority of tribunal claims” – to any number of past statements by the Federation of Small Businesses (FSB) that the number of such businesses affected by a tribunal claim, vexatious or otherwise, is actually very small indeed.

In October 2014, for example, in its written evidence to the Small Business, Enterprise & Employment Bill committee, the FSB stressed to MPs that “only 3 per cent of our members were summoned before an employment tribunal between 2004 and 2009”, and in its oral evidence to the committee it happily noted that “a very small percentage of our members are damaged by tribunals, which is good news”. Indeed, as noted previously on this blog, at the time Coalition ministers decided (in 2011) to introduce hefty upfront claimant fees, the average private sector employer risked facing an ET claim about once every 27 years. Now, it’s about once every century. Can our valiant entrepreneurs really not cope with such minuscule risk? Maybe they should just stay in bed.

And before anyone says “yes, but 2004-09 is a long time ago”, Mr Davies himself had gone back to the last century to look for data that might prove the existence of the Vexatious Claim Ogre. In what must have been a frustratingly short intervention for a man used to talking non-stop for 52 or even 90 minutes at a time, Mr Davies stated that “between 1999 and 2005, the success rates for discrimination cases at employment tribunals were 28% for sex discrimination, 15% for race discrimination cases and 29% for disability discrimination cases. To most people, that would indicate that quite a lot of vexatious [claims] were being dealt with by the employment tribunals.”

Fortunately, Sybille Raphael of Working Families was on hand to point out to Mr Davies that his figures “do not take into account the far bigger number of claims that are settled, either during the tribunal process or before the tribunal process. They would not be settled if there was no tribunal there.” Shantha David of Unison noted that, in his written evidence to the Committee, the current President of the Employment Tribunals, Brian Doyle, had indicated “that only a very small percentage of claims can be [readily] identified as weak or unmeritorious, and that we need to be a bit careful about the way in which we bandy around the term ‘vexatious’.” Furthermore, Ros Bragg of Maternity Action noted that “we see no evidence that fees are effective in removing weak or vexatious claims”, and Rebecca Hilsenrath of the EHRC agreed that “there is no evidence of the fees having an impact on vexatious claims.”

I suspect that Sybille, Shantha, Ros and Rebecca would be more likely to convince the Pope that God does not exist than to rid Mr Davies of his faith in the Vexatious Claim Ogre, but some of the other myths about fees propagated by Matt Hancock and his mates in the tabloid press took a good pasting during the evidence session. Front-line practitioners Kate Booth of Eaton Smith LLP, Stephen Cavalier of Thompsons solicitors, and Shantha David all confirmed there has been no significant displacement of ET claims (such as breach of contract claims) to the county courts. And, in what may well prove to be the killer evidence to the committee, Kate Booth – who acts for both employees and employers – laid to rest the Ministry of Injustice’s canard that fees would “encourage the use of alternative dispute resolution services, for example, Acas conciliation”:

I sit on both sides of the fence. When I advise an employer, why would they engage in early conciliation? You wait for the employee to pay a fee. Ultimately you want to call their bluff – are they prepared to put their money where their mouth is? – so you sit back and see whether they do it. There is absolutely no incentive to engage early, unless you know you are going to go down. Why would you?

Stephen Cavalier confirmed that “fees have had the opposite effect [to that intended by ministers] – employers sit on their hands and do not engage”, while Sybille Raphael told the committee that, in her experience, “employers [now] wait until the very end – until the hearing fee is paid, three weeks before the hearing – to engage in meaningful discussions, wasting everybody’s time and the tribunal’s resources.” And Shantha David noted that “the average clearance times for multiple [claimant] cases are actually longer than they used to be.”

On fee remission, Emma Wilkinson of Citizens Advice noted that “the complexity of the eligibility requirements is particularly harsh for vulnerable [CAB] clients,” while Sybille Raphael told the Committee that “in our view the fee remission system is very unfair. For instance, if you have just above £3,000 in savings – I believe that we want to encourage people, especially low-paid employees, to save – you cannot benefit from fee remission. We have terrible cases of women who were sacked the minute they told their employers that they were pregnant, but cannot bring a claim for unfair dismissal because there is no way that they can spend nearly half their savings on a highly uncertain employment tribunal claim – especially when we know that, even if they win, there is a 50% chance that the employer will not pay anything, so she would be £1,200 worse off for having dared to claim her rights.”

On the question of whether the cost of the employment tribunal (ET) system should be “moved away from the taxpayer on to those who can afford it”, Sally Brett of the TUC gave the committee members a quick lesson on the wider social and economic benefits of the system:

Often a division is made between taxpayers and users of the ET system, but all taxpayers are potentially users of the ET system, [which is] a very important backstop to ensure that basic rights such as the right to the minimum wage, rights to paid holiday, rights to time off and maternity leave, and rights not to be unfairly dismissed or discriminated against are effective.

Those rights bring important social and economic benefits for this country. They ensure that more people can participate in the labour market without facing unfair discrimination. They give vulnerable workers more job security and stability of income. If there is not that ultimate sanction that employers may face if they breach employment rights, it encourages rogue employers to flout the law, which undermines and puts at a competitive disadvantage businesses that are striving to meet the [statutory minimum] standards or to exceed them and use good practice.

Hopefully, such evidence will help steer the committee towards the only just outcome of its inquiry, even if some of its Conservative members would personally much prefer to accept the laughable oral evidence of James Potts of Peninsula Business Services. Despite having to concede to Andy McDonald MP that he is “not au fait with the particular nuances of the [fee remission] system”, Mr Potts stuck to the line first set out in his firm’s evidence-free written evidence to the committee, that up is down and down is up, and “there really is not an access to justice issue” with fees because “access to justice is through the remission system” – the system, that is, with which he is not au fait.

Thieving an idea from FT journalist and legal blogger David Allen Green (see link in first paragraph, above), I can only imagine the conversation went something like this:

Tory member of the Committee: “So, this inquiry is to give Michael some political cover for a retreat?”

Bob Neill (Committee chair): “That’s right.”

Tory member: “In which case, we need the pro-fees evidence from the employer lobby to be really crap.”

Bob Neill: “We do.”

Tory member: “Peninsula Business Services?”

Bob Neill: “Make the call.”

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October 14, 2015

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Everything you need to know about the impact of ET fees, but are too afraid to ask

Since October 2013, when the UNISON legal team forced a reluctant Ministry of Injustice to cough up astonishing figures for the number of ET claims made in the previous two months, much has been written and said – not least by yours truly – about the impact of the ET fees regime introduced on 29 July that year. Most of this comment has focused on the sudden, substantial and sustained fall in the number of claims/cases, evident from the Ministry’s quarterly tribunal statistics, but over the last year or so attention has also been given to the seemingly related impact on claim outcomes. In short, it is now increasingly clear not only that the fees have deterred a very large number of potential claims/cases, but also that, on average, those claims ‘lost’ to fees were of greater merit than the claims that have not been deterred by the fees since July 2013. Yet ministers continue to assert, without evidence, that only ‘vexatious’ or “questionable” claims have been deterred by the fees.

In this post, I try to summarise – using some simple charts – what I see as the most important data for assessing the impact of fees on workers’ access to justice. And, in doing so, I will expand on my submission to the current inquiry into court and tribunal fees by the Justice select committee of MPs.

I strongly recommend that you read this post in conjunction with the excellent House of Commons library briefing paper, written by the excellent Doug Pyper and Feargal McGuinness, and published last month. And you might also want to read the submissions to the Justice committee’s inquiry from the Fawcett Society, the Law Society, Maternity Action, the President & Regional Employment Judges (England & Wales), the TUC, the Equality & Human Rights Commission (EHRC), and Working Families. The submission by Working Families includes this case study of what justice secretary Michael Gove would call ‘rough justice’:

Camilla, pregnant and until very recently working 30 hours per week as a hotel cleaner on a zero-hours contract, contacted the Working Families legal helpline in 2015 after being summarily dismissed for taking time off work due to a pregnancy-related illness. The helpline team considered Camilla to have a strong claim for unlawful pregnancy-related dismissal, but she was unwilling to risk up to £1,200 of her savings on issuing and pursuing a tribunal claim. Not without difficulty, Camilla had managed to save just over £3,000 to cover the extra expense she knew would come with having a baby – not least because she would receive only the statutory rate of maternity pay (just 60% of the National Minimum Wage) while on maternity leave. And those savings meant that Camilla would not be eligible for any remission of the tribunal fees.

The impact of fees on ET claim/case numbers

To fully understand the impact of fees on access to justice, it is important to understand that there are two different types of ET case: (a) single claims/cases brought by individual workers; and (b) multiple claimant cases involving tens, hundreds or even thousands of workers, each with an identical (or very similar) claim against the same employer. For example, in 2012-13 – the last full year before fees – there were 54,704 single claims/cases, and 6,104 multiple claimant cases involving a total 136,837 claimants, brought against an overall total of 60,808 employers (give or take some single claims brought against the same employer).

Most press and media reports about ET claim/case numbers misleadingly cite the grand total number of claimants (i.e. 54,704 + 136,837 = 191,541 in 2012-13), but that figure gives a grossly inflated impression of the ET system’s workload as, in most multiple claimant cases, the system will only need to determine one or a handful of lead claims. It is far better to focus on either the total number of cases (i.e. 60,808 in 2012-13) or, better still, the number of single claims/cases.

Not only is this the most meaningful measure of the ET system’s varying workload – and, indeed, the measure now favoured by the Ministry of Justice – but, as the vast majority of multiple claimant cases in recent years have been equal pay claims brought against local authorities and NHS trusts, it is also the most relevant measure when considering the impact of ET claim/case numbers on private sector employers. In that context, it is also worth bearing in mind that approximately one-third of all single claims/cases are also brought against public or voluntary sector employers.

In fact, and as the following chart shows, since July 2013 there has been a substantial and sustained fall both in the total number of new cases, and in the number of new single claims/cases. (The unusually high number of claims/cases in July 2013 was undoubtedly due to some claims being submitted earlier than they would otherwise have been, in order to beat the introduction of fees on 29 July).

Much the same pattern – of claim/case numbers remaining steady or declining no more than marginally between January 2012 and June 2013, then plummeting from August 2013 onwards – can be seen if we look at some of the major jurisdictions.

Equal pay and sex discrimination are two of the few jurisdictions in which there was an upwards trend in claim numbers, prior to the introduction of fees in July 2013.

While the officially stated objectives for the fees regime do not include ‘deterring potential claimants’, it is (and always was) abundantly clear that this was in fact the principal objective of ministers. For example, in November 2014, the then justice secretary, Chris Grayling, stated that, by introducing fees, the Coalition government was “trying to deal with a situation where it was too easy to go to a tribunal and where employers, often good employers, were easy prey for questionable claims”. And in June 2015, the current justice secretary’s legal counsel, David Barr QC, told the Court of Appeal that the ‘policy problem’ that fees were intended to address was that “there were increasing numbers of [ET] claims and the existing model was unsustainable.”

In fact, as the following chart shows, having flat-lined in the mid-2000s, and then risen to a peak in 2009-10, at the height of the wave of business failures and redundancies that followed the onset of economic recession in late 2008, the number of single claims/cases was already falling when ministers announced their intention to introduce ET fees in November 2011. And, by the time fees came into force in July 2013, the (modest) “historic downward trend” in single claim/case numbers now cited by ministers as an alternative to the introduction of fees as an explanation of the decline in claim/case numbers was already well established. Indeed, by that time, claim/case numbers had fallen back to the pre-recession, record low level of the mid-2000s.

The number of claims/cases ‘lost’ to fees

As is clear from the above charts, the introduction of fees in late July 2013 had an immediate, substantial and sustained impact on ET claim/case numbers: in August 2013, the number of new claims/cases fell off a cliff, and has not recovered since. In the six months up to 31 March 2014 – i.e. up to immediately prior to the introduction of Acas early conciliation in April 2014 (see below) – new ET cases (single claims/cases + multiple claimant cases) were down 62% on the same period in 2012-13, from 30,095 to 11,508. Unfair dismissal claims were down by 64%, sex discrimination claims by 80%, and equal pay claims by 84%. In the words of Lord Justice Underhill in the Court of Appeal in July 2015:

It is quite clear … that the introduction of [ET] fees has had the effect of deterring a very large number of potential claimants.

Indeed. And that “very large number” is easily quantified, by comparing the actual number of single claims/cases against the number we could have expected, had fees not been introduced in July 2013. To do so, we simply need to generate projections allowing for (a) the “historic downward trend” in case numbers that began in 2010/11, but which ministers either failed to spot or ignored in 2012, when deciding to introduce fees; and (b) the introduction of Acas early conciliation, which was intended to bring about a 17 per cent reduction in the number of claims, in April/May 2014.

Clearly, that “historic downward trend” may not have continued at the same rate (or even at all) in recent quarters, and the actual impact of Acas early conciliation appears to have been more modest than intended – the combined impact of any remaining downward trend and the introduction of early conciliation has been an annual rate of decline of just 15.4%. So the following chart sets out two alternative projections (one low, one high) of single claim/case numbers.

For the ‘low’ estimate (Projection A), I have assumed that claim/case numbers continued to decline at an annual rate of 6.3% over all eight post-fees quarters, and that the introduction of Acas early conciliation caused a further 17% reduction over the last four quarters. And, for the ‘high’ estimate (Projection B), I have assumed that claim/case numbers declined by 3% over the first four quarters, and then by 15.4% over the last four quarters (i.e. the same rate as the actual decline due to the combined impact of Acas early conciliation and any remaining ‘historic downward trend’).

According to these calculations, as of 30 June 2015, the “very large number” of potential single claimants deterred by and so ‘lost’ to fees was somewhere between 47,350 and 52,200, and continues to rise by some 5-6,000 every quarter. Furthermore, based on historic (i.e. pre-July 2013) case outcome trends, about 80% of those individuals – four out of every five – would have obtained a favourable judgment or settlement, had fees not been introduced. (Note that these figures do not include any claimants in multiple claimant cases ‘lost’ to fees. The number of such MCCs has also declined since mid-2013, but that decline may well be due to factors other than the fees).

How many of the claims/cases ‘lost’ to fees were meritorious

As it is pretty much indisputable that – after allowing for the “historic downward trend” in claim/case numbers and the introduction, almost a year after fees, of Acas early conciliation – some 47-52,000 single claims/cases have been ‘lost’ to fees (as of 30 June 2015), the key outstanding question is: how many of those ‘lost’ claims/cases are likely to have been meritorious?

There is of course no way of knowing for sure. Because – as noted recently by the Department for Business, Innovation & Skills – “only an employment tribunal can determine whether unlawful discrimination or unfair dismissal has occurred.” And, by definition, none of the 47-52,000 single claims/cases ‘lost’ to fees will ever go before a tribunal. (It is worth noting that this was a key factor in the failure of UNISON’s two applications for judicial review – the courts said they needed to see individual cases of ‘justice being denied by the fees’, but by definition cases in which the claimant has been deterred by fees yet a tribunal has found their claim to be meritorious simply don’t – and can’t – exist).

However, in July this year, when giving oral evidence to the Justice committee of MPs on the work of his Ministry, justice secretary Michael Gove appeared to suggest that none of these 47-52,000 single claims/cases ‘lost’ to fees were meritorious, stating:

“There is no evidence yet that the bar being set at a high level has meant that meritorious claims by people who feel they’ve been discriminated against aren’t being heard.”

Yet it simply defies logic to think that the impact of ET fees could have been so precisely calibrated by the Ministry in 2012 that some 47-52,000 unmeritorious claims/cases have been deterred by fees in just two years, without even one potential claimant with a meritorious case being so deterred. Moreover, the available evidence on claim/case outcomes flatly contradicts the justice secretary’s assertion that none of the 47-52,000 single claims/cases ‘lost’ to fees were meritorious.

Were it the case that all (or even just most) of the 47-52,000 single claims/cases ‘lost’ to fees were without merit, then we could expect the overall success rate of claims to have risen substantially. And, as the average ‘age’ of concluded cases is about nine months, this effect would have become clearly evident in the official outcome statistics from at least the first quarter of 2014/15 onwards, if not earlier.

Yet, as the following chart shows, far from rising, the overall success rate has fallen in each of the last five quarters, from 79% in 2013/14, to just 62% in the last quarter of 2014/15. In the first quarter of 2015/16 (April to June 2015), the figures for which were published last month, the overall success rate did leap to 75%. However, this figure is substantially inflated by unusually high proportions of (i) equal pay claims being conciliated by Acas or withdrawn (80%, compared to 40% in the same quarter in 2014/15); and (ii) unfair dismissal claims being conciliated by Acas (69%, compared to 32% in the same quarter in 2014/5). And, of course, outcome figures are given in terms of jurisdictional claims, not cases, so are easily skewed by one or two large multiple claimant cases. If we remove those two jurisdictions from the picture, then the overall success rate in the first quarter of 2015/16 falls to 62% – the same as in the previous quarter.

Now, it can be argued that the ‘overall success rate’ shown above is too broad a measure of ‘success’. And it is true that, while the great majority of withdrawn claims are withdrawn as a result of a settlement of the claim, this is not true of all cases. So the following chart shows more narrow definitions of both ‘success’ and ‘failure’, excluding claims conciliated by Acas or withdrawn. And, again, we can see that, from the first quarter of 2014-15, both the ‘success’ rate and the ‘failure’ rate have moved in the opposite direction to what could be expected, were all or even just most of the claims ‘lost’ to fees of little or no merit.

As with the more broadly-defined ‘overall success rate’, the figure for ‘unsuccessful’ claims disposed of in quarter 1 of 2015-16 is distorted by the unusually high rate of equal pay and unfair dismissal claims conciliated by Acas or withdrawn, so the orange line excludes these two jurisdictions.

Such analysis tends to confirm the view of experienced employment law practitioners that, by and large, it is the ‘high merit but low value’ claims/cases by relatively low-income workers that have been deterred by fees. Yet, in the words of one (respondent) lawyer, “the fees regime really isn’t preventing [speculative] claims with little merit” by high earners, who can “easily afford” the issue fee of £250 “in the hope of making a return on this investment.”

Other considerations

In addition to citing the “historic downward trend” in case numbers and introduction of Acas early conciliation as factors that might explain at least some of the dramatic fall in ET case numbers since July 2013, ministers have repeatedly suggested that some potential ET claimants have simply decided to issue the claim in the County Court, where issue and hearing fees are lower, instead of in the ET.

It is certainly possible that some single claims/cases have been displaced to the County Court. However, all but a few types of claim can only be brought in the tribunal and – while there is some anecdotal evidence of large multiple claimant cases having been brought in the civil courts instead of the tribunal – I am not aware of any actual evidence of such displacement of single claims/cases. Accordingly, there is no good reason to think that such displacement accounts for more than a very small proportion of the 47-52,000 single claims/cases ‘lost’ to fees since July 2013.

Ministers have also stated – repeatedly – that access to justice has been preserved by the existence of the fee remission scheme. A great deal has been said and written about the adequacy or otherwise of that fee remission scheme, but here I simply note that the theoretical availability of full or partial fee remission to claimants on a very low income – and with less than £3,000 of household savings – has patently not protected access to justice for the 47-52,000 individual claimants ‘lost’ to fees since July 2013. More particularly, it has not protected access to justice for the 80% (i.e. 38-42,000) of those men and women who – based on historic case outcome trends – we can reasonably expect to have obtained a favourable judgment or settlement, had fees not been introduced.

Conclusion

Even after allowing for a pre-existing (but modest) downward trend in claim/case numbers, and for the (intended) impact of the introduction of Acas early conciliation in early 2014, the introduction of prohibitively high claimant fees in July 2013 has deterred some 47-52,000 single claims/cases in just two years. All the available evidence – including individual case examples, the experience-based views of a large number of employment law practitioners, and the official statistics on claim outcomes cited above – strongly counters the Government’s apparent position that none of those 47-52,000 single claims/cases were meritorious. And, prior to the introduction of fees, no credible commentator ever suggested that two-thirds of all such claims/cases were “vexatious”, “bogus” or otherwise without merit.

Apart from the obvious detriment to the 47-52,000 individuals in question, this amounts to a significant diminution of the ‘deterrence’ value of the ET system, with an associated risk of increased incidence of unlawful employment practice by rogue and dinosaur employers. That is not in the long-term interest of law-abiding employers, who quite rightly expect a level-playing field on which to compete with business rivals.

Yet this avoidable damage to access to justice and the ‘deterrence’ value of the ET system has brought negligible financial benefit to the government. In 2014-15, net income from ET fees (after both remission and annual administrative costs of some £1.3m) was just £4.3m – less than half the £10m that, in 2012, the Ministry said it expected fees to generate each year. (There have of course been more substantial operational cost savings due to the two-thirds fall in case numbers, but such savings were never an officially stated objective for the fees).

In short, only an idiot would deny that the fees regime needs to be reformed. What that reform should look like, I will explore in a future post.

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September 11, 2015

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The latest quarterly ET stats in three charts

Yesterday saw the publication by the Ministry of Injustice of the latest set of quarterly ET statistics, covering the period April to June 2015 (i.e. Q1 of FY 2015/16). This is no longer as exciting an event as it used to be, back in the first half of 2014, when each new set confirmed the dramatic and sustained impact on claim/case numbers of the hefty, upfront fees introduced on 29 July 2013. But for wonks like me the statistics are still of great interest, not least for what they tell us about the trend in claim outcomes, which in turn tells us quite a lot about the ‘rough justice’ effect of fees. So here are a few charts, covering what I see as the most interesting aspects of the statistics.

ET case numbers now appear to have stabilised

For obvious reasons, there was great variation in the monthly number of new ET cases in the summer of 2013, linked to the introduction of fees, and in the spring of 2014, linked to the introduction of ‘mandatory’ early conciliation by Acas. However, the figures for Q1 of 2015/16 suggest that case numbers have now stabilised, at about one-third of pre-fees levels.

Some 50,000 single claims/cases have already been ‘lost’ to fees

In July, when dismissing Unison’s appeal against the High Court’s rejection of its two applications for judicial review of the fees regime, Lord Justice Underhill stated: “It is quite clear … that the introduction of fees has had the effect of deterring a very large number of potential claimants.” And we can easily quantify that “very large number”, by comparing the actual number of single claims/cases against the number we could have expected, had fees not been introduced in July 2013. To do so, we simply need to generate projections allowing for (a) the “historic downward trend” in case numbers that began in 2010/11, but which ministers either failed to spot or ignored in 2012, when deciding to introduce fees; and (b) the introduction of Acas early conciliation, which was intended to bring about a 17 per cent reduction in the number of claims, in April/May 2014.

Clearly, that “historic downward trend” may not have continued at a constant rate (or even at all) into recent quarters, and the actual impact of Acas early conciliation appears to have been more modest. So the following chart sets out two alternative projections (one low, one high) of single claim/case numbers. I won’t bore you now with the detailed assumptions behind each projection, but if you’re keen to know just get in touch.

Based on these projections, and ignoring multiple claimants (the numbers of which are not so predictable), Underhill LJ’s “very large number of potential claimants” deterred by fees was somewhere between 47,350 and 52,200, as of 30 June 2015, and continues to rise by some 5-6,000 every quarter (so, at the time of writing, might well be approaching 60,000). Furthermore, based on historic case outcome trends, about 80 per cent of those 47-52,000 workers would have obtained a favourable judgment on or settlement of their claim, had fees not been introduced.

There is still no evidence to support the Grayling-Hancock theorem

According to the Grayling-Hancock theorem – which seems unlikely to win The Fields Medal for its authors – every single one of those 47-52,000 single claims/cases ‘lost’ to fees was a “vexatious”, “bogus” or otherwise unfounded claim that should never have been brought in the first place. Yep, every single one – for there has been absolutely no ‘rough justice’ as a result of the fees.

However, were it the case that all (or even just most) of the 47-52,000 single claims/cases ‘lost’ to fees were “vexatious” or otherwise without merit, then we could expect the overall success rate of claims to have risen substantially in recent quarters (the average age of a concluded case is about nine months, so the vast majority of claims determined in recent quarters will have been issued after July 2013).

Yet, as the following chart shows, the overall success rate has fallen steadily in recent quarters, from 79% in 2013/14, to just 62% in the last quarter of 2014/15. Yesterday, I tweeted a hastily-constructed chart showing that, in Q1 of 2015/16, the overall success rate leapt to 75 per cent – how they must have cheered in the Ministry of Injustice!

However, on closer inspection of Tables 2.2 and 2.3 of the official stats, we can see that this figure was substantially inflated by unusually high proportions of equal pay claims being conciliated by Acas or withdrawn (80 per cent, compared to 40 per cent in Q1 of 2014/15), and of unfair dismissal claims being conciliated by Acas (69 per cent, compared to 32 per cent in Q1 of 2014/5). And, of course, outcome figures are given in terms of jurisdictional claims, not cases, so are easily skewed by one or two large multiple claimant cases. If we remove those two jurisdictions from the picture, then the overall success rate in Q1 of 2015/16 falls to 62 per cent – the same as in the previous quarter.

Clearly, we’ll have to see (when the statistics are published in December) what happens in Q2 of 2015/16, but I think it’s fair to say that, at the time of writing, there remains no evidence whatsoever for the Grayling-Hancock theorem.

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July 27, 2015

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The secret of Acas’s success

Just weeks after erroneously informing us that employment tribunal case numbers are “bouncing back following the slump after the introduction of fees”, on Friday the Law Society’s Gazette trumpeted that Acas early conciliation has “cut tribunal cases in half” since its implementation in April 2014.

To be fair, the (very short) news report is a lot more accurate than its headline – so much so that you have to wonder which narcotic substance the sub-editor was enjoying at the time he or she came up with the headline. And perhaps it really doesn’t really matter whether a sub-editor at the Gazette knows the difference between ‘up’ and ‘down’. But if the self-proclaimed “publication of record to solicitors in England and Wales” can get so confused about basic legal matters, we can’t really blame less specialist news outlets (and politicians) for soaking up and repeating such canards. So it’s worth setting out in detail just how wrong that headline is.

The relevant official statistics are freely available. And – especially if we put them into a chart – even Gazette journalists, with their uncritical eye, should be able to see immediately that the implementation of Acas early conciliation in April 2014 has not reduced the number of ET cases by anything like 50%.

In January and February 2014 – by which time ET case numbers had pretty much stabilised following the introduction of fees in July 2013 – the average monthly number of new ET cases (single claims/cases + multiple claimant cases) was 1,922. And, over the three months up to March 2015 – the most recent months for which the figures are available – it was 1,626. That’s a reduction of 15.4% – which is slightly less than the 17% reduction predicted in the then government’s final regulatory impact assessment in February 2014, and a lot less than the 50% reduction now trumpeted by the Gazette.

Furthermore, no one can say with certainty that all of that 15.4% reduction can be credited to the implementation of ‘mandatory’ Acas early conciliation. As noted previously on this blog, some ministers seem to believe there has been a significant ‘downward trend’ in ET claim numbers in recent years, as the economy has slowly recovered from the near-fatal shock administered by bankers in 2008. And, if they’re right, some of that 15.4% reduction would have happened anyway.

So, how do we square this modest reduction of 15.4% with the fact – more accurately reported by Gazette journalist Chloe Smith in the body of her news report – that Acas is “preventing” about half of the cases notified to it under the early conciliation scheme from progressing to a tribunal claim? Well, one theory, previously set out on this blog, is that Acas is now hoovering up (and conciliating) lots of workplace disputes that would never have become a tribunal claim in any case.

Which, it must be emphasised, is arguably a very good thing. It has always been clear that the overall number of workplace disputes (or potential tribunal cases) far exceeds the actual number of tribunal cases. And, even before the introduction of hefty, upfront fees, many potential tribunal claimants were deterred by the likely time, stress and cost involved – in March 2014, the then minister for employment relations, Jenny Willott, wrote: “it costs on average £1,800 to present a claim at tribunal”. And now it would seem Acas is helping to resolve some of those ‘non-tribunal’ disputes. Bully for Acas, I say.

But the evident ‘success’ of Acas in hoovering up and resolving those ‘extra’ disputes is a separate matter to the (evidently modest) impact of early conciliation on the actual number of tribunal cases. And, of all people, journalists and sub-editors at the Law Society’s Gazette really ought to understand that.

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June 11, 2015

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ET fees: Ministry of Injustice starts hunt for the X Factor

So, the Ministry of Injustice has finally decided to launch its long-promised review of the employment tribunal fees introduced in July 2013. This is the review, you might remember, that the Ministry was busy “finalising” the timing and scope of as long ago as June 2014. And it’s no doubt entirely coincidental that, next week, the Court of Appeal will hear Unison’s appeal against the High Court’s dismissal of their application for judicial review of the fees regime.

The wording of today’s announcement provides little cause to think that work-starved employment lawyers should hold their breath until the outcome of the review. To my jaundiced eye, the stated terms of reference suggest the Ministry will be scouring all kinds of tribunal and economic data for any factor – other than the fees, obviously – that might possibly have contributed, even just a tiny bit, to the sharp decline in ET case numbers since July 2013. So the Ministry’s finest minds will be studying the “historic downward trend” in the number of ET claims – you’ll no doubt remember how much Vince Cable and other ministers made of that trend in late 2011 and 2012 – as well as the impact from “the improvement in the economy” and “changes to employment law”.

I’ll come back to those factors in a minute, but today also saw the scheduled publication of the latest set of quarterly ET statistics. These new figures remind us just how big the fall in case numbers has been since July 2013. And, perhaps more interestingly, especially to the crack employment team at top 100 law firm Hugh James, they suggest that exploited and mistreated workers, having ‘acclimatised’ to the fees in Q3 of 2014-15, somehow de-acclimatised in Q4. I’m looking forward to reading about this in the Law Society Gazette, but meanwhile here’s a chart.

But back to those legal and economic factors (other than the introduction of hefty, upfront fees in July 2013) that – three, six or maybe 24 months from now – the Ministry will no doubt inform us wholly explain the fall in ET case numbers since July 2013. As is evident from the above chart, and as reported ad nauseam on this blog, there was a modest downward trend in ET case numbers in the quarters immediately prior to the introduction of fees, quite possibly linked to the steady improvement in the economy in recent years. From Q2 of 2012/13 to Q1 of 2013/14 – the last full quarter before fees – the number of new single claims/cases declined by 5%, from 13,407 to 12,727.

I imagine the Ministry boffins will find no reason to assume that that modest downward trend would not have continued, had fees not been introduced in July 2013. Indeed, they may well find reasons to argue that it would have accelerated. So, let’s assume that, over the next three quarters, single claims/cases declined by 6%. In that scenario, the number of such claims/cases would have fallen to 11,963 by Q4 of 2013/14, the last full quarter before the implementation of Acas early conciliation (from 6 April 2014). And – if that 6% rate of decline continued – by Q4 of 2014/15, the quarter for which the figures were published today, single claims/cases would have fallen to 11,010. Which, it’s worth noting, would have been a record low, unseen since the passing of the first Corn Laws in 1815.

Now, that implementation of Acas early conciliation (which became mandatory in May 2014) may well be what the Ministry had in mind when referring, in the review’s terms of reference, to the impact on ET case numbers of “changes in employment law”. Because the primary aim of Acas early conciliation was to reduce the number of claims/cases by a whopping 17% (that being the figure given in the final BIS impact assessment). So, from Q1 of 2014/15 onwards, we need to reduce the number of single claims/cases in my ‘no fees’, downward trend projection by 17%. And, if we do that, we get the following chart, in which the green columns represent the number of single claims/cases we might have expected to see in each quarter, had fees not been introduced, and the red columns represent the actual number of such claims/cases.

We can total up the differences between the red and green columns, and that gives a figure of 36,210 single claims/cases ‘lost’ to ET fees between 29 July 2013 and 31 March 2015, after allowing for the ‘historic downward trend’ in case numbers and the introduction of Acas early conciliation. And that figure continues to increase by some 5,000 every quarter (so is, at the time of writing, in excess of 40,000).

Now, I can’t think of any other significant (and relevant) change in employment law since July 2013, and I have difficulty imagining what “changes in users’ behaviour” might explain more than a tiny bit of the difference in the height of the green and red columns in recent quarters (there is no evidence to suggest that displacement of single claims/cases to the County Courts has been more than negligible). So I think I’ve just about done the Ministry’s job for it. For nothing. In an afternoon.

But perhaps the Ministry’s boffins will find some X Factor I have stupidly overlooked.

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June 2, 2015

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Are ET claims going up? Yes but no but yes but no but … whatever!

On Monday afternoon, I was happily wandering through a series of dimly-lit rooms, admiring some rather fine naked bodies in all manner of unlikely poses, when a series of tweets by #ukemplaw tweeps alerted me first to one, then to another, and then to a third news report, each announcing new hope for Britain’s work-starved employment lawyers.

“Employment tribunal claims up 75 per cent in 12 months”, screamed The HR Director, which claims to be “the most respected independent resource for HR directors and senior HR practitioners in print, in person and online”.

“Employment tribunal caseload rebounds after slump”, bellowed the Law Society Gazette, which claims to be the “publication of record to solicitors in England and Wales since 1903”.

And – a little more wonkishly – the Solicitors Journal, which claims to have been “a reliable and trusted source of information for thousands of legal professionals” since 1856, helpfully explained that “Employment tribunal cases are on the up as claimants adjust to new fee system.” [NB – article since deleted, it seems]

Hallelujah! Crack open the champagne! Come back Chris Grayling, all is forgiven. Let the gravy train roll!

And then – cynic that I am – the doubts began to set in. Surely the latest set of ET statistics isn’t out until next week, I mused, while sneaking a closer peek at a chiseled pair of buttocks. So, pausing only to check out some extremely pornographic vases, I read beyond the dramatic headline of each news report.

The number of single claims in ET cases has jumped by 16 percent in just six months, rising from 3,790 in Q1 [2014/15] to 4,390 in Q3 2014/15, as the slump in cases reverses, says Hugh James Solicitors, the top 100 law firm. Hugh James Solicitors says that the number of employment tribunal cases fell from 10,900 in Q2 2013/14, after the introduction of tribunal fees. However, the number of claims is now re-bounding as disgruntled former employees adjust to the new fees and weigh the financial risks to them of pursuing a claim against the potential pay-out. Hugh James Solicitors notes that when multiple claims are included in the analysis, the increase in the number of tribunal cases is even more striking – rising by 75 percent from 10,840 to 18,940 in a year. Emma Burns, Partner, Head of Employment and HR Services Group at Hugh James Solicitors, explains: “The cost for launching a claim is between £160 to £250; when they were first introduced it was a shock, but now people are more acclimatised to these fees.” (The HR Director)

Employment tribunal cases have rebounded in spite of the introduction of fees and it is still too easy [!!!!] to bring a spurious claim, a leading law firm has said. Claims have doubled [sic], with a similar trend in Scotland, since the requirement was introduced a year ago to use the Acas mediation service before launching a case, according to Hugh James Solicitors. Tribunal cases at first slumped by almost two-thirds in response to the [fees]. But claims have rebounded “as disgruntled former employees adjust to the new fees and weigh the financial risks to them of pursuing a claim against the potential pay-out,”, the firm says. (This was The Herald in Scotland – from where things always look a lot worse, apparently.)

The number of claims in employment tribunals is bouncing back following the slump after the introduction of fees, figures obtained [sic] by a law firm reveal today. Top-100 firm Hugh James said that the number of single claims in tribunal cases has jumped by 16% in six months, rising from 3,790 in the first quarter [2014/15] to 4,390 in the third quarter. Hugh James said the number of claims is now rebounding as disgruntled former employees adjust to the new fees and weigh the financial risks to them of pursuing a claim against the potential pay-out. Emma Burns, partner, said: ‘The cost for launching a claim is between £160 to £250; when they were first introduced it was a shock, but now people are more acclimatised to these fees.’ (Law Society Gazette)

The recent and highly-publicised slump in ET cases has reversed, say lawyers, as reports emerge single claims have risen by 16 per cent over the last six months. Hugh James Solicitors observed [sic] that employment tribunal cases fell from 10,900 in Q2 2013/14, after the introduction of tribunal fees. However, the number of claims has begun to rebound as disgruntled former employees adjust to the new fees and weigh the financial risks of pursuing a claim against the potential pay-out. Emma Burns, partner and head of employment at Hugh James Solicitors, explained: ‘The cost for launching a claim is between £160 to £250; when they were first introduced it was a shock, but now people are more acclimatised to these fees.’ (Solicitors Journal)

The number of employment tribunal cases is rebounding, after falling when tribunal fees were introduced, according to research [sic] released today by Hugh James Solicitors. “The cost for launching a claim is between £160 to £250; when they were first introduced it was a shock, but now people are more acclimatised to these fees,” said Hugh James Solicitors partner Emma Burns. (This was CityAM, which clearly thinks it knows a good bit of legal research when it sees it.)

Yes – and I’m truly sorry to have to break this to you, employment lawyers – we’ve been here before. It’s the old ‘Get Our Law Firm’s Name in The Papers in The Hope of Drumming-up Some Much-needed Business by Issuing a Press Release With an Eye-catching But Rubbish Story About ET Claim Numbers’ trick. Last year, it worked rather well for GQ Employment Law, who were rewarded by the legal editor of the Times, Frances Gibb, with a very silly story about how discrimination claims were bucking the steeply downward trend under fees. And in 2013 it worked extremely well for law firm EMW, for whom publicists Mattison PR [sic] secured splashes in both the Times and Telegraph, later picked up by HR Magazine and the CIPD. (Incidentally, Nick Mattison of Mattison PR wasn’t very pleased when I wrote about EMW – he rang one of my then senior managers to complain about me).

And here – kindly provided to me (via email) by Catherine Sirikanda of Mattison PR [sic] – is the press release issued by Hugh James Solicitors on Monday (I’ve had to crop the bottom of the left hand page but – believe me – you’re really not missing anything):

So, just how stale and silly is the story sold to The HR Director, CityAM, the Law Society Gazette, The Herald in Scotland, and Solicitors Journal by Hugh James Solicitors (or Mattison PR)? Have mistreated and exploited workers become “more acclimatised” to ET fees?

Well, the official statistics that The Law Society Gazette reports as being “obtained” by Hugh James Solicitors were, of course, published by the Ministry of Justice on 12 March. And you really don’t have to have spent nearly three months studying those statistics to ‘observe’ that the number of single claims/cases did indeed increase by 16% from 3,792 in Q1 of 2014/15 (erroneously referred to as Q1 of 2013/14 in the Hugh James press release – an error dutifully copied out by both The HR Director and Law Society Gazette), to 4,386 in Q3 (October to December 2014). Or to ‘observe’ that the number of multiple claims increased from 4,478 to 18,943.

But can we conclude from this that would-be ET claimants have become “more acclimatised” to ET fees? Indeed, can we conclude anything at all from these figures?

Well, the short answer to both questions is: no. And the slightly longer answer is: only if you are an idiot (or a journalist at The HR Director, the Law Society Gazette, CityAM, The Herald in Scotland, or Solicitors Journal with a law firm’s press release to copy out before your deadline).

Because you only have to spend less than three minutes looking at Table 1.2 of the Ministry’s statistics – freely available even to Law Society Gazette and The Herald journalists since 12 March, remember – to see one obvious explanation for at least a large part of this counter-intuitive rise in the number of ET claims, from Q1 to Q3 of 2014/15.

We can see, for example, that equal pay claims actually fell, from 1,995 to 1,759, as did redundancy claims, from 900 to 675. Meanwhile breach of contract claims rose by a less than whopping 4.3%, from 1,928 to just 2,012. But Working Directive claims rose by 488%, from 2,171 to 10,604, and Unauthorised Deductions claims rose by 420%, from 2,545 to 10,701. And, frankly, you don’t have to be a former Pulitzer Prize winner to realise what was going on here. In short, a high-profile (and certainly well-reported) legal ruling on holiday pay in early November led to a (relatively small) tsunami of holiday pay claims in the final weeks of 2014, as workers (and their unions and lawyers) rushed to take advantage of the ruling. Do a few basic sums to take those extra holiday pay-related claims out of the picture, and the total number of jurisdictional claims increased from about 27,100, to about 38,800.

Yes, that is still a rise of some 43%, from Q1 to Q3. But you also don’t have to be a legal genius to know that the figures for Q1 were artificially (and quite considerably) depressed by the implementation, at the start of that quarter, of Acas early conciliation, which introduced a one-month delay in the registration of new ET claims (known to employment lawyers everywhere – other than those at Hugh James Solicitors, it would seem – as the ‘Acas pause’). This ‘Acas pause’ is plainly evident in the columns for May and June 2014 in the following chart, which – unless you are Emma Burns or Catherine Sirikanda – you have probably seen at least one version of before.

So an increase in the quarters immediately following Q1 of 2014/15 was inevitable, and by itself tells us nothing whatsoever about the relative inclination of mistreated workers to issue an ET claim. It is (much) more meaningful to compare Q3 of 2014/15 to Q4 of 2013/14 (i.e. the three months immediately prior to the introduction of Acas early conciliation). And when we do that, we can see that the figure for single claims hailed as a 16% increase by Hugh James Solicitors – 4,386 – was still well below the 5,619 just nine months earlier, and the 4,969 in the quarter before that. I don’t see much ‘acclimatisation to fees’ in those figures, or indeed in the above chart.

So, well done Emma Burns of Hugh James Solicitors, you got your firm’s name in the papers. But it’s a moot point whether you have acted in a way that is consistent with ensuring public trust in the legal profession. And you certainly haven’t enhanced your personal entry for Employment Law Genius of the Year.

[BTW, you can see those impressive naked bodies and pornographic vases at the British Museum, until 5 July]

Postscript (3 June): As Paul Statham has today noted on Twitter, the Law Society Gazette article may be rubbish, but the BTL comments are worth reading. So, in case the Gazette decides to follow Solicitors Journal in deleting its article, here are the best of those comments:

This has got to be one of the worst articles I’ve seen on the [Law Society Gazette] website. (anonymous)

Sounds like a desperate PR plug for Emma Burns. And considering that Hugh James are a respondent outfit, how would she know what claimants are thinking? She has come across as a bit of a wally. (Marshall Hall)

Hugh James said the number of claims is now rebounding as disgruntled former employees adjust to the new fees … Emma Burns, partner, said: ‘… when they were first introduced it was a shock, but now people are more acclimatised to these fees.’ These statements make no sense. (anonymous)

That the Gazette should publish unchallenged the PR guff of Hugh James is depressing but not surprising. Slack lazy journalism, and Hugh James should be ashamed but no doubt will not be. (Paul Jeffcoate)

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May 26, 2015

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How not to measure the ‘level of ET claims’. Oh, too late …

Last weekend, Giles Wilkes – who served four years as special adviser to then business secretary Vince Cable – responded to a fairly innocuous blog post of mine, in which I urge new Tory ministers to conduct their long-promised review of the employment tribunal fees regime introduced in July 2013, by tweeting back:

Was there definitely nothing wrong with [the] ex-ante level of claims?

Now, this is uncomfortably close to one of the standard responses to criticism used by political scoundrels throughout public policy history: ‘So, you would have done nothing, huh?’ To which the answer is almost always: ‘No, I just wouldn’t have done what you did’. And my tweeted retort to Giles was indeed that there was “very little” wrong with the level of claims in mid-2011, when Dr Cable and then justice secretary Ken Clarke agreed to introduce hefty claimant fees, not least because claim/case numbers were at that time going down.

However, as one of the good guys in life (and the Coalition government), Giles deserves a fuller response to his question than it is possible to give in one or two tweets. So I promised him this blog post. What a lucky chap he is.

So, what was the ex-ante level of ET claims (or cases) in 2011? Well, the answer to that question is slightly complicated by the fact that there are two different types of ET case: (a) single claims/cases brought by individual workers; and (b) multiple claimant cases involving tens, hundreds or even thousands of workers, each with an identical (or very similar) claim against the same employer. For example, in 2012-13 – the last year before fees – there were 54,704 single claims/cases, and 6,104 multiple claimant cases (involving a total 136,837 claimants), brought against a total 60,808 employers (give or take some single claims brought against the same few recidivist employers). And, as a result, there are two alternative ways of measuring the ‘level of ET claims’.

The first way is to add the number of single claims/cases to the total number of claimants in the relatively small number of multiple claimant cases. This produces the ‘headline’ measure used exclusively (and wrongly) by Coalition ministers in 2011, 2012 and 2013. Giles will know better than me why they chose to use this measure, but the number of claimants involved in a handful of unusually large multiple claimant cases (mostly equal pay claims brought against NHS trusts and local authorities) enabled ministers to make otherwise un-evidenced (and grossly misleading) statements such as:

“Workplace disputes are increasingly being settled through tribunals – over 200,000 claims last year. We are in danger of getting away from the principle that they should be the last resort, not the first option.”

The second – and far more meaningful – way to measure the ‘level of ET claims’ is to total the number of single claims/cases and the number of multiple claimant cases. This is the measure that Dr Cable and Giles Wilkes should have focused on in 2011 and 2012, for two simple reasons: (i) it’s a much more meaningful measure of the workload of the ET system (as, in most multiple claimant cases, the tribunal only has to resolve one or two lead claims, even if there are 50,000 claimants in the case); and (ii) it equates to the number of employers affected. And, if that was obvious to me – a lowly policy officer in an under-resourced charity – in late 2011 and early 2012, it should have been obvious to the business secretary, his SpAD, and the then employment relations minister, Ed Davey.

This measure of the ‘level of ET claims’ is set out in the following chart, from which we can see that, in 2008-9 and 2009-10, the number of ET cases did rise quite significantly. However, as economists, Dr Cable, Giles Wilkes and Ed Davey would have known that this was entirely to be expected, given a little local (and global) difficulty in the economy from late 2008, and the associated wave of job losses and outright business failures. Indeed, in early 2011 a regulatory impact assessment issued by Dr Cable’s department noted that there had been “a clear rise in [the number of ET claims for unfair dismissal] coinciding with the downturn in the economy and particularly the level of redundancies which peaked in the second quarter of 2009”.

We can also see that, in 2010-11 – the first financial year of the Coalition government – the number of ET cases fell by 13 per cent, from 78,700 to 68,500. These figures were published in the autumn of 2011 – several weeks before Dr Cable announced the plan to introduce ET fees on 23 November – but they would have been available to, say, a SpAD in the private office of the business secretary or the BIS employment relations minister several months before that.

So, when Dr Cable told that somewhat partisan audience at the EEF in November 2011 that “we are in danger of getting away from the principle that [ETs] should be the last resort, not the first option”, he knew – or should have known – that the level of claims was in fact falling sharply. And, later, he would (or should) have known that this downward trend continued in both 2011-12 and 2012-13, as he and Ken Clarke (later Chris Grayling) finalised the ET fees regime for implementation in July 2013 – by which time the ‘level of claims’ was pretty much back to its lowest level since the turn of the century. In short, Dr Cable and his ministerial colleagues at the Ministry of Injustice could have ‘achieved’ a record low level of ET claims without even going into the office.

Now, Giles might well say that, just because the level of claims was falling, it cannot be said that there was nothing wrong with the level of claims. I cannot actually recall Dr Cable, Ed Davey or Norman Lamb making any speeches along the lines of ‘the level of ET claims is falling to a record low, but that is still far too high so we must take radical action to reduce it by another 65 per cent, and sod access to justice’, but hey. Nor can I recall even the maddest of the employer lobby groups suggesting that two-thirds of all ET claims were vexatious.

So let’s look at that 2010-11 figure of 68,500 ET cases more closely. Only about two-thirds (i.e. 45,000) of the 68,500 employers affected were private sector businesses, as one-third of all cases (and the vast majority of multiple claimant cases) are brought against public or voluntary sector employers. And there are about 1.2 million private sector employers in the UK. Accordingly, at the time Dr Cable rose to his feet at the EEF in November 2011, the average private sector business employer risked facing an ET claim about once every 27 years. Yet, according to a series of speeches delivered by Dr Cable and other ministers, this marginal risk was enough to keep our valiant entrepreneurial classes awake at night as they fretted over whether to take on another employee.

None of which is to say that, in 2011, there was not scope to improve the speed, consistency and efficiency of the ET system (and, to that end, I was later to play a tiny but entirely supportive role in the Underhill review of the ET procedural rules, also announced by Dr Cable in November 2011). But introducing fees of up to £1,200 to bring a claim for unfair dismissal or pregnancy-related discrimination was never itself going to improve the speed, consistency or efficiency of the system. Nor is it to say there was no case for a genuinely fair and reasonable ET fees regime – I argued for such a fees regime in 2012, including in the response of Citizens Advice to the formal consultation on ET fees, and have continued to do so ever since. Was Giles even aware of such alternative proposals for raising the Ministry’s £9-10 million per year?

In short, Vince Cable appears, at best, to have consented to Tory ministers’ proposal for hefty claimant fees on the basis of an entirely false premise about the ‘level of ET claims’, and without any evident understanding of the predictable (and predicted) impact of such prohibitive fees on workers’ access to justice. But then why spend time searching out the (informed) views of lowly third sector policy wonks or employment lawyers when you can spend it hanging out in the grand offices of the Institute of Directors and British Chambers of Commerce?

Throughout the lifetime of the Coalition, the Liberal Democrat ministers at BIS – Vince Cable, Ed Davey, Norman Lamb, Jo Swinson and Jenny Willott – appeared entirely uninterested in what they might learn from those outside the powerful lobby groups with their vested interests. And now, having ignored us, our evidence and our (dire) warnings for five long years, during which they consented (seemingly without much of a fight) to the single most damaging reform ever made to Britain’s system of employment rights – far more destructive than anything proposed by Adrian Beecroft – they blithely assure us we will miss them.

When it comes to employment rights, what’s to miss?

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March 22, 2015

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ET fees: the BIS minister that time forgot

On Saturday, in a stunning example of the laughably low journalistic standards at the Daily Mail and the inability of some political dinosaurs to adapt to changes in the known environment, the paper re-ran it’s infamous story of the ‘£1.6 billion a year gravy train for employment lawyers’ derailed by ET fees.

In a bold attempt on the world record for the number of factual errors in the opening paragraph of a newspaper article, and appropriately illustrated with a stock photo of a gavel – never used in British courts, let alone employment tribunals – the paper’s political editor, James Chapman, writes:

“The £1.6 billion a year industrial tribunal gravy train has been brought to a shuddering halt. Official figures reveal there has been a fall of almost 80 per cent in the number of cases brought against firms by employees. Business leaders said the Government’s introduction of changes to deter vexatious claims appeared to have ended the damaging ‘no win, no fee’ culture that flourished under Labour.”

At no point in the article does Chapman bother to explain how he arrived at his figure of £1.6 billion a year, but he does throw around a few clues by telling us that, thanks to ET fees:

“The level of claims has returned to levels seen in the early 2000s, before the escalation of no win, no fee cases helped the number to spiral to almost 240,000 a year. Under the last government the taxpayer met the £86 million a year cost of running the tribunals. Firms were spending around £1.6 billion a year in defence costs. The British Chamber of Commerce estimated the average cost to a business of defending itself at tribunal is £8,500, and the average cost of agreeing a settlement is £5,400.”

However, we don’t need Chapman to tell us how he got his £1.6 billion figure, because we know this from the original version of his article, penned by Steve Doughty and which appeared in the Daily Mail as long ago as 29 July 2014. That article – headlined “Hallelujah! The gravy train’s derailed” – informed us that “there were 191,000 employment claims in the financial year to March 2013 … with the average defence costing £8,500.” Multiply £8,500 by 191,000 and you get … £1.6 billion.

Strangely, that July 2014 article made no mention of ‘no win, no fee’ lawyers – the target of Doughty’s wrath being “the multi-billion pound industry built on vexatious discrimination claims against employers.” But the evident source of that vexatious story (and another in the Sunday Express the same week), Conservative BIS minister Matthew Hancock, has this time put his head above the parapet to tell Chapman that:

“Labour’s compensation culture was totally out of hand. It cost millions and warned businesses off creating jobs because of the risk of being held to ransom by a spurious claim. We have worked hard to reform tribunals so they work better and more fairly … and genuine abuses can be dealt with properly and only reach court where absolutely necessary. Yet Ed Miliband has not learned lessons and would reverse this progress.”

In fact, it is Matthew Hancock and James Chapman who have failed both to learn the lessons from the debacle of the Daily Mail’s July 2014 article, and to absorb the factual evidence that has emerged from the Ministry of Injustice over the past eight months.

Let’s leave aside the facts that employment tribunals haven’t been called industrial tribunals since 1998, and that employment tribunal cases are down by some 65 per cent, not “almost 80 per cent”, and focus on Chapman’s ignorant confusion of employment tribunal claims, and employment tribunal cases. For the BCC’s average cost figures of £8,500 for a business to defend itself at a tribunal hearing, and £5,400 to agree a settlement, are per employment tribunal case, not employment tribunal claim. And there have never been 191,000 – let alone 240,000 – employment tribunal cases a year; those figures are for the total number of claims, including both single claimants and all the claimants in the relatively small number of multiple claimant cases. If the concern is the impact of ET claims on business, then it is the total number of cases (single claims/cases + multiple claimant cases) that is most meaningful, since that is also the number of employers affected.

In 2012-13, the headline total of 191,541 claims used by Doughty to calculate his £1.6 billion figure 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. So Doughty would have been a little more accurate if he had multiplied the BCC’s figure of £8,500 by 60,808, not 191,541.

Furthermore, the £8,500 figure is wrong, firstly because it’s a considerable over-estimate (the government’s own figure is £6,200), and secondly because only about one in five cases go to a tribunal hearing. Most cases are settled or otherwise resolved before they reach a hearing, so the BCC’s lower figure of £5,400 applies (though, again, the government’s own figure for settlements is £3,500). Indeed, the government’s figure for the average cost to employers across all tribunal outcomes is just £3,900.

So, all in all, Doughty’s bogus figure of £1.6 billion – mindlessly regurgitated eight months later by Chapman – is more like £366 million (£0.37 billion), if you accept the BCC’s dodgy average cost figures, and just £237 million (£0.24 billion) if you prefer the government’s more reliable average cost figure of £3,900. And, finally, only about two-thirds of that total cost to employers is borne by businesses, as one in three employment tribunal cases (including the vast majority of those pesky multiple claimant cases) are brought against employers in the public and voluntary sectors. In short, Doughty and Chapman overstate the ‘problem’ for their beloved private sector firms by a factor of 10.

As for the dinosaur Hancock, his entire argument rests on the assumption that only weak or vexatious claims/cases have been deterred by the hefty, upfront fees. But if that were true, and only strong claims/cases were making it to the tribunals, the proportion of successful claims would have risen towards 100 per cent, and the proportion of unsuccessful claims would have dropped towards zero. And what we – but seemingly not the Minister – have learned since he first fed the ‘£1.6 billion gravy train’ story to the Daily Mail and Sunday Express in July 2014, is that the very opposite is happening.

As the following chart (based on official figures) shows, the proportion of successful claims (the blue line) has gone sharply down, not up, and at just eight per cent in the most recent quarter for which the figures are available (July to September 2014) was less than half that in each of the six years before the introduction of fees. And the proportion of unsuccessful claims is markedly up, not down.

Now, it might be said that the proportions shown in the above chart are not the full story, as four in five claims do not go to a hearing, and are either conciliated (i.e. settled) by Acas, or are withdrawn by the claimant. And, as Naomi Cunningham and Michael Reed have noted recently, “most of these withdrawals, but not all, represent some form of non-Acas settlement.” So, it might be said that the proportion that matters is the grand total of those claims that are successful at a hearing or result in a default judgment, plus those that are conciliated by Acas, and those that are withdrawn.

However, as the following chart shows, that proportion has also gone down, not up.

So, another Hancockusaurus and Daily Mail #Fail. Though you do have to admire their persistence.

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February 17, 2015

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Will the next government put the ‘fair’ back into unfair dismissal law?

Last week, for some reason, my mind kept wandering back to 2011, the year in which every stakeholder meeting with BIS officials was dominated by a shouty policy wonk from the British Chambers of Commerce. The year in which BIS spent taxpayers’ money compiling a consultation response that – without so much as a ‘winking’ emoticon to let you in on the joke – stated:

In a survey of 1,100 of their nuttiest members, the Institute of Directors told us that large numbers of businesses had expressed concerns about dismissal and the risk of tribunal claims in relation to recruitment plans. Fifty-one per cent of respondents to the survey said that the one-year qualifying period for unfair dismissal was a ‘significant’ or ‘very significant’ factor in considering whether to take on an additional employee.

Yes, OK, I added ‘nuttiest’. But I don’t think it makes any difference. For the fact is business secretary Vince Cable opted to extend the unfair dismissal qualifying period to two years, on the basis that 561 (two per cent) of the 34,000 members of a Pall Mall-based organisation that’s had only two female heads in its 112-year history thought they could get a bit more deregulation of the labour market by ticking a box in a survey questionnaire. Perhaps, being a Liberal Democrat, Dr Cable just felt a natural affinity with the largely woman-free Institute.

To be fair to Dr Cable, the somewhat less nutty CBI did say that extending the unfair dismissal qualifying period would “have a positive impact on marginal hiring decisions, particularly in smaller firms.” But then that sort of depends on how you define ‘marginal’. Because what the November 2011 BIS consultation response failed to note is that, at that time, the UK’s 1.2 million employers faced an unfair dismissal claim just once every 27.5 years, on average. So, if business leaders really were hamstrung by anxiety over whether their next hiring decision would result in an unfair dismissal ET claim, then we know who to blame for the UK economy lagging behind so many of its competitors.

The BIS consultation response also overlooked the fact that, as shown by the following chart, the number of unfair dismissal claims had been declining steadily since early 2009 (when, of course, the economy was not exactly in best form). Faced with such statistical evidence, as distinct from the views of a self-selecting sliver of the membership of an exclusive Pall Mall club, most time-pressed ministers would probably have opted not to try and fix something not obviously broken. But poor Dr Cable had the abominable Adrian Beecroft and his pals in 10 and 11 Downing Street to deal with. So, with the economy struggling to get out of first gear, Dr Cable thought it best to make workers (aka consumers) a little bit more insecure, but not quite as insecure as Beecroft would have made them.

And so it was that, in April 2012, the Unfair Dismissal and Statement of Reasons for Dismissal (Variation of Qualifying Period) Order 2012 extended the unfair dismissal qualifying period from 12 months to two years, and what we might call the Blair-Brown era of unfair dismissal claims (the red columns in the chart) came to an end. Then, somewhat ironically, given that the BIS consultation response had predicted the extension would result in a 3.3 per cent fall in the number of unfair dismissal claims, the dawn of the Beecroft-Cable era (the blue columns in the chart) saw a not insignificant increase in the number of such claims. (That 3.3 per cent, incidentally, is what we policy nerds call ‘spurious precision’. BIS had absolutely no idea how much claim numbers would fall by, if at all, but cunningly concealed that fact by suggesting it had calculated the drop to a tenth of one per cent. MPs and especially journalists fall for this every day of the week.)

Yes, there might have been an even bigger rise, had Dr Cable not acted as indecisively as he did. There’s simply no way of knowing. Whatever, by early 2013, the number of unfair dismissal claims had slipped back pretty much to where it had been in late 2010. And then, of course, we entered the Grayling-Swinson era (the orange columns in the chart), during which the number of unfair dismissal claims has fallen to levels not seen since the Institute of Directors last had a female head, in 1926. With the result that UK employers now face an unfair dismissal ET claim just once every 87 years, on average.

In short, this was evidence-free policy making, based on nothing more than an ideological hunch that eroding legal protection against unfair dismissal would somehow boost job creation. Yet, amid ever greater casualisation of the labour market, the move has unquestionably shifted the imbalance of power between workers and employers a little bit more in favour of the latter. So, with the economy now doing somewhat better than it was in late 2011, there’s a good case for putting the qualifying period back to one year (or even lowering it all the way to six months).

Good employers would have nothing to fear from such a move, as the law on unfair dismissal does not prevent an employer from dismissing a qualifying employee for incompetence or even just for not working hard enough – it simply requires the employer to follow a fair process when doing so. And, as Simon Jones notes in this blog post, that isn’t hard to do. But a shorter qualifying period would create a bit more security in what is an increasingly insecure labour market.

It seems safe to assume this is not a direction of travel in which Conservative ministers would go after 7 May, and the Liberal Democrats’ pre-manifesto, published last September, is entirely silent on the matter. The July 2014 report of Labour’s National Policy Forum, which is supposed to form the basis of the party’s general election manifesto, does include the extension of the qualifying period among a list of Coalition policies that have “fundamentally undermined employment rights”, but there’s no clear commitment to reverse the extension. Similarly, Labour’s better economic plan for prosperity, published yesterday, states:

The [Coalition] Government has actively encouraged a race to the bottom [in wages and skills] by weakening the UK’s enforcement regime and promoting a hire-and-fire culture: doubling the qualification period for unfair dismissal; introducing fees for employment tribunals; and setting up a controversial scheme whereby employees trade their employment rights in return for a share in the company.

Despite this highlighting of the issue, there’s still no place in the plan for a pledge to reverse the doubling of the qualifying period for unfair dismissal (or, indeed, to do anything at all about the equally controversial employment tribunal fees). But then there was no mention in the National Policy Forum report of increasing paternity leave and pay, and that omission – together with a price tag of some £150m per year – hasn’t prevented Ed Miliband from pledging to do exactly that if Labour win in May.

If they genuinely believe in supporting businesses to win the race to the top, not get dragged into a race to the bottom, senior figures in both Labour and the Liberal Democrats should ensure their election manifesto includes a commitment to promptly lower the unfair dismissal qualifying period to 12 months. British bosses should not need more than 12 months to decide whether or not they’ve hired the right person. And the Institute of Directors should be told to go fish.

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February 2, 2015

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ET fees & ET judges: the regional winners and losers

Last week, as I was reading through the Hansard record of a House of Lords grand committee debate on the Small Business, Enterprise & Employment Bill, my eye was drawn to a comment made by shadow BIS minister Lord Young, during an exchange with BIS minister Baroness Neville-Rolfe on ET fees.

Surely there ought to be some concern about a situation where, in some regions, the number of employment tribunal [claims] has dropped by 80 per cent? Surely that is not an indication that 80 per cent of claims were vexatious. Does [the Minister] really not have any concern in this situation that fees are deterring people from bringing what could be completely fair and justifiable cases before an employment tribunal?

Shockingly but not surprisingly, as President Josiah Bartlet would say, the Minister turned out not to have any great concern, but Lord Young’s use of the qualifier “some regions” reminded me of a conversation I had a few weeks ago with an adviser to a shadow minister. The adviser said he had been told that, while claim/cases were sharply down in some ET regions, in other regions the employment judges were almost as busy as ever. I said that was news to me, and made a mental note to look into the matter. And the chart below is the result.

For this chart, I have focussed on single claims/cases, as that is (currently) the Ministry of Injustice’s favoured measure of ET receipts. And, for each ET region, I have charted the monthly number of new single claims/cases over the 12-month period October 2013 to September 2014, as a fraction of the average over the 12-month period July 2012 to June 2013. So, for example, where claims/cases are down by 60 per cent on the pre-fees average, they are plotted at 0.4 in the chart. All source data is from the Ministry’s quarterly tribunal statistics. There would be little point including the figures for all the claimants in multiple claimant cases in this exercise, and sadly the Ministry does not give a breakdown by region of the number of multiple claimant cases (which I would otherwise include).

I could be wrong (I often am), but to my mind the chart suggests either that the shadow minister’s adviser was misinformed, or that he or I somehow got the wrong end of the stick. For there is remarkably little variation between the ET regions, and all have followed much the same pattern over the period up to September 2014. Scotland has remained a little bit busier than the North East and Wales, it’s true, but not really busier enough to induce any work-shy Scottish ET judge to check out the Newcastle or Cardiff housing markets. Then again, the ET judges in Newcastle or Cardiff perhaps have a little more reason than most to be checking out the jobs market.

Interestingly, the chart suggests that, in March 2014, there was a bit of a rush to get claims issued before the coming into force of Acas early conciliation on 6 April, much as there was in July 2013 to beat fees.

The chart also confirms that Lord Young was somewhat over-egging it when he said that claims are down in “some regions” by 80 per cent. While Wales came very close, at the peak (or depth) of the Acas early conciliation ‘pause’ in May 2014, the truth is that no region has fallen quite that far (at least, not in terms of single claims/cases). However, by September 2014, single claims/cases were down by more than 60 per cent in all but one of the eight ET regions, the exception being Scotland, down a mere 59 per cent. And not even the nuttiest employer lobby group has ever claimed that, pre-fees, 60 per cent of all single claims were vexatious.

So, who are the real winners from the situation revealed by this chart? They are not the ET judges in Cardiff and Newcastle, but the dinosaur and rogue employers throughout England, Scotland and Wales who have breached the statutory employment rights of their workers with impunity. And the losers include not just the abused workers in question, but the great majority of law-abiding employers denied a level playing field. Just ask Tory MP Sir John Randall, who is closing his family business after being undercut by rivals lowering costs by employing staff on zero-hours contracts and “brutal” working conditions.

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Hard Labour

Thinking Hard about UK Employment Law

Tag Archives: ET claims

Will the Justice committee prove to be au fait with access to justice?

Everything you need to know about the impact of ET fees, but are too afraid to ask

The impact of fees on ET claim/case numbers

The number of claims/cases ‘lost’ to fees

How many of the claims/cases ‘lost’ to fees were meritorious

Other considerations

Conclusion

The latest quarterly ET stats in three charts

ET case numbers now appear to have stabilised

Some 50,000 single claims/cases have already been ‘lost’ to fees

There is still no evidence to support the Grayling-Hancock theorem

The secret of Acas’s success

ET fees: Ministry of Injustice starts hunt for the X Factor

Are ET claims going up? Yes but no but yes but no but … whatever!

How not to measure the ‘level of ET claims’. Oh, too late …

ET fees: the BIS minister that time forgot

Will the next government put the ‘fair’ back into unfair dismissal law?

ET fees & ET judges: the regional winners and losers