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

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

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

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

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

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

monthlyVara

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

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

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

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

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

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

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

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

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

annualVara

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

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

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

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

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

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

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

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

Possible Factor #3: Er ….

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

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

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

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

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

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

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

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

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

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

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

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

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

 

 

 

 

 

 

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.

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

 

 

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?

 

 

The one chart that shows the MoJ is talking out of its a**e on ET fees

Unless you’ve just come back from a trip to Mars, you’ve probably seen the quarterly tribunal statistics issued by the Ministry of Justice yesterday, showing a dramatic, 79 per cent fall in the number of employment tribunal claims. (But if you need to catch up, this outstanding blog post by Gem Reucroft tells you all you need to know).

In fact, it’s not quite as bad as that, but it’s still very, very bad.

The overall number of claims in the three-month period October to December 2013  is down 79 per cent, compared to the same period a year ago.  But the overall number of claims includes all the multiple claimants in the relatively small number of multiple claim cases, which are much less affected by the fees regime, not least because the fees paid per multiple claim case are capped at six times the fee for a single claim, regardless of the number of claimants in the case, which can be as many as several thousand.  And most multiple claims are brought by a trade union, with the biggest unions now paying such fees for their members.

What really matters here is the number of single claims by individual workers. And, compared to a year ago, that is down by 67 per cent. Which is plenty bad enough.

In response, the Ministry of Justice does not appear to have issued any formal statement on the matter (other than the statistical bulletin itself). But the justice minister, Shailesh Vara MP, is quoted in both the Financial Times and Personnel Today as saying:

“We think that the fees are not the only reason for the fall in the number of employment tribunal receipts; there has been a longer term downward trend as the economy has strengthened, and some of the big [multiple claim] cases involving airlines are now being concluded.”

Which, as the following chart shows, is utter hogwash.  The chart shows the number of single claims by individual workers, so the issue of the ‘big multiple claim cases involving airlines’ is irrelevant.  And I challenge Mr Vara and his officials to identify any significant ‘longer term downward trend’ going on here.

Chart: single ET claims, January 2012 to December 2013

ET single claims, monthly 14 03 14

(Yes, I’ve left out the months of July, August and September 2013, because they tell us nothing other than that there was a predictable rush to submit claims in July, before the fees came into force on 29 July, followed by a balancing out in August and early September.)

The simple fact of the matter is that ET claims have fallen off a cliff since the introduction of fees.  But if anyone in the Ministry of Justice can produce a chart or graph showing a longer-term downward trend behind the figures for October, November and December 2013, we’d be very happy to reproduce it here on Hard Labour.

So, exactly how much does it cost to make an employment tribunal claim?

You might be wondering – no, I’m sure you’re wondering – how much it costs to make an employment tribunal claim these days. It’s a good question. And who better to answer it than Jenny Willott, the Liberal Democrat MP for Cardiff Central and current BIS employment relations minister?

Just a few weeks ago, in the House of Commons, the Minister rather testily insisted to MPs that “it does not cost women [who have been subject to pregnancy discrimination] more than £1,000 to go to a tribunal. It costs only £250 to start a claim, and most cases are finalised well before a hearing”.

Well, thank goodness for that!  We wouldn’t want excessive cost obstructing workers’ access to justice.

However, somewhat confusingly, last week the Minister wrote that it costs “on average £1,800 to present a claim at tribunal” for, say, pregnancy discrimination. It does?

Yes, it does. It says so in Annex A of the BIS final regulatory impact assessment on Acas early conciliation, quietly published by BIS last week.  This shows how the Minister’s £1,800 figure consists of three elements, each one calculated in 2012: there’s £714 for “time spent on case”, £23 for “travel & communication”, and a whopping £1,017 for “costs for advice & representation post ET1”. (Yes, I know. But who are we to question figures approved by the BIS employment relations minister?)

That comes to a total of £1,754, which BIS then rounds up to £1,800.  So, the Minister’s figure of £1,800 does not include anything for the hefty upfront tribunal fees introduced in July 2013.

Which means it costs, on average, £2,050 to issue and pursue a tribunal claim for pregnancy discrimination. Which, according to both Maternity Action and the equalities minister, Maria Miller, is a serious and growing problem.  And, where the case goes to a hearing, for which a fee of £950 is payable, that average cost rises to £3,000.

So now we know.  Thank you, Jenny.

Tribunal fee remission: a very small fig leaf?

In response to widespread concern about the detrimental impact on access to justice of the employment tribunal fees regime introduced on 29 July last year, Coalition ministers have repeatedly claimed that low-income claimants will have their access to justice protected by the accompanying fee remission scheme.  In late October, for example, just days after the Ministry of Justice published provisional statistics indicating a sharp fall in the number of individual claims since July, the BIS employment relations minister, Jo Swinson, stated (in a letter to Maternity Action):

“The Government believes that all users of the tribunal system should make a contribution to the costs where they can do so, regardless of the type of claim.  Where claimants cannot afford the fees, the remission system ensures that nobody will be denied access to the tribunal.”

However, the  tribunal fee remission scheme, under which a claimant can receive full or partial exemption from the fee, is simply a revised version of the pre-existing County Court fee remission scheme, which in 2012 was condemned by Citizens Advice as “not fit for purpose” on account of its complexity and maladministration by HM Courts & Tribunals Service.  Under this revised scheme, any individual living in a household that has £3,000 or more in savings will not be entitled to any fee remission. This eligibility criterion applies to everyone, including those out of work.

And let’s not forget, the upfront fees introduced last July are substantial.  To issue and pursue a claim for unfair dismissal, for example, costs £1,200 (an issue fee of £250, and a hearing fee of £950).  Will summarily dismissed workers who have acted prudently to protect their family from sudden financial shocks by building up moderate savings of just £3,000 want to risk £1,200 of those savings on a tribunal claim for unfair dismissal, when there is no guarantee that the employer will repay the fees even if the claim is ‘successful’?  As recent government research has shown, half of the workers awarded compensation by a tribunal do not receive their award in full, and there’s no reason to think that those employers who fail to pay an award will be any more forthcoming when it comes to the repayment of hefty fees.

Furthermore, the upper income limits, above which claimants will not receive even partial remission of the fees, are set extremely low.  An analysis by economist Howard Reed, commissioned by the TUC, shows that “even among households where someone is earning just the national minimum wage, fewer than one in four of these workers will receive any [fee remission] and will have to pay the full fees”.  Reed’s analysis further suggests that just one in nine disabled workers, and one in 20 workers aged 50-60 (i.e. those most at risk of age discrimination) would qualify for full fee remission.

So, has the fee remission scheme protected access to an employment tribunal since the introduction of fees in July?  Last week, I stumbled across a Ministry of Justice response to a Freedom of Information request, published on-line by the Ministry in November (FoI 86412) but, as far as I can tell, not otherwise reported by whoever it was that submitted the request.  This states that, of “the 852 employment tribunal fee remission applications submitted nationally between 29 July and 11 November, 672 were rejected”.  That is a rejection rate of 79 per cent.

In other words, during the first three months of the fees regime, just 180 tribunal claimants received full or partial fee remission.  And we know that, in the same period, there were some 4,500 tribunal claims by individual workers (i.e. single claims; I have left multiple claims out of this analysis).  So, only 22 per cent of all single claimants applied for fee remission, and just four per cent of all single claimants received full or partial fee remission.  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 claimants would be eligible for full (25 per cent) or partial (six per cent) fee remission.

Furthermore, the figure of 4,500 individual claims in the three-month period August to October is substantially lower than the average number of such claims prior to the introduction of fees.  But for the introduction of fees, we could have expected about 13,200 single claims in that period.  So a mere 1.4 per cent of the individual claimants we might have expected in the first three months of the fees regime received full or partial remission of the fees.

Whichever way you look at it, the fee remission scheme didn’t do a great deal to preserve access to justice in the first three months of the fees regime.  That said, the fee remission application rate may have risen in subsequent months, and the rejection rate may have fallen, as legal advisers became more familiar with both the fees regime and the fee remission scheme.

Well, maybe – time will tell.  But there’s certainly no room for the sort of ministerial complacency exhibited by Jo Swinson in October.  If the numbers don’t improve significantly, and soon, the fee remission scheme is going to look a very small fig leaf.

A tad more on ET claims since July

A few weeks ago, I emailed each of the regional ET offices, asking for the number of ET claims they had received in each month in 2013, including October.  At least some of my emails were passed to HMCTS, which unilaterally decided to treat them as a Freedom of Information request. And I have just received a partial FoI response from HMCTS: the data provided is for just seven ET regional offices, and does not include any figures for October. According to the covering letter from HMCTS, the figures for October are “not currently available”. To which I can only say: and I’m a banana.

Whatever, the data probably adds little if anything to the fantabulous, two-part analysis by Alex Lock on this blog of the data already published by the Ministry of Justice/HMCTS.  But I’m going to share it with you anyway, as I think there are a couple of interesting points to note.

*Claim & Multiple Claim Case* Klaxon!!! Yes, before we start, it is important to note that the data, set out in the following table, relates to ‘claims’ received by each ET regional office.  That is, the figures for each month are – as an estate agent would say – comprised of the number of single claims by individual claimants, plus the number of individual claimants included in multiple claim cases.  Which, as Alex Lock noted, is not the most meaningful measure of the ET system’s workload: the better (but still not ideal) measure is the number of single claims by individual claimants, plus the number of multiple claim cases.  This is important, because at the level of ET regions the number of ‘claims’ can easily be distorted by just one or two unusually large multiple claim cases (or the lack of same).  Got that?  OK, now we can move on to the table.

ET Office

Jan

Feb

Mar

Apr

May

Jun

Average

Jul

Aug

Sep

Actual – aver
Nottingham

721

433

332

572

323

329

452

1,400

218

73

335

Leeds

1,461

1,307

808

1,085

686

567

986

789

684

325

-1160

Huntingdon

193

171

173

200

230

168

189

296

109

53

-109

Reading

431

263

540

276

265

224

333

395

102

61

-441

Watford

320

295

357

272

446

586

379

780

102

81

-174

Bristol

221

174

194

179

183

158

185

317

66

32

-140

Southampton

195

210

272

236

190

239

224

248

218

73

-133

Total

2748

 

 

698 

-1822

To the table of data provided to me by HMCTS, I have added two columns: one giving the average monthly number of claims received in the six-month period January to June; and a final column showing the difference between the actual total number of claims received in the three-month period July to September, and the total number of claims that would have been received in that period had each month been an average month (based on the previous six months, January to June).  Whilst this fails to take account of seasonal variations, it does gives us a somewhat crude measure of the impact of fees in these seven regions, as it does at least even out any bulge of claims submitted earlier than they might have been in order to beat the introduction of fees on 29 July.

From this final column, we can see an apparent fall in the number of claims post-fees in six of the seven regions – the exception being Nottingham, which had a relatively large pre-fees bulge in July. Klaxon!!! Yes, as noted above, some or all of the Nottingham bulge could be due to one or more unusually large multiple claim cases. Overall, the seven regional offices received 1,822 fewer claims in the three-month period July to September than they would have done, had each of those months been an average month.

Perhaps more significantly, in September the number of claims was well below average, in all seven regions.  Indeed, the September total for the seven regions (698) is just 25 per cent of the average monthly total (2748).

We can also see that in three regions – Leeds, Reading and Southampton – there was in fact no evident pre-fees bulge.  Klaxon!!! OK, by now you know what the klaxon means.

If you are still awake at this point, you might have noticed that the August and September figures for Nottingham and Southampton are not just similar, but identical.  This seemed so unlikely that I asked HMCTS to double-check, and they have today assured me that the figures are correct.  Coincidence? It would seem so.

Different klaxon!!! Yes, enough with the klaxons already. As Alex Lock noted, the September (and perhaps even the August) figures might well need to be adjusted upwards, as they do not include any claims submitted but not counted as received by HMCTS because a decision on fee remission is still pending.

Which means I’ve probably just wasted two minutes of your time, and you’ll just have to come back and read a further devastating analysis by Alex once the October and November figures have been made public.