When Employment Tribunal fees were introduced, with effect from 29 July 2013, there was an immediate drop in the number of claims made. Last month The Supreme Court has said that the law imposing fees prevents access to justice and is therefore unlawful. The Government will now stop charging fees and will reimburse the fees paid over the last 5 years. The cost of repayment could a significant part of the total £32 million charged to date.
What might be the value of mediation in the light of this decision?
Attempting to justify introducing the fees, the Government argued that there were three reasons for doing so. Firstly, without fees, the costs of the Employment Tribunal were borne by the taxpayer when they should be paid by the users of the tribunal service. Secondly, they would discourage claims that did not have merit. Thirdly, the requirement to pay a fee would encourage settlement.
The number of claims dropped following the introduction of fees. Studies, referred to in the Supreme Court decision, indicate a reduction of between 66% and 70% in the period following July 2013.
The Supreme Court decision
The Supreme Court was not persuaded by any of the three arguments put forward by the Government. The conclusion was that access to justice was being prevented, both under English and European law. Additionally, the Court concluded that fees discriminated against women.
The imposition of fees does not appear to have encouraged settlement. The proportion of cases settling through conciliation has slightly decreased since 2013. This should not be a surprise. One reason is that some employers act tactically to delay negotiations, waiting to see if the employee would actually pay the Tribunal fee to start a claim. More generally, there is basic negotiation point here. As the Court put it:
“Conciliation can be a valuable alternative in some circumstances … (but) … the ability to obtain a fair settlement is itself dependent on the possibility that, in the absence of such a settlement, a claim will be presented to the ET.” (para92)
An important part of any negotiation strategy is to know what your alternative is to reaching agreement. Employees who cannot afford to pay Tribunal fees do not have much of an alternative in this respect.
Mediation has had a significant role in employment and workplace dispute resolution, both before and after the introduction of fees. With the barrier of fees removed by this Supreme Court decision the number of Tribunal claims should increase, as should the use of mediation as confidence increases in general with using the employment disputes resolution process.
In any claim the recognised incentives to reach an agreed outcome still remain. Employment law is complex and extensive. If you are an employer or an employee about to be embroiled in an Employment Tribunal case that entanglement is a daunting prospect. Claims are rarely concluded simply and at low cost. What is more the Tribunal is heard in public. Having sometimes lurid aspects of working life examined in the media can damage both parties and witnesses. Adverse publicity has commercial consequences for the best intentioned employer.
Legal costs incurred in bringing or defending a claim are only recoverable in Tribunal cases where a party has “…acted vexatiously, abusively, disruptively or otherwise unreasonably in either bringing or conducting the proceedings.” It is unusual for one party to be required to pay the legal costs of the other. This has always been the case, irrespective of the imposition of fees. Employers feel aggrieved that it costs them a lot of money even when they win. Employees feel equally aggrieved that they may receive little or none of their compensation when they win, after legal fees have been taken into account.
Is mediation the obvious next step when the parties cannot resolve things by talking to each other directly? One issue highlighted by the Court’s decision is that many Tribunal claims are relatively low value. The fees in some cases were disproportionate to the value of the claim. It might be argued that the same point on proportionality could be made about mediating modest claims. Surely this is an apt comparison?
Once the parties are locked into a contested claim the comparison is really between the costs of going to Tribunal and the costs of resolving the case by dialogue. Both sets of costs need to be considered against the background of the possible value of the claim. Mediation is likely to be significantly less costly than going to Tribunal, especially when factors like the lost management time, the publicity and the stress of a Tribunal hearing are taken into account. Options are available to keep mediation costs down, including time limited meetings and lower fees in lower value cases. As a proportion of the overall costs of the case the mediation costs are usually surprisingly low.
It is not guaranteed that mediation will result in a resolution of the dispute; there is the risk that the mediation will not work and the Tribunal costs incurred anyway, but there are risks in every case. Ultimately mediations have a very high success rate, so it is a risk worth taking.
Neil Goodrum is a CEDR Chambers Mediator