All Change: New Employment Rules of Procedure & Introduction of Fees
Published: 30 October 2014
On 29 July 2013, the UK employment tribunal system saw substantial change. Following the Government consultation, Resolving Workplace Disputes, and a Fundamental Review of the Rules of Procedure for Employment Tribunals led by Mr Justice Underhill, the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013 finally became law, effectively overhauling the existing employment tribunal rules and introducing new employment tribunal rules of procedure.
This overhaul of the employment tribunal rules was accompanied by the, arguably more radical, Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013 (the Fee Order) which introduced a new fees system for employment tribunals.
Introduction of tribunal fees
With the primary aim of reducing the taxpayer subsidy of the employment tribunal system, the Fee Order introduced a new fees regime for the first time into employment tribunal proceedings. The fees regime also forms part of plans to promote early resolution of disputes. According to the Ministry of Justice, the fees have been tailored “to encourage people to look for alternatives – like mediation” and keep tribunals “a last resort for the most complex cases”
Fees now have to be made at two relevant stages of the proceedings:
- initially when the form is presented to the employment tribunal (the issue fee); and
- at the hearing itself (the hearing fee)
Type A and Type B claims
The new tribunal fee regime divides claims into “Type A” and “Type B” claims. The level of fees payable will depend on into which of these categories the claim falls.
Type A claims are those considered to be more straightforward which should need very little, if any, pre–hearing work, and be resolved in a one hour hearing, for example claims of unlawful deduction from wages, failure to give time off for dependants, breach of contract, failure to pay redundancy pay and failure to give time off for trade union activities.
Type B claims are not listed in this way but the Fee Order makes it clear that this type of claim encompasses all other claims. They are typically more complicated, will take longer to case manage and require longer hearings, for example unfair dismissal, discrimination and whistleblowing claims.
For claims made by a single claimant, the fees payable are as follows:
Type A claim
- Issue fee £160
- Hearing fee £230
Type B claims
- Issue fee £250
- Hearing Fee £950
There are also fees payable for certain types of specific applications during the tribunal proceedings.
The fees can be paid via the online service of the Ministry of Justice as well as through the centralised processing centres. The way that claim forms are submitted has also changed enabling claimants to submit both their Form ET1 and the fee online. However, they may still simply send the Form ET1 with their payment (or remission form) to the appropriate central office. Once payment has been processed then the Form ET1 will be sent on to the appropriate local tribunal.
Although no particular types of claims will be exempt from fees, the civil court fee remission system will be extended to the tribunal system and made available to individuals that cannot afford to pay part or all of the fees (for example, claimants with low or negligible incomes).
Impact of the fee system
The introduction of fees will make individuals think carefully about whether they really want to proceed with issuing proceedings. It is likely that some individuals will decide not to proceed at all once they take into account a £250 issue fee for a Type B claim, particularly if they do not qualify under the fee remission system.
However, the new fee regime will not deter very determined claimants or those with strong or very valuable cases, especially if they have third–party funding.
Employers and their representative organisations have widely welcomed the introduction of the new fees regime. In theory, the regime should reduce the number of spurious and opportunistic claims.
Requiring the hearing fee to be paid approximately six weeks before the hearing date is also likely to encourage the parties to consider the merits of a claim at an earlier stage so as to avoid incurring the hearing fee and legal costs associated with final preparations for hearing.
The extent to which this has an impact though may depend on how strong each party views their respective case and positions. If a claimant is not very confident in their claim then clearly they are more likely to want to settle before the hearing fee is paid. However, once they have gone past that point, having paid the hearing fee may make claimants dig their heels in and even more determined to pursue their claim, unless their fee would be refunded as part of a settlement package.
It is envisaged that some respondents particularly those who feel they have a strong case, may take a tactical approach and delay entering into settlement negotiations until the hearing fee has been paid and it is then clear to them that the claimant has the intention and means to actively pursue their case to a full hearing
The new ET rules of procedure
The central aims of the new employment tribunal rules of procedure are to be simpler and easier to understand than their predecessor, particularly for non–lawyers, and to facilitate effective case management.
Below is a summary of the key changes that have been introduced by the new rules, which are likely to be of most interest to readers:
In interpreting or exercising each of the new rules, Rule 2 requires a tribunal to give effect to the overriding objective, namely “dealing with a case fairly and justly”. This includes, so far as practicable:
- ensuring that the parties are on an equal footing;
- dealing with cases in ways which are proportionate to the complexity and importance of the issues;
- avoiding unnecessary formality and seeking flexibility in the proceedings;
- avoiding delay, so far as compatible with proper consideration of the issues; and
- saving expense
As part of the Government’s objective for the New Rules to focus the parties at an early stage and settle claims where possible, a tribunal must:
“… encourage the use by the parties of the services of ACAS, judicial or other mediation, or other means of resolving their disputes by agreement” (Rule 3).
New ET1 and ET3 forms
The Claim form (ET1) has been re drafted. This must be used in all cases to make a claim to an Employment Tribunal. There is also a new Response form (ET3).
Whilst the content of the forms remains largely unchanged, they are generally considered to be easier to understand and complete. One interesting point is that claimant must now specify the compensation being claimed and how it was calculated. Although this is not binding and can be revised as a later date, it is consistent with the notion of focussing the minds of the involved parties at the outset with understanding the claimant’s expectations and assist in settling claims.
Relaxation of the rules on default judgment and debarment
Under the new rules, if an ET3 is not submitted in time or is rejected and the Respondent has not applied to the Employment Tribunal for reconsideration, then it will be for an Employment Judge to decide whether the claim can be determined based upon the information available. The Employment Judge can seek further information from the parties, can call a hearing or can alternatively decide to enter a default judgment based upon the available information.
The debarment rules have also been relaxed and it will be for the Employment Judge to decide whether Respondents will be allowed to participate in future proceedings.
Initial Paper Sift
A radical change under the new rules is the initial consideration or ‘sift’ stage has been introduced into Employment Tribunal proceedings. The purpose of this sift stage is to identify any claims or responses which the Employment Tribunal considers to be weak and which should not proceed to trial.
Once the Tribunal receives the ET3, an Employment Judge will, as soon as possible, review the ET1 and ET3 (‘sift’) and consider whether the parties have brought viable claims and responses. The Employment Judge will also check that the Tribunal has jurisdiction to hear these claims.
Following consideration at the sift stage, the Employment Judge can then either decide to strike out the claim or response, if, for example, he or she considers either to lack reasonable prospects of success, or the claim is outside of the Tribunal’s jurisdiction, or can allow the claim to proceed and issue case management directions. The Employment Judge may also consider whether any additional information is required from either party.
A notice will be issued to the parties confirming a claim or response is dismissed. The dismissed party then has the opportunity to present written representations, explaining why their claim/response should not be dismissed. An Employment Judge will either allow the claim to proceed in whole or in part, or will timetable a sift hearing to determine whether it should proceed. If the case is then allowed to proceed, then case management directions will be issued.
If the response is dismissed, the Employment Judge will either determine the case his or herself or allow it to proceed to a full hearing to determine the claim, if considered necessary.
Another significant change under the new rules is the new procedure for preliminary hearings which essentially combines separate pre–hearing reviews and case management discussions and is part of the aim to install effective case management.
A preliminary hearing can be called by an Employment Tribunal of its own motion or by either party. Amongst other things, the hearing can be used to deal with directions for the preparation of the case for trial, clarification of the issues in the case, applications for strike out and whether it is appropriate to make a deposit order.
The rules governing interlocutory applications that are made by either party to the Tribunal during proceedings have been simplified.
The rules (under new Rule 30 replacing the old rule 11) no longer specify when the application should be made or the information that must be included. It is no longer a requirement to state why the application will assist the Tribunal in terms of the Overriding Objective of dealing with the case efficiently and fairly. Applicants are only required to copy the other parties into their correspondence and to state to the Tribunal that this has been done. At the same time, the Applicant is required to inform the other parties that objections should be sent to the Tribunal as soon as possible, rather than within 7 days of receipt as provided.
Under the old rules, when a Claimant withdrew their claim, the Respondent would apply for the claim to be dismissed. Without dismissing the claim, there was a risk that the Claimant could commence fresh proceedings on the same or substantially the same facts (provided they were still within the time limit).
This two stage process has been largely removed in the new rules. This means that when a claim is withdrawn, the Tribunal will automatically issue a judgment formally dismissing it. Dismissal will be automatic, unless on withdrawal the Claimant expressly reserves the right to bring another claim or the Tribunal believes that a dismissal would not be in the interests of justice.
Under the new rules, judges are given wide powers to manage the running of the hearing as they see fit and in accordance with the overriding objective. A new rule will allow the Tribunal to set the hearing timetable and time limits can be imposed upon the time taken by parties to give evidence, question witnesses and make submissions during a hearing. Although many Employment Judges already actively manage the hearing in this way, it is hoped that this express rule will increase the use of this power.
It is also worth noting that the new rules allow for preliminary hearings to be treated as final hearings. Final hearings can also be treated as preliminary hearings if necessary. This is on the condition that the Tribunal is properly constituted and is satisfied that neither party will be substantially prejudiced by the change.
The position in respect of costs has been slightly altered in the new rules. Under the new rules, costs can be awarded where a ‘party (or that party's representative) has acted vexatiously, abusively, disruptively, or otherwise unreasonably in either the bringing of the proceedings (or part) or the way that the proceedings (or part) have been conducted’ or ‘any claim or response had no reasonable prospect of success.’ These limited provisions for costs are similar to the position under the old rules. At the same time, the provision under the old rules to allow costs to be awarded where ‘the bringing or conducting of proceedings has been misconceived’ has been removed. Consequently, a party can no longer use the argument that a claim or defence to a claim has been misconceived to try and recover their costs. Instead they will need to rely on the claim or response having no reasonable prospect of success.
The new rules also provide that where a party has paid a Tribunal fee in respect of a claim, the Tribunal has the discretion to make a costs order to be paid by the unsuccessful party in respect of that fee, where the claim or application has been decided in favour of the fee paying party.
Under the new rules all costs applications can be assessed in the Tribunal. Under the old rules, Tribunals only had the power to assess a costs application of £20,000 and below. Anything over £20,000 had to be assessed by the County Court.
A new rule provides that written reasons following judgment will be provided where they are requested on any disputed issue. If a judgment has been delivered orally by an Employment Judge at Tribunal and a party would like written reasons, they should apply within 14 days of the Tribunal sending out the notice of the decision. However, the new rules also provide that the written reasons can be ‘very short’, so allowing some proportionality where issues are less complex or significant.
Both the new rules and the fee regime are geared at encouraging parties to settle disputes at an early stage.
However, the payment of fees may actually have the opposite effect if respondents decide to take a tactical approach and delay entering into settlement negotiations until the hearing fee becomes payable, at which point the claimant is now forced to make a financial commitment to pursuing their claim.