Added Tribunals (Employment Tribunals and Employment Appeal Tribunal) Order 2013 — Motion to Approve

– in the House of Lords at 7:15 pm on 8th July 2013.

Alert me about debates like this

Moved by Lord McNally

That the draft order laid before the House on 24 April be approved.

Relevant document:1st Report from the Joint Committee on Statutory Instruments

Photo of Lord McNally Lord McNally Deputy Leader of the House of Lords, The Minister of State, Ministry of Justice, Liberal Democrat Leader in the House of Lords 7:35 pm, 8th July 2013

My Lords, I shall also speak to the draft Employment Tribunals and Employment Appeal Tribunal Fees Order 2013. The purpose of these orders is to make provision for fees to be paid by those who present claims or make appeals to employment tribunals and the Employment Appeal Tribunal. They also make provision for fees to be remitted or waived in full or in part if the person cannot afford to pay using the existing civil courts remission scheme.

Bringing a claim or an appeal to employment tribunals and the Employment Appeal Tribunal is currently free of charge. In 2012-13, the cost of running the employment tribunals system was £74.4 million. That cost was entirely met by the taxpayer. While the Government are committed to providing a fair system for those who need an independent tribunal to settle an employment dispute, we also believe that it is perfectly reasonable that those using the tribunals should contribute to their cost, where they can afford to do so. It is important that noble Lords understand that introducing fees into these tribunals is not an attempt to deter individuals from bringing claims—vexatious or otherwise—and given the mitigations in place we do not believe the provisions of this order will do so.

Employment tribunals were originally intended as the option of last resort in disputes when all other resolution services had failed. Over time that status has eroded and claims are now often launched prematurely, without exploring alternative options for resolving disputes. The introduction of fees can support a necessary change in the mindset of users and help to reset the system by encouraging individuals to stop and think about whether a dispute can be settled without recourse to a tribunal, and whether it is really necessary to submit a claim. Complementing that aim, mandatory early conciliation will be introduced in 2014, meaning parties will not be able to bring a claim to the tribunal without first having sought a conciliated resolution via ACAS.

The Government are also implementing a brand new simplified set of rules and regulations governing procedure in employment tribunals. The simplified rules attempt to roll back and reset unnecessary complexity in tribunal rules, creating increased clarity and understanding for the lay person. This ought to reduce claimants’ reliance on legal representation and help return employment tribunals to the role envisaged when they were first set up.

Responsibility for the wider employment law, including the rules, lies with the Department for Business, Innovation and Skills. Should issues arise in this debate that are beyond my remit I will ask my colleague, my noble friend Lord Younger, to respond in writing should it be necessary. I am confident that noble Lords will see that these proposals are not an attack on employment rights or on people with low incomes. They simply reset the system that this Government inherited and reduce the taxpayer subsidy of employment tribunals by transferring some of the cost to those who use the service, while protecting access to justice for all. Assuming parliamentary approval, the instrument is due to come into force on the day after it is signed and made. We are confident that, subject to that approval, fees will come into effect on 29 July this year.

I turn now to the provisions of each order. Parliament has already made provision for fees to be charged in tribunals under Section 42 of the Tribunals, Courts and Enforcement Act 2007. The added tribunals order provides for employment tribunals and the Employment Appeal Tribunal to fall within the provisions of Section 42 as added tribunals allowing the Lord Chancellor to prescribe fees by order for anything dealt with by them.

The fee structure provided in the fees order reflects the decisions made and announced after the Government’s consultation paper, Charging Fees in Employment Tribunals and the Employment Appeal Tribunal. We considered the views expressed by those who responded to the consultation, and settled on a final structure taking proper and full account of those views.

Part 2 of the order provides for claimants to pay an “issue fee” covering a contribution to the pre-hearing costs, and then a “hearing fee”, payable 3 or 4 weeks before a hearing, should that stage in proceedings be reached. It also outlines a number of application fees, payable by the party making the application, and a fee for judicial mediation, payable by the respondent.

Sections 5 to 10 provide the fees payable. Two levels of the issue and hearing fees are proposed, and are defined in the order as type A and B claims. Claims are allocated to type A or B depending on the nature of the complaints described in the claim form. Type A claims are those which are simpler for the tribunal to deal with and so cost less for a claimant to bring—namely, £160 at issue and £230 before the hearing. Type B claims are more complicated, requiring more tribunal time and resources to determine. Therefore they attract higher fees of £250 at issue and £950 at hearing. Where there is a mixture of type A and B claims within the same claim form, the higher fee will be paid.

Sometimes in the employment tribunal two or more claimants present their claims on the same form. The order defines this as a fee group, and the number of people in the fee group also affects the fee due to be paid. There are three bands of fees, increasing on a sliding scale depending on the number of individuals named within a form. If claimants present their claims in this way, the fee payable per person will usually be much lower—and will never exceed—the amount that they would have paid if they had sent their claim separately.

In certain circumstances, Article 12 provides a safeguard ensuring that no one in a fee group will have their claim struck out because of the failure of others in their group to arrange a group payment if they themselves are willing to pay the single fee.

Part 3 of the order provides for fees in the Employment Appeal Tribunal. A flat fee regardless of claim or appeal type will be required on instituting an appeal. A further flat fee will be required ahead of the full hearing of the appeal. Part 4 of the fees order provides for transitional arrangements and remissions. Fees will be charged from the date of the order, so that those who have commenced their claims or lodged their appeals before this date will not pay any fees. Schedule 3 of the fees order makes provision for a range of remissions or fee waivers based on the existing HMCTS civil courts scheme. This scheme will ensure that access to justice is protected by reducing or remitting fees for individuals who provide evidence of being in receipt of particular qualifying benefits, or that their income is below certain thresholds.

The Government are fully committed to ensuring that tribunals remain accessible and continue to provide an effective service which is responsive to users. This measure provides for the users of the Employment Appeal Tribunal to make a contribution towards the provision of that service and to better balance the cost of providing access to justice between the user and the taxpayer without restricting that access.

I therefore commend the orders to the House and hope that noble Lords agree that the measures which I have proposed today should proceed.

Photo of Lord Beecham Lord Beecham Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Justice) 7:45 pm, 8th July 2013

My Lords, we live in a world where failed bankers and departing BBC executives are awarded compensation for their loss of employment running into millions or hundreds of thousands of pounds, often at the taxpayer’s expense. We seem to be about to live in a world where employees, often low paid, not only no longer receive legal advice or legal aid to pursue a claim arising out of their employment problems but will have to pay significant sums to have their case dealt with by an employment tribunal. It costs only between £35 and £70 to issue a money claim of up to £1,000 in the civil courts but, as the Minister confirmed, it will cost £160 to issue a type A claim—for example, for wage theft, withheld holiday pay or all manner of modest claims—in the employment tribunal, and a further £230 for a hearing, with higher fees where a number of claimants seek the same remedy.

In the more serious type B cases, to which the Minister referred—for example, for unfair dismissal, discrimination or equal pay—the fees rise to £250 to issue a claim and £950 for a hearing. The result is that it costs more for a type B hearing at an employment tribunal than it does to lodge an appeal in the Supreme Court, which costs £1,000, and even with a hearing the total Supreme Court costs are only £1,600—£350 more than for a hearing in the employment tribunal.

The Government are anxious to market our courts to the likes of libel tourists or Russian oligarchs but evidently loath to facilitate access to justice for our own citizens seeking redress in the form of modest payments, frequently amounting to only a few hundred pounds, and often less than £100.

The Government’s own impact assessment demonstrates that 22% of employment tribunal claimants are disabled, with 40% of those claiming discrimination in that category. There is a rising number of claims stemming from pregnancy and maternity issues. Those are particularly vulnerable groups of people who will have to put up the money, disproportionate to any other form of civil litigation, to have their case heard.

In any case, the number of claims has fallen over the past two or three years, and the impact assessment shows a saving of only £12 million. The Minister is right when he refers to the overall cost being about £70 million, but the result of these measures will be, only if people pay the sums, to gather in only £12 million.

The proposed fees for multiple claims to which the Minister referred—for example, in relation to equal pay—compound the injustice. For example, seven supermarket workers claiming for an improper shortfall in their pay amounting to only, in one case, £313.90 between them will have to pay £320 to issue the claim and £460 for a hearing. Given the uncertainties, many people will simply be deterred from bringing a case, not least because the money has to be paid up-front, and in the absence of legal advice potential claimants will not have a ready notion of their prospects of success.

The response to the Government’s consultation paper on the issue contains an interesting passage which I quote in full:

“Employment Judges in Scotland consider that there is a significant risk that if a claim is for a small amount of money then a claimant will be discouraged from pursuing that claim, even although they are legally entitled to the sums due. For example, say an individual is entitled to one week’s wages in respect of holiday pay and the individual is paid just above the threshold which would allow them to qualify for remission. That person may decide that they will not pursue the sum due. This could have the consequence of encouraging a less than fair employer to routinely deprive employees of small sums of money to which they are entitled on the basis that the risk of them pursuing a claim will be small”.

The Government airily dismiss this response and disingenuously aver that claimants will not be deterred from lodging claims. What steps will they take and how soon to ascertain the actual impact of these changes? What do they propose to do about the startling fact revealed by the Ministry of Justice’s own study in 2009, which showed that 40% of awards in England and Wales are not paid at all and that fewer than 50% are paid in full?

In relation to concerns raised by Money Advice Group about the situation of claimants whose employers have ceased trading, and against whom claimants have to lodge a claim to access any payment from the National Insurance Fund, the Government said that they would explore the issue further. I invite the Minister to say whether they have reached a conclusion and, if so, what it is. If he is not in a position to do that tonight—and of course I understand that he may not be—no doubt he will write to me and place the answer in the Library.

Of course, not all claims are for monetary compensation. For example, for a claim under Section 12 of the ERA 1996 to determine the particulars of employment there is simply no monetary component, yet the fee, which will be significant for a number of claimants, will still have to be paid. It should also be noted that there are problems with the timescales—for example, in relation to the payment of the fee or in applying for remission of fees. As the Minister said, there is a remission scheme but this pitches the threshold very low. For example, no fee is payable if the disposable monthly income of the applicant and any partner is £50 or less, with a graduated cap beyond that. That is a very low threshold. Crucially, there will also be a capital limit of £3,000. Ironically, a claimant who, shortly before bringing a case because he is being dismissed, receives a redundancy payment—the claim may not necessarily be related to the dismissal but may relate to other matters—will have that payment counted towards the capital limit.

With a matter of only weeks to go before the new system becomes operational, I understand that there has been no user-testing of it, nor any detailed guidance published about how to apply for remission or appeal against refusal of remission. I do not know whether the noble Lord can enlighten us as to whether and when such testing has taken place or will take place, or when the guidance will be issued.

To be fair, there may be cases, usually affecting large claims, where respondent employers feel that it may be more economic to settle a claim even though it may be without merit. Recent changes in procedure initiated by Mr Justice Underhill may well mitigate this problem, and streamline and improve the management of cases, but in any event the fees for that type of case are unlikely to deter claimants who seek substantial sums from hoping to secure a settlement, while at the same time making it difficult for genuine claimants of moderate means and with more modest claims to pursue their remedy. For a settlement of £50,000, somebody may be prepared to gamble £1,200 or £1,500. Somebody seeking a payment of £50 or even £500 would be much less likely to stake a fee which is close to, or even exceeds, the amount claimed. It should also be stressed that the Gibbons report of 2007 made it clear that only a very small minority of claims could be described as vexatious.

My noble friend Lady Donaghy, with her long experience of ACAS, will no doubt comment on how the role of that organisation might be deployed to improve the working of the system, with or without the proposals in the regulations.

There would be little objection, perhaps, to a modest fee being levied that was much more proportionate to the amount claimed, as occurs in other jurisdictions. However, the Government’s proposal seems to be another in a long series of changes favouring defendants and making access to justice more difficult for ordinary people with meritorious claims. As such, it is deeply regrettable.

Photo of Baroness Turner of Camden Baroness Turner of Camden Labour

My Lords, we have seen a series of government proposals over the past year, all designed to reduce employment rights and all apparently in the belief that this will promote employment. So a supine, disposable workforce is expected to result in increased employment. This is entirely wrong. We have legislation now making it more difficult for a dismissed worker to claim unfair dismissal. Already, a worker must be in the job for two years before any such claim can be made. Then a series of steps has to be taken before the case can get to a tribunal. The Government have admitted that they want to make access more difficult, and their policies certainly have done so. Now, the Government want to charge and a complicated system is being proposed.

Level A claims for unpaid wages, and smaller claims under category A, are to have an issue fee of £160 followed by a hearing fee of £230. For unfair dismissal, the charges are much greater, being £250 and then £950. We are told that vulnerable and poorer people will not have to pay but the TUC research indicates that a significant number of people on the national minimum wage and living wage rates will have to pay. It is clear that the Government are moving in the direction of the Beecroft proposals, which were widely condemned even by employers. The Government are trying to do that without seeming to do so. The scheme by which employees give up employment rights in return for shares in the employing company, which incidentally was voted down in this House when first proposed, is not meeting with much success even though the Government managed to get it through the Commons.

The latest proposal about charging for tribunal access is part of the same mindset. An employee seeking access to a tribunal following what he or she deems unfair may have been in the job for a number of years. Losing the job could have a distressing effect not only on the employee but the family, leading perhaps to further benefit claims as well as the illness of the dismissed employee. An appeal to an ET before a judge sitting alone will cost more money, and lay members, who bring experience and knowledge of workplaces, are being dispensed with. The Government are clearly expecting that the whole process will seem too complicated and costly for most employees and that there will be very few claims as a result—with no legal aid, of course, in employment cases. Furthermore, employers will be less inclined to seek resolution internally, as they will understand well enough that the complex procedures and costs awaiting employees claiming unfair dismissal will put off any but the most determined.

Do the Government really think that a frightened, submissive workforce is going to assist us in our present economic difficulties? Of course it will not. Growth requires a committed and enthusiastic workforce. These latest government proposals are completely and utterly unfair. They should be withdrawn.

Photo of Baroness Donaghy Baroness Donaghy Labour

My Lords, I am grateful to my noble friend Lord Beecham for raising these issues, and I will not cover the ground that he has already covered. During Committee on the Enterprise and Regulatory Reform Bill, I congratulated the noble Lord, Lord Marland, who was then taking the Bill through this House, on the fact that the proposals regarding ACAS were right. They laid emphasis on mediation and settlement, and aimed to enhance ACAS’s role. I said that this was the right thing to do and I still think that. Both sides would receive a reality check and be in a much better position to take appropriate action after the ACAS procedures—that is, until these proposals came along.

Unfortunately, alongside the much needed reform that came up in the hands of the noble Lord, Lord Marland, there come these punitive measures for applicants to employment tribunals. It is a classic result of two government departments approaching a problem and coming up with contradictory results. What kind of mood will the client and the employer be in when they get to ACAS? The employer will hold his ground in the hope that the entry fee to the employment tribunal will be sufficient to put the applicant off. The applicant will feel that the cards are stacked against him or her and will be in no mood for conciliation. That is how to sabotage a perfectly good reform.

Today, I spoke to John Cridland, the director-general of the CBI, about these proposals because I knew his views when we were on the ACAS Council together. The CBI agrees with charging for employment tribunals but wanted a lower fee of around £100 and rules that apply more generally to each applicant, rather than all the exemptions and ceilings.

The CBI view is that the high fee is unhelpful. The exemptions defeat the purpose of the exercise and the proposals are confusing. It believes that the Ministry of Justice has concerned itself with recouping charges for its own cost base rather than as a deterrent for vexatious claims. The Ministry of Justice is not focused on how to influence culture, and John Cridland expressed frustration at the poor implementation that he fears, as do I, will get in the way of conciliation. My view is that this apparent deregulation and cut in public expenditure will set up a whole complicated bureaucracy because of the complexity of the scheme, and applicants will not know to which category they belong. This is more red tape, not less.

My noble friend Lord Sugar is unable to be here today. He has quite firm views about employment tribunals, and I undertook to give a flavour. My noble friend is concerned that there should be a real deterrent to vexatious claims but doubts whether the proposed figure will make any difference. He sees the need for reform in the area of case management—a clearer steer from the chairman of the employment tribunal about weak cases and unnecessary delays. My noble friend’s view is that a claim for tens of thousands of pounds will not be headed off by this proposal. He supports more conciliation and would not wish to discriminate against applicants with very small claims. I hope that I have reflected his view accurately.

This complicated and misguided proposal will not deter the headline-seekers or those who are sure that their employer will pay them off to the tune of £2,000 simply to avoid an ET. It will not deter a member of a trade union if they have trade union support. It may well deter the applicant whose claim is relatively small or who is relatively poor so that they cannot put up the money, or they think twice about it. So, it is the weaker who will pay the Ministry of Justice tax. At best this proposal is inept, and at worst it is a petty con trick.

Photo of Baroness Drake Baroness Drake Labour 8:00 pm, 8th July 2013

My Lords, on any reading this order raises the barriers to an effective remedy to enforce employment rights for ordinary people. Yes, some employees will bring cases without merit but in my experience, from 27 years as first an ET member and then an EAT wing member, most claimants have a genuine belief that they have experienced a wrong in the workplace and been treated unfairly. Similarly, some employers behave badly—not all are models of paternalistic virtues facing difficult employees.

Employment tribunals used to be viewed as the last-resort mechanism, but the structural shift in the UK economy has also seen a corresponding decline in collective representation throughout the private sector. People no longer have access to a network of union representatives to help them pursue their workplace dispute. The tribunal system is often the only route open to them.

The order is concerned less with protecting access to justice and more with reducing the number of ET cases by pricing workers out of the system. In the order wesee the obstacles to access. The language in the Explanatory Memorandum reduces the enforcement of employment rights to a commercial transaction. Paragraph 4.19 of those notes observes that if some users’ expected costs of bringing a claim now exceed their expected benefits of doing so, the total volume of cases brought to the ET might reduce. Concepts such as “consumer surplus”, “level of utility” and “price elasticity of demand” are deployed to give a monetary value to claimants’ loss of satisfaction so that they will no longer choose to bring cases, thus reducing enforcing an employment right to something akin to purchasing a washing machine or an insurance policy.

The Explanatory Memorandum made depressing reading. It showed insensitivity to what drives some claimants. The motive is not always compensation. They can often feel frustrated and humiliated at the way they have been treated, and it becomes important to have a public record that they were badly treated. They may bring a case for unfair dismissal because they know that unless they can win that claim they cannot get a decent reference or a comparable job, and their “utility”, as the memorandum puts it, may be far greater than the financial value of any remedy if they win, the median value of which is only around £4,600.

For those on low incomes, filling in an ET1 application form to register their claim is a complex procedure, notwithstanding the proposed simplifications. A remission form has been added that has to be submitted with the claim, which itself has to be submitted within a statutory deadline. Add limited literary skills, English as a second language and a lack of confidence, and we can see how the very process itself will work against precisely the vulnerable people who are most likely to be taken advantage of in the workplace.

An employment tribunal claimant is more likely to be male and working full-time or unemployed, confirming that women in low-paid and part-time jobs are less likely to use the tribunal system to enforce their rights. This order will simply reinforce that.

For some types of cases, proportionality is lost. For claims on annual leave entitlements, unpaid wages, statutory redundancy payments or non-payment of the national minimum wage, the fees being set could be greater than the remedy being sought—even more so if you are a part-time employee.

The remission system will mean that significant numbers of individuals in couples earning national minimum wage rates will still have to pay fees to enforce their workplace rights, as will others on modest incomes. When it comes to equivalence, as other noble Lords have said, the proposed fees are higher than fees payable in the civil courts. For some, an appeal to the EAT will simply be out of their league, particularly when the cumulative effect of an issue fee, hearing fee, ET review fee, EAT lodge and hearing fees and their own legal costs are taken into account. That is deeply unfair. Appeals from employers could begin to dominate the EAT. Appeals to the EAT are on points of law, which require legal help and support to put forward.

Add the uncertainty that the claimant may not get their money back for the fees paid if they win their case. Yes, it will be open to the ET to order an unsuccessful party to pay an amount up to the value of the fees—or less, the criteria are unclear—then add the possibility that the employer may not pay up on such a fees order, or even on any other element of the remedy, and the scales of justice start heavily to tilt against the claimant.

The Government are already facing two legal challenges, one from a trade union, the other from a firm of Scottish solicitors. The order could affect women disproportionately, particularly in multi-claimant equal pay cases. Take the level of fees, the way in which the fee group may operate and the fact that solicitors operating on a no-win-no-fee basis may be unwilling to pay fees up front because they become too expensive, and again, before the claimant can get their foot in the door of the tribunal, we see those doors slowly closing.

The Government want to encourage parties to settle at an early stage, but the fees could produce perverse incentives and negative behaviour, as my noble friend Lady Donaghy explained. Some employers could become less likely to agree a resolution. They may want to see the claimant’s money submitted first by registering the case, knowing that the claimant has to come up with the money. The worst employers may be emboldened to treat their employees badly, knowing that they may have to come up with significant amounts of money to pursue their case.

As for the vexatious employee, who seems to dominate this debate, employment tribunals already have case management powers, and can make orders for deposits and costs where a party is deemed to have acted vexatiously, abusively, disruptively or otherwise unreasonably or where the bringing of proceedings has been misconceived—that is a long list—and they are increasingly using those powers. Of course there is scope for improving the efficiency of the tribunal system—I sit in it, and could suggest several—and there are arguments for strengthening the judge’s case management powers. Parties should be encouraged to settle whenever possible, but employment judges already often encourage them to do so. However, the order will introduce unfairness and raise the barriers for ordinary people to get an effective remedy. It will not raise the barriers for the well paid executive, but it will raise them for the ordinary person.

Photo of Lord Monks Lord Monks Labour

My Lords, we know that the Ministry of Justice is constrained by some very tight budgets and needs to save money. However, it is clear from these orders that it is proposing to save money very much at the expense of the low-paid and the most vulnerable in our society. The argument that was made by my noble friend Lord Beecham about the comparison with the fees at the Supreme Court tells its own story. The fees at the Supreme Court are disproportionately low compared to what will be the position in the tribunals. Therefore, I do not see the Minister’s argument that saving money has to be at the expense of those in the lower income parts of our society compared to those who are much better off and will be taking cases in the higher courts. The burden is in the wrong place.

Secondly, it is clear that this is all about deterring applicants. My noble friend Lord Young will remember debates on another regulation about raising the qualifying period for unfair dismissal. That took 3 million people out of the unfair dismissals scope virtually at a stroke. Now we have got this as well. As people have said, it is not going to deter the well paid executive who can see a crock of gold at the end of the case. Nor will it deter the union member because we already know that unions are preparing to support their members in appropriate cases by covering the fees. It will be those who are on their own, probably low paid and vulnerable, and who will not find it easy to get a comparable job. They are being told to go away quietly. I think that is a green light to the heartless, careless, poor employer that they can now get away with it when previously they would have had to be more circumspect.

I do not put too much weight on the remissions scheme. The idea that if one has a £3,000 household investment income or savings certainly seems to be unfair because it lumps the household together for those calculations. I think it is still very much an attack on the low-paid, and the remissions scheme is nowhere near adequate to cover that. This is Beecroft by the backdoor. I know the Minister’s party colleague has been very strong in his condemnation of Beecroft, but why is it that these particular measures keep appearing, under a different guise for sure, and we keep seeing these attacks on employment rights in exactly the same spirit that Beecroft meant them in his original report.

I, too, add my voice to that of my noble friend Lady Turner in asking for these regulations to be withdrawn.

Photo of Baroness Whitaker Baroness Whitaker Labour

My Lords, I just want to speak briefly because I sat on employment tribunals for several years and I do not remember any vexation claims. Although some were poorly argued, they would actually have done better with a lawyer. Of course conciliation is desirable where it can be arranged, but where it is not, I fear that these regulations will curtail access to justice. I am uneasy about the implication that assertion of rights is an unnecessary burden on business and therefore needs to be disincentivised.

There is exploitation and ill-treatment; I saw plenty of evidence of people sacked when pregnant or being sexually harassed. They were not glamorous bankers in the way that we read about them in the newspapers but, for instance, three cleaners whose lives were made a misery every day and people who were dismissed without a proper reason. The cases we found proved were brought by ordinary poor people who had lost their jobs. How could they afford to bring such cases under these regulations? I cannot imagine that they serve justice or provide that desirable balance between the interests of the employer and those of the employee; they distort it.

Photo of Lord Lea of Crondall Lord Lea of Crondall Labour 8:15 pm, 8th July 2013

My Lords, it seems that after 13 years of improving the quality of the contract of employment, and I mean everything from holidays and maternity rights through to the quality of access to justice, we have been going backwards since 2010. A more unequal society is the same as a less just society; a society which protects the strong at the expense of the weak. Of course, this can all be reversed; we hope that it will be in a couple of years with the election of a Labour Government, and on this side of the House, that is obviously the constitutional remedy to which we look forward.

I will make another point about the culture within which these proposals keep coming forward, whether it comes from the Department for Business or the Ministry of Justice makes no difference. We have lost the culture of the department for employment where people understand what creates some sort of balance in the labour market. We are, after all, looking for a labour market in which the quality of employment and jobs go along with the quality of the contract of employment. One cannot have satisfying, quality work without this being looked at in a holistic fashion.

I take this opportunity to put on record that, despite the fact that the Minister personally has a great commitment to some of these matters, the Ministry of Justice is the wrong culture within which to have a sensible picture of where we need to be going so far as the quality of the contract of employment are concerned.

Photo of Lord Young of Norwood Green Lord Young of Norwood Green Shadow Spokesperson (Business, Innovation and Skills)

My Lords, my noble friends have made the key points, but I want to emphasise a couple of issues. The Government wanted to do something really positive and constructive, as my noble friend Lady Donaghy said, and they started to do it by enhancing the role of ACAS and encouraging mediation. We support that wholeheartedly. It is the right way forward. It is positive, it is constructive, it does not discriminate against people regardless of their income and it does not swing the pendulum towards employers, as I firmly believe the current proposals do.

As regards reducing the number of claims or the claims that the Government believe should not be taken, it is interesting that the statistics demonstrate that the number of cases is coming down in any event. My noble friend Lady Drake brings a wealth of experience of employment tribunals and employment appeal tribunals. She pointed out that judges already have significant powers in dealing with vexatious claims, so that part of the problem could and should have been dealt with. In our view, this is an unfortunate piece of legislation that, as one of my noble friends said, does not reduce red tape. It adds complexity and tilts the balance against workers. I agree with my noble friends that this order ought to be withdrawn.

Photo of Lord McNally Lord McNally Deputy Leader of the House of Lords, The Minister of State, Ministry of Justice, Liberal Democrat Leader in the House of Lords

My Lords, I thank all noble Lords who have taken part in this debate, many of whom I know have spoken from a wealth of experience of tribunals, ACAS and the trade union movement. It has been helpful to identify and address concerns. Doing so has enabled me to set on record why the Government have decided to introduce fees in the employment tribunal system and, crucially, what has been put in place to ensure that fees are not a barrier to those wanting to access the justice system.

In speaking to his amendment to the Motion on the fees order, the noble Lord, Lord Beecham, expressed regret that its provisions do not effectively protect access to justice, that some claimants will be deterred from bringing claims and that the remission system is inadequate. Neither I nor my government colleagues accept those arguments. We believe that the mitigations we have put in place will properly protect access to justice for those seeking to bring claims. The remission scheme will ensure that those on low incomes can apply to have their fee reduced or waived entirely and, given the importance of the issues at stake, the Government believe it is unlikely that fees alone will deter those with a strong case bringing a claim. These factors, together with the power for the tribunal to order reimbursement of fees paid, will help to ensure that access to justice is maintained for those who wish to bring a claim.

As I have mentioned, we hope that fees will encourage potential claimants seriously to consider options to resolve disputes outside the tribunal system. From 2014, mandatory early conciliation will mean parties cannot bring a claim to the tribunal without first having sought a conciliated resolution via ACAS. Any decrease in claims after the introduction of fees does not mean that claims are being deterred. It is more likely that disputes are being resolved without the need to use the tribunal, which benefits everyone.

The noble Lord, Lord Beecham, raised a number of issues. He asked whether fees should be charged for someone seeking a small amount. All claimants, irrespective of appeal or claim type should make a contribution to the cost where they can afford to do so, and everyone should also think carefully about entering into litigation irrespective of the remedy sought. Claimants should bear the cost of fees where they make an allegation in a claim and fail to pursue it or where the employer is judged to have acted lawfully.

The noble Lord said that the employment tribunal is more expensive than the civil courts. The civil courts do not offer a reasonable comparator in this instance as they charge at up to five points in the court process and fees are set to recover the full cost. Civil courts process significantly higher volumes of claims and therefore have lower unit costs. In the civil courts, parties open themselves to much wider cost powers so there are different issues to consider.

The noble Lord asked about the changes to the process for the enforcement of awards when fees are introduced. The enforcement of employment tribunal awards is fast-tracked through the civil courts. There are no plans to make any changes as part of the introduction of fees. However, separately the Government have commissioned new research covering England and Wales and Scotland, and the findings are due to be published next year.

The noble Lord asked whether there will be guidance for those paying fees. We will ensure that all users are clear on the obligation to pay fees or to apply for a remission. Existing HMCTS guidance for employment tribunals will be updated to highlight the stages at which fees are payable. There will be fees and remission leaflets to explain the fees payable, how to pay and where to apply for remission.

Photo of Lord Beecham Lord Beecham Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Justice)

Can the noble Lord say whether they will be in force by 29 July? Will they be available by that date?

Photo of Lord McNally Lord McNally Deputy Leader of the House of Lords, The Minister of State, Ministry of Justice, Liberal Democrat Leader in the House of Lords

If they are not, I will write and tell the noble Lord. The noble Lord also raised the question of whether the Government know what the impact will be. It is difficult to predict the impact that the introduction of fees will have on behaviour. It may be reasonable to assume that if people who are thinking about bringing a claim have to pay to do so, they will more carefully consider whether they wish to do so and their chances of success than they would if the process was free. If this is a valid assumption, we would expect the number of speculative claims—and therefore the number of claims overall—to fall. We will review the impact post-implementation to ensure that the remissions system acts to ensure that only those who can afford to pay fees do so. To ensure that the fee-charging process is simple to understand and administer, we will examine impacts on equality groups in the light of experience and will verify the amount of fee income raised.

The noble Lord asked how we will review fees. Fees will be kept under review as part of an ongoing review of fees across the justice system. The review will seek to ensure that the remission system acts to ensure that only those who can afford to pay do so. The noble Lord, Lord Beecham, asked if redundancy payments will be taken into account in a remission of application. No, this is considered a capital payment under the current scheme. We are considering whether to change this as part of our recent consultation on remissions.

The noble Baroness, Lady Turner, raised a number of matters. Let me make it clear: we do not want a frightened or submissive workforce, as she implied. We want a highly skilled, adaptable, highly productive workforce that can compete in the world. It is important that the noble Baroness understands that introducing fees into these tribunals is not an attempt to deter individuals from bringing claims, and we do not believe that the provisions in the order will do so. Given the importance of the issues at stake, we believe, as I said, that it is unlikely that fees alone—

Photo of Lord Lea of Crondall Lord Lea of Crondall Labour

The Minister says that it is not likely to deter people. However, the memorandum states that that is the intention.

Photo of Lord McNally Lord McNally Deputy Leader of the House of Lords, The Minister of State, Ministry of Justice, Liberal Democrat Leader in the House of Lords

We will not play with words. Of course, numbers will fall, so in that sense it will deter people. It will enable people to make better-informed decisions about what they are doing.

I pay tribute again to the vast experience the noble Baroness, Lady Donaghy, has of ACAS. I believe that making ACAS a first stop is a step forward and one to be much welcomed. Like all Members of the House I always regret when we are not able to receive the wisdom of the noble Lord, Lord Sugar, in person, but I note that he is in favour of more conciliation. The noble Baroness asked if the introduction of fees undermines the aims of early conciliation. We do not believe so. Fees can encourage parties to resolve their disputes as early as possible. In addition, respondents will be aware of the financial implications of losing a claim, including the ability of tribunals to order them to reimburse a claimant’s fee. Therefore, if a respondent waits to see if the claimant pays the fee, it could increase the respondent’s own cost. The noble Baroness also asked if this is designed to prevent weak and vexatious claims. We do not intend fees to prevent claimants bringing forward claims they believe to be genuine. We intend only that users who can afford to do so should contribute to the cost. If fees were to discourage those bringing speculative claims from doing so, this would be a positive consequence.

The noble Baroness, Lady Drake, acknowledged that this is a simplified scheme, and that is to be welcomed. It neither tilts the balance against workers nor closes the tribunal door. The noble Baroness also made the point that it was particularly disadvantageous to vulnerable people. Our initial analysis suggests that BME groups, women, younger people and disabled people are more likely to fall into the lower income bracket, so these groups are more likely to qualify for partial or full fee remission. The Government believe that it is right and fair that users of the Employment Appeal Tribunal, as with the employment tribunals, make a contribution towards the cost of their case when they can afford to do so. There are clear public policy reasons not to place the full burden on the taxpayer to subsidise fully a user who has already had the benefit of a previous judicial decision.

The noble Baroness, Lady Drake, also asked how fees will incentivise business to settle if only the claimant pays fees. Businesses will be conscious of the financial implications of losing a case, as well as the wider power of the employment tribunal judiciary to impose financial penalties on businesses that act unreasonably. Businesses will also be aware of the power of the tribunal to order them to reimburse the fees paid by the successful claimant.

The noble Lord, Lord Monks, intervened to tell us that, quite rightly, unions will support their members. I think that he was unfair in dismissing the impact of the remissions scheme. He asked whether we are trying to introduce Beecroft by the back door. No, we are not.

Is the court remissions scheme suitable to be used in employment tribunals? Yes, the remissions scheme is based on an individual’s ability to pay and the principles are the same as those that arise in the civil courts.

I fully acknowledge the point made by the noble Baroness, Lady Whitaker, that discrimination occurs in the workplace. That is why we need employment tribunals. There is a danger in overstating the impact of the decisions that we are taking tonight. I take on board the comments that have been made; however, as the noble Lord, Lord Young, said, this will enhance the role of ACAS. The truth is that people who wish to resolve an employment dispute have access to an independent tribunal, which is part of a justice system that is highly respected throughout the world. However, proceedings before the tribunals are costly and the Government believe that it is unfair that taxpayers have to shoulder all of that cost. To share the burden, we are proposing to charge fees to cover about a third of the cost of the tribunal. That, it seems to us, is both reasonable and right.

Those who can afford to will pay a fee dependent on the claim type they are bringing. Because of the remissions scheme, we will put in place, no one should be denied access to the tribunal because they cannot afford it. The fees and the safeguards that we have built in represent a fairer way to share the costs of tribunals while fully preserving the principle of access to justice. I commend these orders to the House.

Motion agreed.