23 May 2017

By Michael Ford, Professor Law at University of Bristol and QC at Old Square Chambers

Both the Labour Party and Liberal Democrats have included in their Manifestos a promise to scrap Employment Tribunal (ET) fees. But what has been the impact of the fees and how can the enforcement of workers' rights be improved?

What are employment tribunal fees and what has been their impact?

ET fees were introduced by the Coalition government in 2013 and mean that workers whose rights have been breached by their employer – who have been underpaid, who have been unfairly dismissed, who have been injured, abused or discriminated against – have to pay up to £1,200 to have their day in court.

While there is clear evidence of widespread breach of labour standards, such as failure to pay the National Minimum Wage, there is also mounting evidence that the current system of workers' rights enforcement is failing to hold those who break the law to account.

Tribunal fees, introduced at prohibitively high levels, have resulted in a 70% drop in claims. A recent review by the Government indicated that about 8,000 claimants each year do not bring ET claims because they cannot afford the fees. Fees especially deter claimants on low incomes, who claim low amounts, such as unpaid wages, or who have just lost their job (as most have).

A radical reform of the system is needed to ensure it delivers the rights it promises.

Whose duty should it be to police the workforce?

First and foremost, tribunal fees should be abolished. Workers’ rights without effective remedies are rights written in sand.

But at the Institute of Employment Rights, we would go further. The onus should not be on workers to be the primary enforcers of their own rights. A properly-resourced Labour Inspectorate, as required by ILO Conventions, should be responsible for enforcing labour standards in all areas. Quite apart from fees, in many cases individuals lack the resources or legal assistance to bring claims: the Labour Inspectorate should ensure that labour laws are implemented. It should have power to bring legal proceedings on behalf of workers, as well as impose criminal sanctions on serious offenders.

Employers, too, should have a positive duty to report to demonstrate compliance with labour standards. Too often, it is only when legal claims are brought that a widespread breach of standards of fairness at work is revealed. Employers should be required to publish information in audits and elsewhere on information such as pay levels, pay differentials and the gender pay gap. As the modern workplace is often highly fragmented, with work conducted by third parties, it is also crucial that companies have a duty to ensure that their contractors comply with labour standards.

The way disputes are resolved has tipped in favour of the employer

A raft of reforms introduced under a Conservative Prime Minister have slowly changed the system of resolving disputes, moving it further and further away from the original intention of Labour Courts as cheap, quick and accessible justice for workers.

Reforms have included the now mandatory duty for workers to take their case to early conciliation through ACAS, thereby increasing the likelihood of settlement outside of court. Not only does this allow employers to protect their reputation following wrongdoing, it also gives companies the opportunity to hold out on a reasonable settlement knowing their workers cannot afford the financial risk of ET fees should the case progress to court.

Other reforms have included removing the need for lay members (representatives of employers and trade unions) to sit on the panel at tribunal. What's more, new proposals have raised the possibility of decisions being made remotely through online procedures, and legal clerks making rulings instead of judges.

How disputes can be resolved more fairly

With the re-introduction of Sectoral Collective Bargaining (as advocated by the IER's Manifesto for Labour Law and adopted by the Labour Party), collective agreements can include a dispute resolution mechanism that provides for a cheap and easy way for disputes to be resolved inhouse.

Employers and workers would negotiate at a sectoral level for a procedure, agreeable to all, that can be used to iron out disputes and resolve breaches of the law without the necessity of going to court.

For those cases that still require an external judiciary, there should be a new system of Labour Courts, involving representatives of employers and unions.

That Court should have power to adjudicate over all disputes about work. It should have increased powers of investigation, to ensure that unrepresented parties are not disadvantaged.

Workers should have access to some form of free legal advice on employment claims, and the services of ACAS should be available to conciliate workplace disputes. It should no longer be compulsory to use ACAS before a tribunal claim, as at present, which is yet another obstacle to justice. But those who want to use ACAS should be able to do so.

How should breaches of workers' rights be compensated?

In 2013, a cap on damages was placed on unfair dismissal of one year's salary. This cap is a further means of penalising the low-paid and those in part-time jobs and should be removed. If a worker has been unfairly dismissed, they should be compensated for the lost earnings which result.

The system for enforcing tribunal awards should also be greatly improved. At present, only about half of claimants who win in the tribunal actually get paid their award. This needs to change - enforcement should be undertaken by the Labour Court or the Labour Inspectorate, employers should not be able to hide behind corporate structures to avoid paying awards, and there should be criminal penalties for the worst offenders.

These policies build on the IER's Manifesto for Labour Law - click here to read more and purchase your copy