27 January 2016

IER Editorial Team

LAST week’s revelations that only 18 fines for negligent or malicious employment practices have been levied since 2014 show that the employment tribunal system is failing to deter bad practice. With only £18,000 in fines handed out since 2014, the evidence suggests that the worst bosses need not fear punitive action; in fact, with the huge barriers workers face in accessing justice, employers as a whole have reason to believe they will never end up at tribunal at all.

Regulations implemented in April 2014 as part of the Enterprise and Regulatory Reform Act allowed employment tribunals to levy additional fines against employers where “aggravating factors” were present, such as repeat offences, or circumstances where the employer acted with negligence or malice.

It was claimed that the fines would net up to £2.8 million per year, according to a 2011 government impact assessment, yet figures obtained by Green MP Caroline Lucas last week show that to date only 18 fines, to the value of £18,000 have been levied — far short of the £7m that should have been raised since 2014.

So why such a huge shortfall? Ministers’ rationale for the fines at the time was “to punish the most unscrupulous employers and deter breaches of employment rights.”

Yet at the same time as they were drafting this legislation, the government introduced fees of up to £1,200 for workers to access the employment tribunal. This precipitated a near 70 per cent drop in claims.

In particular, low-value claims by low-paid workers, such as unlawful deduction of wages, are likely to be discouraged by the fees.

A 2016 survey by Citizens Advice showed 47 per cent of respondents estimated they would have to put aside all of their discretionary income for six months in order to afford a claim. This prices many workers out of seeking justice on employment problems — and leaves unscrupulous employers safe in the knowledge that they won’t be called to account for bad practices.

Speaking at the Institute of Employment Rights’ (IER) Employment law Update 2016 conference, president of tribunals in England and Wales Judge Brian Doyle highlighted the huge impact fees have made. Since the 70 per cent drop in caseload, Judge Doyle stated that the surviving cases tended to be by highly paid, or else trade union-backed individual claimants, pursuing higher-value cases with bigger stakes, such as career loss or career ending cases. Low-value, high-merit claims are now unlikely to be seen.

This means low-paying employers and those with high numbers of part-time or precariously employed staff are much less likely to find themselves in front of a tribunal.

The government has recently been criticised by the select committee for justice over its failure to publish a report on the impact of the fees, which is now more than 15 months overdue. The committee has already called for action to increase access to employment tribunals, including lowering the level of the fees and increasing the financial threshold for fee remission.

Against a backdrop of widespread labour rights abuses — including the denial of rights to thousands working in the so-called “gig” economy, and the “Victorian” working conditions reported at Sports Direct’s Shirebrook warehouse — the IER is calling for a more comprehensive revision of the way employment rights are enforced.

A Manifesto for Labour Law: towards a comprehensive revision of workers’ rights, developed by 15 leading labour lawyers and academics, argues for the establishment of sectoral collective bargaining, driving for higher pay, better conditions and greater security. This would be underpinned by a strengthened framework of statutory individual rights.

Crucially, rights would be enforced by a labour inspectorate, with the power to initiate legal proceedings on behalf of workers through a free at the point of access employment tribunal, which would form the first tier of a new autonomous Labour Court System.

Ideally, many cases need not arrive at tribunal at all, as dispute resolution procedures can be written into collective agreements and dealt with in-house under the guidance of the Labour Inspector, who would also be granted certain powers, such as to reinstate workers that have been unfairly dismissed.

The current system is over-reliant on individual workers bringing litigation against problem employers. Even when claimants do overcome the hurdles and make it to tribunal, individual judgements are not always directly applicable to others working for the same company, and individual awards frequently go unpaid.

A fundamental overhaul of the system is needed to ensure proper scrutiny of employment practices and enforcement action where rights are breached.

Meanwhile, concrete action is being taken to overturn the fees regime. Unison is still in the process of challenging the fees through the legal system.

The union seeks to argue that the fees are discriminatory, and also breach the principle of “effective” access to a court to uphold a right as defined in European law.

The bar, however, has been set high in the previous hearings — the court requires that the fees regime be proven to be financially prohibitive to claimants seeking access, the wider deterrent effect of the fees is not a consideration.

It seems unlikely then that any judgement will wholly overturn the fees regime and as a result, unscrupulous employers will be able to continue to breach basic rights with the confidence that the courts system deters low-paid workers from seeking to uphold their employment rights.

The Institute of Employment Rights is hosting a wide-ranging discussion of these issues, including Unison’s position on workplace justice, at our Access to Justice 2017 conference in London on February 8 at Unite the Union, Theobald’s Road, London WC1X 8TN 9.30am - 3pm.

Originally published by the Morning Star