What the employment tribunal fees ruling means for your small business

The Supreme Court has ruled that employment tribunal fees are unlawful. Industry experts outline the good and bad news for small business owners…

Employment law hit the headlines this week after the Supreme Court ruled employment tribunal fees are unlawful – meaning the government will now have to refund approximately £32m to past claimants.

The government first introduced the fees, ranging in costs of up to £1,200, in 2013 to reduce the number of spurious and weak claims being brought by employees. However, the Supreme Court believes the government acted uninstitutionally when the fees were introduced.

Critics have stated that the ruling is good news for employees and bad news for employers, so the question here is should you, a small business owner, be worried about the news?

We’ve consulted with various employment law specialists and solicitors on the ruling and they’ve outlined what it means for your small business…

The good news for small businesses

If you adhere to employment law and frequently review your processes, you should have nothing to worry about:

Raphael Prais, employment law specialist at LHS Solicitors:

“Employers will now need to keep pace with further change. In line with this, it is important to highlight that the Supreme Court did not rule that any fee system in employment tribunals would be unlawful. It is quite possible that the government could implement a revised system with fees at a lower level, probably more aligned with those charged at county courts, and without higher fees for discrimination claims.

“With that in mind, it has never been more important for businesses to know exactly where they stand with regards employment law, in order to minimise the potential of claims being made against them.”

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The ruling will bring a more balanced approach and encourages best practice

Simon Whitehead, partner and employment solicitor at HRC Law:

“The size of Employment Tribunal Fees effectively barred access to justice for the majority of working people who have had to make a very real decision between paying their bills or addressing wrongdoing in their workplace.

“We will have to see what the consultation and any new legislation brings but hopefully any fee regime will be more realistically priced and recognise the precarious position of many workers who face issues in their workplace.  A more balanced approach will encourage best practice, discourage abuse and unfairness.

“All good employers would welcome this more balanced approach.”

….While offering you the opportunity to create a more positive culture in your workplace

Mike Hibbs, employment law partner at Shakespeare Martineau:

“This is a brave decision by the Supreme Court but could take months, if not years, to unravel.

“In the meantime, small and medium enterprises need to be more active than ever in promoting positive and good relations with employees to avoid the reputational risks, time and cost of tribunal claims.”

CJCH Solicitors head of commercial law Gareth Thompson added:

“Employers could assess their recruitment processes to ensure they take on the right people in the first place.  They will also review their training and appraisal policies, to ensure they become meaningful and valuable staff members.”

The bad news for small businesses

Your small business could be hit with an influx of new claims

Raphael Prais, employment law specialist at LHS Solicitors:

“This is a significant result that will improve access to justice for employees from middle to low income backgrounds, but the ruling could pave the way towards uncertainty.

“The ruling leaves employers exposed to significant rise in the number of claims made against them along with increased likelihood of the claimant proceeding to a hearing rather than settling.”

…And employees may now bring past disputes back to life

Simon Whitehead, partner and employment solicitor at HRC Law:

“There’s an interesting debate around those people who have not been able to bring claims because of unlawful fees.

“I suspect there will be a lot of claimants who fall into this category and who may try to argue that the Tribunal should now allow them to pursue their claim out of time. The success of these arguments will depend on the circumstances of the case and the evidence available but it certainly seems feasible that some people will fall into this category which will be a worry for employers.”

The costs involved in letting an employee go may also rise

Marian Bloodworth, employment partner at Kemp:

“Whilst employers do not generally want to dissuade employees with genuine claims from pursuing them in the tribunal, their real concern is in limiting the number of spurious claims that are made, as these can have a significant cost for businesses in terms of time and money as well as reputational risk. It is therefore a question of balance – and it would appear that the introduction of tribunal fees got that balance wrong.

“Employers who are managing staff exits will now need to weigh up the risk of a claim being brought, given that the deterrent effect of fees will no longer apply. The costs involved in employee departures may therefore increase going forwards.”

For advice and guides to keep track of the latest employment laws and employment regulations, click here.

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