Employment tribunals – an update

With cost-cutting high on the Government agenda another set of measures to reduce taxpayer costs have been tabled in the latest consultation on employment tribunals - Charging Fees in Employment Tribunals and the Employment Appeal Tribunal.

Currently costing around £84 million a year the consultation aims to lower this amount by proposing that those who use the “system make a financial contribution”. Two options are laid out in the consultation:

• Option 1: an initial fee of between £150-£250 for a claimant to begin a claim, with an additional fee of between £250-£1250 if the claim goes to a hearing, with no limit to the maximum award; or
• Option 2: a single fee of between £200-£600 – but this would limit the maximum award to £30,000 – with the option of an additional fee of £1,750 for those who seek awards above this amount

There are a number of benefits listed in the press release issued by the Ministry of Justice on 14 December, including:

• Access to justice for those on low incomes or limited means will be protected by fee waivers
• Discourage unmeritorious claims
• Encourage early settlement of claims
• Small businesses will be encouraged to recruit new staff without the fear of unnecessary actions
• Incentivise complainants to choose conciliation or mediation
• Reduce taxpayers costs

On the other hand, an article in the Law Society Gazette has comments from Victoria Phillips, head of employment rights at national firm Thompsons, who is concerned that “fees at any level will make it more difficult to pursue a claim against an employer.”

With the number of employment tribunals increasing every year and money spent by both parties unnecessarily on applications that often do not reach a full hearing, how well will these proposals tackle the problems going forward and who else will be affected by the changes? Your comments are of course very welcome.

Matrimonial bliss or matrimonial miss!

The latest statistics from the Office for National Statistics show that the number of divorces in England and Wales is unfortunately on the rise, with an increase of 4.9% from 2009 to 2010.

In real terms the figures have risen from 113,949 divorces in 2009 to 119,589 in 2010, this is equivalent to 11.1 divorcing people per thousand married population.

Alongside this dissolutions of civil partnerships are also increasing with provisional total of 509 in the UK in 2010, an increase of 44% from 2009.

The average age for couples to divorce is between 40 to 44 years old. The 2010 trend also shows that women are more likely to divorce at younger ages and men when they get older. With regards to the average duration of marriages in 2010 the statistics show that it remained steady at 11.4 years.

While no-one planning to get married or enter into a civil partnership wishes to think that things may not work out, nuptial agreements are becoming a popular way for individuals to protect their property and assets if the relationship does break down.

ARAG is now selling two new divorce insurance products – Pre-nuptial Legal Solutions and Divorce Legal Solutions – that are sold alongside nuptial agreements. These products provide a legal expenses insurance policy that starts from the date of a marriage or civil partnership and protects the policyholder against legal costs associated with matrimonial breakdown.

Both policies cover costs arising from a legal challenge to the nuptial agreement whilst Divorce Legal Solutions extends cover to include the cost of divorce proceedings.

Find out more about Pre-nuptial Legal Solutions and Divorce Legal Solutions from the ARAG website.

Fighting for access to justice

As a member of the Consumer Justice Alliance (CJA) we at ARAG were very interested in seeing the video that they have just produced and released on YouTube. Called ‘Fighting for access to justice’ it looks at how the CJA are campaigning against the Government’s proposals for changes to civil litigation as presented in the LASPO Bill.

More importantly victims of accidents and medical negligence are invited to discuss their experiences and how their lives have been transformed not only by their illnesses or injuries but how they managed to turn it around thanks to the compensation and support they received as a result of being able to claim through the current system.

As one victim of medical negligence describes in the film, “changing the funding regime will make it harder for people to have their claim properly investigated and also for the hospital to change the practices that allowed it to happen and deny them full compensation for the loss they have suffered.”

The risk of having to pay for legal fees should the decision go against you would have been too much of a barrier for the people speaking in the film and they all explain that this is not a risk that they could have taken.

Nigel Meurs-Raby, Chairman of the CJA concludes the film by saying, “These are real people who are real victims with injuries that are not their fault. We need to do everything that we can to make sure that this dreadful new legislation doesn’t end up on the statute book.”

Watch the video in full here: http://www.youtube.com/watch?v=gtvMdYOu3Ks&feature=related

ARAG shortlisted at the 2011 Personal Injury Awards

ARAG is pleased to announce that we have been shortlisted at this year’s Personal Injury Awards in the ‘Insurance Provider of the Year’ category. Having previously won this award in 2009 we are keeping our fingers crossed for 24 November when the awards will be held at The Riverbank Park Plaza in London.

ARAG’s existing After-the-Event (ATE) product is known for offering flexibility and quality to ensure that customers’ needs are met and hopefully exceeded. In addition to this, ARAG also look for and implement innovative ideas and in 2011 we created and launched a new product – Recourse Options.

Our original product Recourse provides a standard limit of indemnity covering third party costs and disbursements, whereas Recourse Options is tailored to the specific indemnity required to cover third party costs, disbursements and own sides costs in non-injury cases. Some of the key features include:

• Limits of indemnity to meet the specific risk


• Cover by an A-rated insurer


• Contingent premium – the premium is deferred until conclusion and only payable upon a successful conclusion


• Top-up cover to a Before-the-Event policy


• Cover for cases conducted under a partial or full CFA


• Premium shortfall cover


• Bespoke staged premiums

These are backed by a passionate team and a bespoke approach which allows them to be set up as scheme arrangements or one-off cases.

There is also an easy-to-use online policy application and administration system designed to make life easier for our solicitor partners. This is currently in the process of being developed to enable solicitors to update cases from their own system rather than having to log in to gATEway as well as increasing its scope to offer post-issue schedules for RTA cases.

If you would like more information on ARAG’s ATE products please visit: http://www.arag.co.uk/index.asp?m=93&s=159&t=After%2Dthe%2DEvent+Legal+Insurance

ARAG responds to ruling on insurers’ use of non-panel solicitors

Following the High Court’s Judgment in the case of Brown-Quinn & Webster Dixon -v- Equity Syndicate Management, ARAG Legal Services has issued its reaction to the decision.

The Bristol-based legal expenses specialist warned that the court’s decision was not a positive one and, without any evidence to suggest that non-panel law firms offer higher standards of representation, the main beneficiary of the ruling would be the non-panel law firms themselves. The court’s decision could also result in higher legal expenses premiums.

ARAG’s Managing Director Tony Buss commented: “With no evidence to suggest non-panel firms deliver a heightened level of service to the policyholder, those firms may well be the only long-term beneficiaries from the Judgment. At a time when, the take-up of BTE is being encouraged, this cannot be a positive development overall.”

Many legal insurance providers will now consider their policy wordings and whether they are consistent with the judgment, especially where they have chosen to expressly limit the costs payable to those which their panel lawyers charge.

ARAG’s policies fully comply with the decision. In addition, legal insurance providers will need to be sure that their approach in practice complies with what their wordings actually say. It seems in this case that the defendants' approach was at odds with the policy wording and also perhaps the result of too ambitious an interpretation of The Insurance Companies (Legal Expenses Insurance) Regulations 1990.

Even with cases handled by its panel, ARAG does not take a "one size fits all" approach, and has arrangements for higher remuneration rates for more senior lawyers when circumstances demand it. This also extends to how we contract with non-panel solicitors, where again, we will, where appropriate, agree a higher rate, be that an aggregate hourly rate, or a variety of rates.

That is not to say that ARAG embrace the appointment of non-panel firms. Unless the complexities of the case warrant the appointment of a non-panel firm, we are confident that our policyholders receive at least as high a level of service from our panel firms as they would their chosen lawyer, but at a fraction of the cost. That cost, as the Judgment recognises, is reflected in the very modest premiums policyholders currently pay for before-the-event (BTE) legal insurance. The obvious danger therefore arising from this Judgment is that policyholders wanting to use their own solicitor will see their financial position strengthened when looking to insist on their own solicitor acting. The consequence of this is increased exposure to the insurer which is likely to be passed on to policyholders in the form of higher premiums.