Claims likely to rise following the abolition of employment tribunal fees

The abolition of Employment Tribunal Fees following UNISON’s successful Supreme Court appeal swept away a significant affordability barrier to individuals bringing claims against their employers or ex-employers.

There has been happy anticipation in the legal press that a surge of cases would emerge as access to justice was restored. Employment lawyers have fondly reminisced about a time before fees when individuals could more easily afford to bring claims. Commentators have speculated about the impact that the outcome of the UNISON case might have on the volume of future employment tribunal claims.  Will claims volumes increase to 2013 levels?

Rates have remained steady since ARAG entered the UK market in 2006 despite legal costs inflation. We should explain that over the last four years, any cost savings that it may have been assumed would have resulted from fewer employment tribunal applications have been tempered by:

·         a deflection of costs from tribunal representation to ACAS early conciliation. Early conciliation has been a significant factor in encouraging parties to settle disputes and reducing applications to tribunal. We cover legal costs to represent businesses throughout early conciliation. More than 92,000 complaints were notified for early conciliation in 2015/16 and in 48% of cases tribunal applications were avoided;

·         payment of employment tribunal fees either as part of an agreed settlement or as a consequence of losing a claim at tribunal; the Government’s undertaking to repay fees does not extend to employers (or their insurers) who were liable to pay them;

·         the effect of inflationary influences which have not been passed on to customers over time.    

Anecdotally, tribunals have reported an increase in the number of applications being received. We are hearing of long waits for hearings to be listed as applications back-up. The Employment Tribunals National User Group (England & Wales) noted, at its October 2017 meeting, that Regions were reporting a doubling in new claims since the UNISON decision. http://bit.ly/2D6RACE

Significant court closures, mergers and relocations and a shortage of employment tribunal judges, have contributed to the pressure felt by some tribunal centres. Additionally, the judgment in a particular case means that single claims may be brought where a multiple claim may have previously been brought; however the Government’s July to September 2017 tribunal statistics (published in December 2017) showed that single claim Employment Tribunal receipts are up by 64% over the previous quarter. http://bit.ly/2BoN01T This represents a sharp and immediate increase in risk for legal expenses insurers.

We are not going to mirror such an increase by raising premiums by the same extent (64%) or anything close to that; however, we will continue to monitor official tribunal statistics and our own claim volumes. Our Underwriting Team will carefully consider claims experience in light of previous employment claims and forecast the likely increase in claims to determine the future premium required.