ET fees: Ministry of Justice keeps us in the dark

Q: How many Ministry of Justice ministers does it take to change a lightbulb?

A: The Ministry’s plan for changing the lightbulb will be published in due course.

Yep, when it comes to its internal review of the justice-denying employment tribunal fees introduced in July 2013, the Ministry of Justice sure likes keeping us in the dark. Finally launched on 11 June 2015, some 14 months after Coalition (well, Liberal Democrat) ministers first started using the review as a fig leaf by suggesting it was just around the corner, the review team had produced a report by early last October. However, 12 months on, that report is still sitting on ministers’ desks, despite the then junior minister, Dominic Raab, telling MPs as long ago as 4 July that he anticipated publishing it “in the near future”. And, by mid-September, ‘in the near future’ had regressed to “in due course”.

In recent weeks, I’d started to wonder whether ‘in the near future’ and ‘in due course’ actually mean ‘not before the Supreme Court has heard Unison’s appeal in its twice-rejected judicial review challenge, on 7 and 8 December’. In other words, it’s all Adam Creme’s fault. But then we learnt that the Supreme Court hearing dates have slipped back to 27 and 28 March next year. And the Ministry surely can’t stretch the definition of ‘in the near future’ to ‘nine months from now’? Or can it?

Time will tell, but with memories of the damning criticism of the fees regime by both the Justice and the Women & Equalities committees of MPs – as well as by a whole load of the kind of person Michael Gove says we’ve all had enough of – becoming dimmer with every passing week, here is a summary of the options for the Ministry, and the associated issues its review report will need to address if it is to have any credibility at all.

Option 1: Abolish the fees

This would make a lot of employment lawyers (and judges) very happy, but it seems somewhat unlikely, and the omens are not good. For outright abolition would come with a price tag of some £20 million per year – £8 million or so in lost fee income, and up to £15 million in increased operational costs (due to the inevitable rise in claim/case numbers). And, as noted previously on this blog, that’s £20 million that the Ministry would appear not to have. It is presumably for this reason that, just last month, the Ministry confirmed it is to press ahead with indefensible increases of up to 500% in immigration & asylum tribunal fees.

Option 2: Reform the fees regime

This would be the sensible option. As I have demonstrated previously, much if not all of the above £20 million could be covered by a combination of (much) reduced fees for claimants, the introduction of (equally modest) fees for respondent employers to defend a claim/case, and a (more substantial) ‘polluter-pays’ financial penalty for employers found by a tribunal to have breached the claimant’s rights. Yes, there might be some (unjustified) squeals from the employer lobby groups, but with the availability of (free) early conciliation by Acas there is no good reason why an employer should not pay a nominal fee to defend a tribunal claim, and even the British Chambers of Commerce has previously accepted that, if claimants have to pay (even nominal) fees, it is only “fair” for losing employers to have to pay “an analogous administration fee to the Treasury”.

However, justice secretary Liz Truss has so far given little indication that she wishes to develop a reputation for being sensible.

Option 3: Do nothing.

The prevarication and delay in concluding the Ministry’s internal review would suggest this is the option favoured by ministers, and that they simply want Unison’s pesky judicial review safely out of the way before they break this policy wonk’s heart. However, if they are not to leave prime minister Theresa May’s (loudly proclaimed) commitment to greater equality – including in the workplace – looking just a tad hollow and cynical, they will need to try and explain away the loss to fees of more than 60,000 single ET cases alone since July 2013, and in particular the loss of cases involving a claim for discrimination. (And yes, since you ask, that figure is based on a projection that takes into account the mild, pre-existing downward trend in case numbers, as well as the improving economy, global warming, and changes in the price of fish).


That figure increases by some 4,000 with every passing quarter, even if we assume – and it’s a highly questionable assumption – that every single one of the 4,000 or so single cases successfully resolved by Acas early conciliation each quarter would otherwise have resulted in a tribunal claim. For, as Acas’ early conciliation caseload far exceeds the number of ET cases we could expect, had fees not been introduced, it seems more likely that at least some of those early conciliations are of ‘disputes’ that would never have gone to tribunal in any event.

In short, the existence of Acas early conciliation does not get ministers off the hook. And there’s absolutely no evidence to support the contention of the Daily Mail, the Daily Express and Matthew Hancock MP that all the ET cases ‘lost’ to fees are simply weak or unfounded cases that should never have been brought in the first place.

If they go for this option, ministers will also need to explain why they are content for their fees to impact most on relatively low-paid, often vulnerable workers subject to the kind of employer abuses covered by the lower level (Type A) fees, such as the non-payment of wages (i.e. wage theft) or holiday pay. According to the Ministry of Justice, in 2010/11 the majority of ET claims (62%) fell into this category. But in 2015/16 only 24% of issue fees requested from claimants were in relation to Type A claims.

But who thinks Theresa May’s stated commitment to greater equality is genuine?

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ET costs awards: what’s been going on?

Rooting around in the latest set of quarterly ET statistics in the hope of finding something of interest – other than the emergent upward trend in median ET awards highlighted in my previous post – I was somewhat taken aback by Table E12 of the annual ET tables, on costs awards. For, as the following chart shows, in the past two years the long-standing imbalance between the number of costs awards made to respondent employers (the orange line), and the number made to claimants (the blue line), has reversed.

In each of the four years 2007/08 to 2010/11, there were about three times as many awards to respondent employers as there were to claimants, and by 2012/13 that ratio had risen to 4:1. But since 2013/14 the number of awards to respondent employers has plummeted, while the number of awards to claimants has risen sharply. And I am at a complete loss as to why that has happened.

costsawards[NB: I have adjusted the figure given in Table E12 for the number of awards made to respondent employers in 2011/12, as that figure (1,294) includes 800 awards arising from one multiple-claimant case in which the 800 claimants were all made liable for a costs award of £4,000 to the respondent, i.e. £5.00 per claimant. I have counted that as just one award, reducing 1,294 to 495, but I don’t think that introduces any relevant distortion.]

Can anyone out there explain what’s been going on? Am I just being even dumber than normal? I imagine the parallel fall in 2015/16 reflects the overall reduction in the ET system’s workload, due to ET fees and Acas early conciliation. But why the (pretty dramatic) switch-around?

Update (23 September): So, barrister Jamie Anderson was first (on Twitter, last night) to suggest what looks to me to be the explanation, closely followed by Sophie Park (see comments, below): the data for costs awards to claimants from 2013/14 onwards includes orders made under Regulation 76(4) of the 2013 Regulations in respect of the repayment of fees, as well as standard costs awards made under Regulation 76(1). Which is a bit silly, really, and maybe someone could suggest, at the next ET User Group meeting, that such orders/awards be recorded separately from standard costs awards.

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ET awards: looks like we’ve got us a trend thingy

Six months ago, I noted on this blog that, in 2014/15, there had been a marked increase in the median awards for unfair dismissal or discrimination (the only jurisdictions for which the lackadaisical HMCTS bothers to record the relevant data). And I suggested that this might be the beginning of a sharply upward trend, due to the justice-denying fees introduced in July 2013 having eliminated many lower value unfair dismissal and discrimination claims.

Well, this week we got the figures for 2015/16, in amongst the latest set of quarterly ET statistics, for Q1 of 2016/17. And, as the following chart shows, we do appear to have what Sean Jones QC would call a trend thingy.


I have left out Age, Religious and Sexual Orientation discrimination, for the simple reason that the number of awards in those jurisdictions has always been very small. For example, the median award for Age discrimination did increase, from £7,500 in 2014/15 to £8,417 in 2015/16, but there were only four such awards in 2015/16. Similarly, the median award for Religious discrimination increased from £1,080 in 2014/15, to £16,174 in 2015/16, but there was just one such award in 2014/15, and only four in 2015/16. With such small numbers, the median award is prone to significant variation in any case.

And, as the following charts show, the upward trend in the median award is indeed married to a sharply downward trend in the number of awards – reflecting the sharp fall in the number of claims following the introduction of fees in July 2013 (as well as the introduction of Acas early conciliation in April 2014).


etawardssexdiscetawardsraceIf you’re reading this and you’re a junior minister at the Ministry of Injustice, you are no doubt thinking, ‘ah, but lots of people are now getting their claim for unfair dismissal or discrimination resolved by Acas, for free!’. Which is true, to some extent at least. But, crucially, while the quarterly ET statistics have always told us the number and outcome of claims in each jurisdiction, the quarterly Early Conciliation statistics issued by Acas are not broken down by jurisdiction. So it’s hard to know to what extent Early Conciliation by Acas is successfully mopping up the lower value unfair dismissal and discrimination claims and awards lost to fees.

Now that Early Conciliation by Acas plays such a significant part in the ’employment dispute resolution’ system, that is a serious shortcoming that Acas needs to fix.

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Enforcement of the NMW – a fair sport?

Earlier this month, the newly re-named Department for Business, Energy & Industrial Strategy (BEIS, formerly BIS) named & shamed another batch of 197 NMW rogues. With six months having passed since the last batch, in early February, BEIS was able to hype this one as “the largest ever list of NMW offenders”, but the length of the list merely served to highlight the relatively small sums owed by all but a handful of the 197, who between them owed a combined total of £465,290 in NMW arrears to 2,166 workers.

Among the usual mix of hairdressers/beauty salons (27), bars, restaurants, cafes and hotels (25), car dealers/motor garages (15), and childcare providers (12), only 85 employers owed more than £1,000 of arrears, and 131 (66%) had underpaid only one worker. The median sum owed was just £759.32, 80 employers owed less than £500 of arrears in total, and only 12 had underpaid more than 25 workers. The four ‘worst’ offenders – including the high-end San Lorenzo Wimbledon restaurant and the Regis chain of hair & beauty salons – accounted for 37% of the total arrears owed, and for 49% of the 2,166 unpaid workers.

Indeed, perhaps the most newsworthy aspect of the list – overlooked by most if not all journalists, as far as I can tell – is that it included no fewer than 24 social care employers, ten more than BIS had managed to include among the 490 NMW rogues named & shamed in all previous batches since the re-booting of the scheme in October 2013. However, most of the 24 appear to be small fry, with 15 having underpaid fewer than four workers and 18 owing less than £2,500 in total. But at least ‘social care’ – a sector in respect of which HMRC has long appeared to have a bit of a blind spot – has moved a little towards the left of this updated ‘chart of the meanies, by sector’.


With the re-booted scheme in force for almost three years now, and almost 700 NMW-breaching employers named & shamed, it is also interesting – well, it is if you’re a nerd like me – to look at breakdowns by sector of (a) the arrears owed, and (b) the number of workers to whom arrears were owed. NB: for the following ‘arrears owed’ chart, I have excluded the extraordinary sum of £1,742,655.56 owed by security firm TSS Ltd, and for the ‘workers covered’ chart I have excluded both the 2,519 TSS Ltd security workers and the 2,895 hospitality workers to whom the Arta bar/club/restaurant in Glasgow somehow managed to underpay a total sum of £45,124.00 (an average of just £15.59 per worker).




However, even with the exclusion of the TSS Ltd security workers and the Arta hospitality workers, the ‘workers covered’ chart paints a slightly false picture. For example, all but 125 of the 3,071 retail workers were employed by four NMW-breaching retailers: Monsoon Accessorize (1,438 workers), Foot Locker (601), H&M (540), and French Connection UK (367). Of the other 65 retail sector employers, 48 (74 per cent) owed arrears to just one worker, and all but six owed arrears to fewer than five workers. Similarly, 604 of the 818 hairdresser/beauty salon workers were employed by one employer: the national chain Regis UK Ltd. And, of the other 118 hairdressers/beauty salons, 73 (62 per cent) owed arrears to just one worker, and a further 28 (24 per cent) owed arrears to just two workers.

Between them, those 118 hairdressers/beauty salons owed total arrears of £226,831.77 to 214 workers (an average of £1,060 to each worker). And, on average, each of those 118 mostly small, low-profitability businesses owed total arrears of £1,922. Which means that, roughly speaking, each would also have been required to pay, in addition to those arrears, a financial penalty to HM Government of £1,922 (see sections 3.7 and 3.8 of this July 2016 explanation of NMW enforcement policy). The 92 NMW-breaching employers named & shamed in February, for example, were required to pay a combined total of “over £629,000” in financial penalties (some £6,800 each, on average, but note that the 92 included the above-mentioned TSS Ltd and their arrears of £1.74 million).

OK, a penalty of some £2,000 might not sound very much, but £2,000 is in fact a not insignificant sum to a small business such as a local hairdresser/beauty salon (even if the penalty is discounted by 50 per cent for prompt payment, i.e. within 14 days).

So, if I was the owner/manager of one of those 118 small businesses, I might well be wondering whether the highly profitable Sports Direct is going to be required to pay a financial penalty of some £1 million after striking an apparent deal with HMRC and the union Unite to pay some £1 million of NMW arrears to “thousands” of its warehouse workers. (The current penalty rate is 200 per cent of the total arrears owed, but that only applies to underpayments made since 1 April this year. For underpayments made between 7 March 2014 and 1 April 2016, the penalty rate is 100 per cent, and for underpayments made prior to 7 March 2014 it is 50 per cent).

As the Guardian’s economics editor, Larry Elliott, noted on the day the story broke:

“There appears to be no reason for clemency. The government seems quite happy to name and shame little known companies for relatively modest sums, and this was no minor infraction. Sports Direct’s flouting of minimum wage legislation had been going on for four years” … and … “Sports Direct is a prime example of how companies can use employment agencies to avoid giving what are effectively full-time staff members the rights which they are legally due. Employees are too frightened to make a fuss for fear that they will not get any more work.”

Time will tell, but – as noted previously on this blog – HMRC does appear to have quietly introduced a questionable practice of allowing some NMW-breaching employers to ‘self-correct’ and pay the arrears owed without being issued with a Notice of Underpayment, thereby evading both naming & shaming, and – more importantly – the imposition of a financial penalty.

In 2015/16, according to the answers given by BIS (now BEIS) to a series of parliamentary questions, 60 employers took advantage of an effective amnesty (announced in July 2015) to “voluntarily disclose [total] arrears of £786,038 owed to 4,869 workers”, without being issued with a financial penalty or named & shamed, and a further 85 employers were able to ‘self-correct’, also without being issued with a Notice of Underpayment, so were not issued with a financial penalty and will not be named & shamed. And BIS/BEIS seems reluctant to say how much was owed by those 85 employers, and to how many workers – a parliamentary question tabled on 3 June has gone unanswered, despite a chasing question.

Yet, over the year, the total arrears ‘recovered’ by HMRC leapt from an average of £3.9m in previous years, to a remarkable £10.3m. The suspicion has to be that those 85 unnamed, non-shamed and, most importantly, financial penalty-evading NMW rogues were responsible for much of that otherwise astonishing increase.

Is Sports Direct also being allowed to ‘self-correct’, and so evade a financial penalty of some £1 million? We should be told.

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What does the appointment of Liz Truss as justice secretary mean for the MoJ review of employment tribunal fees?

I’m sorry I haven’t a clue.

Update (19 July): However, with the enforced departure from the MoJ this week of both slow-reading junior injustice minister Shailesh Vara and slightly less junior injustice minister Dominic Raab – who appeared to have taken over responsibility for the much-delayed ET fees review from the hapless Vara in recent weeks – there must be some doubt as to whether we will see the long-awaited review report any day soon. For, if the report recommends reform of the fees regime, then at least someone in the new ministerial team is going to be asked to sign-off on the associated financial hit to the catastrophically cash-strapped Ministry. And, if it doesn’t, someone’s going to want to read themselves in before going out to absorb the inevitable political and media heat.

In the meantime, I remain available to any new minister who’d like to learn how to square this tricky circle by reforming the fees regime on a cost-neutral basis. Unlike those introduced by the Ministry in July 2013, my fees are very reasonable.

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Justice by Committee

No, it wasn’t the report we #ukemplaw nerds have been holding our breath for. We are still waiting for the Ministry of Justice’s report of its post-implementation review of the justice-denying employment tribunal (ET) fees introduced in July 2013. But on 20 June, at the start of a quiet news week, the Justice Committee of MPs finally published the report of its own inquiry, launched last year, into the impact of the fees.

Given what was happening later in the week, plus the fact that Parliament was in recess at the time, I do find myself wondering whether at least some members of the Committee were hoping the report would pass largely unnoticed by the mainstream media. Whatever, the Committee’s conclusions and recommendations are commendably pithy. I particularly enjoyed their barbed comments on the laughably poor oral evidence of injustice minister Shailesh Vara, and his meaningless obsession with the figure of 83,000 early conciliation cases handled by Acas:

In coming to a judgement about the impact on access to justice of employment tribunal fees, we consider, on the weight of the evidence given to us, that Mr Vara’s heavy reliance on the figure of 83,000 cases dealt with at Acas early conciliation to support his contention that access to justice has not been adversely affected by employment tribunal fees was, even on the most favourable construction, superficial. Those cases cannot be simplistically assumed to represent displaced cases which were settled satisfactorily otherwise than by being taken to tribunal.

The Committee also notes what it politely calls “inconsistencies” in the hapless Vara’s account of progress with the Ministry’s internal, post-implementation review, the report of which landed on Vara’s desk as long ago as last October: “It is difficult to see how a Minister can urge his officials to progress a review which they apparently submitted to him four months or more previously.” Furthermore:

“There is a troubling contrast between the speed with which the government has brought forward successive proposals for higher fees, and its tardiness in completing an assessment of the impact of the most controversial change it has made. We find it unacceptable that the Government has not reported the results of its review one year after it began and six months after the government said it would be completed.”

Ouch. And, on the impact of the fees on access to justice, the Committee is equally clear:

“The arguments presented to us by the Government in this inquiry, limited as they are, have not swayed us from our conclusion, on the evidence, that the regime of employment tribunal fees has had a significant adverse impact on access to justice for meritorious claims.”

In a statement accompanying the report, the Committee’s chair, Bob Neill MP, added:

“The Ministry of Justice has argued that changes to employment law and the improving economic situation, as well as the pre-existing downward trend in the number of employment tribunal cases being brought, may account for part of the reduction in the number of cases. These may indeed be factors but the timing and scale of the reduction following immediately from the introduction of fees can leave no doubt that the clear majority of the decline is attributable to fees.”

In calling for the fees to be “substantially reduced” as well as for reform of the fee remission system, the Committee recognises that this “would have cost implications for the Ministry of Justice”. However, the Committee stresses – repeatedly – that “if there were to be a binary choice between income from fees and preservation of access to justice”, then “the latter must prevail as a matter of broader public policy”.

All good stuff, then, and the Committee’s members and chair, Bob Neill, deserve praise for their work. That said, I would have liked to have seen a bit more analysis by the Committee of the Government’s arguments to date, and especially the role that Acas early conciliation is now playing in the resolution of potential ET claims. As the following chart shows, about half of the single ET claims ‘lost’ to fees are now successfully resolved through early conciliation. And, of course, not all of the other half would have been successful (at a hearing or default judgment) or satisfactorily settled.

missingJune16This lack of analysis in the Committee’s report was replicated in this week’s debate in the House of Commons, which focused on the Committee’s report but which, technically, was on a motion to approve the remaining £4bn of the Ministry’s £7bn budget for 2016-17 that it hasn’t yet had from the Treasury. (By convention, such ‘Estimate Day’ motions are not put to a vote, but – seemingly under pressure from backbench ‘rebels such as Chuka Umunna – Labour’s front-bench eventually decided to vote against the motion).

It is probably significant that, in his contribution to the debate, justice minister Dominic Raab – who has taken over responsibility for this matter from the hapless Shailesh Vara, and is perhaps most famous for having once been the Foreign Office’s in-house expert on “the international law of outer space” – noted that “there has been virtually no mention of [Acas early conciliation] in this debate”. My guess is there will will be quite a lot about early conciliation in the Ministry’s much-delayed post-implementation review report. Indeed, the emerging evidence on early conciliation may well explain much of the delay.

As for when we might get to read that report, Raab told MPs that “the review is very close to completion, so I hope to be able to make an announcement in the near future”. Which, who knows, might well mean ‘on Wednesday, when everyone is looking the other way’.

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Latest ET stats. Nothing to see, move along.

It would be nice if the latest set of quarterly employment tribunal (ET) statistics, published by the Ministry of Injustice today, provided some distraction from the imminence of World War III, the associated bonfire of all our employment rights, and the precisely calculated 18.3142% fall in the value of our houses. Sadly, the statistics provide little more mental stimulation than the latest Stronger IN initiative. Or, indeed, any Stronger IN initiative since the excruciating EU referendum campaign began, some 200 years ago.

Since the last set of these increasingly banal statistics, in March, the Ministry of Injustice has not completed its internal review of the justice-denying fees introduced in July 2013. The chair and members of the Justice committee of MPs appear to have forgotten that they conducted an inquiry into the impact of the fees late last year. And the Corbyn-led Workers’ Party is seemingly no nearer to having a meaningful policy on the matter (prior to last year’s general election, Labour’s policy was to replace the fees with something else, but we still have no idea what that ‘something else’ might be).

It will soon be three years since those fees of up to £1,200 caused the number of ET cases to fall off a cliff. And it is 12 months almost to the day since Michael Gove – then everyone’s favourite justice secretary, but maybe a little less loved now – agreed to let the Ministry’s internal, so-called post-implementation review go ahead, some 14 months after Liberal Democrat ministers in the Coalition had first tried to hide their blushes by ‘announcing’ it whenever faced with awkward questions about the fees.

However, we know that the Department for Business, Innovation & Skills considers it “too early” to even consider whether reform of the fees regime is needed. And we know that the Ministry of Injustice, having pretty much run out of dosh, is not well placed to bear the increase in operational costs that would inevitably flow from abolition (or a substantial reduction in the level) of the fees. Unless, of course, those extra costs could be covered by, for example, the introduction of fees for respondent employers to defend a claim.

Whatever, I’ve now had as much of this quarterly pointlessness as it is reasonable to expect an unpaid policy wonk to bear. So, for the last time, here are some updated charts showing the impact of ET fees since July 2013. This ain’t rock ‘n’ roll, this is genocide!

Chart 1: New ET cases, Q1 2012/13 to Q4 2015/16


 Charts 2 and 3: ET claim outcomes

According to the famed Hancock Theorem of Vexatious ET Claims, the success rate of ET claims should have shot up towards 100 per cent in recent quarters, and the failure rate down towards zero, as all the vexatious and otherwise unfounded claims that were ‘clogging up the system’ prior to July 2013 have been cleverly weeded out by fees.

However, for reasons that I doubt keep Mr Hancock awake at night, that hasn’t happened. The (narrowly defined) success rate has fallen, and the overall failure rate has risen.



 Chart 4: ET fees and Acas early conciliation

As this chart shows, the (very welcome) fact that some 4,000 potential ET single cases are successfully conciliated by Acas each quarter, via the (free) ‘early conciliation’ regime introduced in April 2014, does not balance out the loss of access to justice caused by fees since July 2013. As of the end of March, we were still ‘missing’ some 54,000 ET single claims/cases (i.e. not including multiple claimant cases), and that figure continues to grow by some 4,000 every quarter – so, at the time of writing, is approaching 58,000.

(As previously explained on this blog, the projection on which this chart is based takes into account the mild downward trend in ET case numbers that was evident in mid-2013, as well as the improvement in economic conditions noted by injustice minister Shailesh Vara whenever he comments on the impact of fees).

Of course, the optimistic way of looking at the figures on which this chart is based is that the justice-denying impact of fees could be pretty much eliminated, going forward at least, if Acas could just increase the number of successful conciliations by 100%.

missingJune16Charts 5, 6, 7, 8, 9 & 10: selected jurisdictions, monthly







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