ET fees: ‘full and careful’ consideration of the evidence

So, now we know. Brexit means Brexit, and ‘in due course’ means, well, in due course. And, thanks to a parliamentary question by Labour MP Dawn Butler, we also know that the government’s review of employment tribunal (ET) fees has been ongoing for 17 months because “it is important that full and careful consideration is given to all the relevant evidence”. Say what you like, but there are no cobwebs at the Ministry of Injustice.

But what exactly is this ‘relevant evidence’? How long has the Ministry had it? What does it tell us? Is there more such evidence to come? And what is the point of Liz Truss?

In this post, I will try to answer (most of) these questions.

First, a few essential facts. The justice-denying ET fees of up to £1,200 were introduced on 29 July 2013. And Liz Truss, believe it or not, is Lord Chancellor and Secretary of State for Justice. Far more than the fact that we import two-thirds of our cheese, that is a disgrace.

The relevant evidence (1): the impact of fees

Impact of fees: the number of ET claims/cases

As noted many, many times by any number of commentators, including yours truly, and as is abundantly clear from the following chart, the impact of the fees on overall ET claim/case numbers was sudden, substantial and sustained.

etcases1116

Moreover, the pattern is damn near the same for each and every ET jurisdiction (e.g. unfair dismissal) – see, for example, charts 5, 6, 7, 8, 9 and 10 here.

Which means that, in terms of the impact of the fees on case numbers, the Ministry has had all the evidence it needs since long before it finally launched its interminable review, after much prevarication, in June 2015. Indeed, for measuring the impact of the fees on case numbers, the key period is September 2013 to February 2014 – that is, the six months immediately after the introduction of fees, and immediately before the introduction in April 2014 of Acas early conciliation (see below), which has had its own, much less dramatic, impact on ET claim/case numbers. (NB: we can ignore March 2014, due to there being a pre-Acas EC spike, just as there was a pre-fees spike in July 2013).

Comparing that six-month period with the six months immediately before the introduction of fees (i.e. January to June 2013), the overall number of single claims/cases fell by 63%. Sex discrimination claims fell by 87%, equal pay claims by 88%, and unfair dismissal claims by 65%. And it doesn’t matter how much more ‘full and careful consideration’ the Ministry gives to this evidence – those figures ain’t gonna change.

Impact of fees: changes in the nature and quality of claims/cases

While the evidence of the impact of the fees on claim/case numbers is both indisputable and increasingly aged, there is also a growing body of evidence that the introduction of fees has changed both the nature and the quality of claims/cases – and not in a good way.

Most importantly, there is a range of evidence – both anecdotal evidence from employment law practitioners and ET judges, and hard statistical evidence – that the fees have impacted most, as one would expect, on relatively simple, low-value claims, such as those relating to the non-payment of wages and/or holiday pay (aka ‘wage theft’). According to paragraph 35 of the Ministry’s December 2011 consultation on its then proposed fees, in 2010/11 the majority of ET claims (62%) fell into this category. But, according to the latest set of official figures (see Table ETF.1), in 2015/16 only 24% of the issue fees requested from claimants were in relation to such Type A claims (as opposed to the more complex, Type B claims for e.g. unfair dismissal or discrimination). And, of course, that’s 24% of a much smaller number.

Those relatively simple, low-value claims tended to have a high success rate – the (rogue) employer was usually bang to rights, often not contesting the claim (which accordingly resulted in a default judgment). And the near eradication of such claims by fees – why would you pay £390 in fees to chase unpaid wages of, say, £500? – no doubt partly explains why the ‘success’ rate (as narrowly defined) has fallen, and the wider ‘failure’ rate has risen, markedly, since July 2013 (see charts 2 and 3 here).

We can see further evidence of these changes in the nature and quality of claims/cases in an emergent but seemingly marked increase in the median value of ET awards, and in the very low incidence to date of both s16 penalties (for aggravated breaches of the claimant’s rights) and s150 penalties (for non-payment of an ET award).

As I say, some of this evidence is still emerging. But the direction of travel is as clear as it is regrettable, so waiting another six, 12 or 18 months wouldn’t make any difference to an objective assessment of the impact of the fees regime. Six months from now, there will be a lot more evidence that a racist, misogynistic narcissist won the recent US presidential election. But I think we have more than enough evidence to make that assessment now.

The relevant evidence (2): mitigating factors

Other factors in the fall in claim/case numbers

In seeking to deny the above-illustrated impact of the fees on ET case numbers from July 2013, ministers have cited an “historic downward trend” in those numbers, as well as improving economic conditions (including record levels of employment). And, as we can see from the following chart, in 2o11, 2012 and 2013, there was indeed a (relatively mild) decline from the 2008 crash-induced peak in 2009/10, back towards the level seen in the relatively stable plateau of the mid-2000s.

etannual1116

However, there is no reason to think that even that mild rate of decline would have continued in 2014 and beyond (let alone that it would have accelerated). By 2012/13, the last full year before fees, case numbers were almost back to the record lows of 2004/05 and 2005/06. And the record levels of employment in recent years might well imply an upward trend in ET cases, in some jurisdictions at least. So it seems much more realistic to assume that the overall mild “historic downward trend” would have gradually petered out. And, indeed, we can see (from the first chart, above) that there has in fact been no decline in actual case numbers since mid-2014.

On this basis, we can create the following projection for the number of ET single claims/cases, had both fees and Acas early conciliation (but see below) not been introduced. (NB: the eight columns for 2008/09 and 2009/10 on the far left look odd because they are averages of the annual total, as the quarterly figures are not available).

etproj1116According to this projection, by the end of June 2016 (i.e. the end of Q1 of 2016/17), almost 90,000 single ET claims/cases had been ‘lost’ to fees. And, as that figure increases by some 8,000 every quarter, at the time of writing it is over 100,000.

The Ministry of Injustice might quibble with the details of the above projection, but it can’t credibly argue for a significantly lower one. And, even if it does, the key point is that the picture hasn’t changed, significantly, since before the Ministry launched its review 17 months ago, in June 2015. Nor will it change, going forward – we will just be able to add more columns on the right that look pretty much like that for every quarter since Q2 of 2014/15. So, again, giving this evidence further ‘full and careful consideration’ isn’t going to lead to any different conclusions. It just wastes more time.

Acas early conciliation

However, there is another, far more significant mitigating factor: the introduction, from April 2014, of Acas early conciliation. As noted previously on this blog, ministers have made a great deal of noise about this mitigating factor. And, yes, we do have to lay on top of the chart above the some 4,000 potential ET single cases that Acas successfully conciliates – for free – each quarter, as follows:

etprojacas1116

That reduces the above figure of 100,000 ET single claims/cases ‘lost’ to fees, to just under 60,000, as of the end of June 2016, and more than 65,000 at the time of writing.

As noted previously, it is debatable whether we can offset all of those successful early conciliations (single cases) against the number of single claims/cases ‘lost’ to fees, as it is less than certain that all are conciliations of a ‘dispute’ that, had it not been for the introduction of fees, would have resulted in an ET claim/case. But it’s difficult to see how this might be nailed down either way. So, again, the key point here – am I boring you? – is that the picture has not changed significantly since before the Ministry launched its bloody review, in June 2015. Even after allowing for the (beneficial) impact of Acas early conciliation, we are still missing more than 65,000 ET single claims/cases, and that figure increases by some 4,000 every quarter. Waiting another six, 12 or 18 months won’t throw any further light on the matter.

Some ministers have suggested that we don’t need to worry about these ‘lost’ ET claims/cases, because they are all vexatious or otherwise weak claims that should never have been brought in the first place. This is known as the Hancock Theorem. But there is simply no evidence for the Hancock Theorem that the Ministry could give ‘full and careful’ consideration to, there never has been, and there never will be. It’s just a belief.

Conclusion

I could go on, but if you’ve made it this far you are probably losing the will to live. I know I am. The key point [Haven’t you said this already? Ed] is that the Ministry has had all the evidence it needs to come to some conclusions, and to make a decision about what to do, since before it launched its review in June 2015. It’s taken me a couple of hours, spread over a few days, to write this blog (I’m a slow writer, and the day job takes up a lot of time, as do the kids). The Ministry has seemingly had a team of top-notch officials working full-time on the matter for 17 months. What the **** do they do all day? And how do ministers expect to successfully negotiate Brexit if they can’t nail a simple little matter like this?

No doubt someone in government is giving full and careful consideration to that question. Let’s just hope it’s not Liz Truss.

 

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About wonkypolicywonk

@wonkypolicywonk is a policy minion who has been lucky enough to work at Maternity Action, Working Families, Citizens Advice, the National Audit Office, the Law Society, and Amnesty International UK. He currently bangs his head on a desk in Parliament.
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