Employment Tribunal Fees are unlawful, Supreme Court rules

In one of the most striking decisions concerning employment law for some time, the Supreme Court has ruled that the government was acting unlawfully and unconstitutionally when it introduced tribunal fees in July 2013.

Employment Tribunals deal with a broad range of claims, including those for unfair dismissal and discrimination. Prior to the introduction of fees, the criticism had been that there was little stopping claimants bringing claims that were groundless or malicious in intent, with a view perhaps to obtaining a payment from a former employer to stop the case going ahead. The introduction of fees was, in part, a means to prevent these types of vexatious and baseless claims from going ahead.

Yet the introduction of fees, especially at the rates laid down by the rules, was controversial right from the start. The fees are payable at different stages of the case and can be up to £1,200 if a matter proceeds all the way to a hearing. Exemptions from paying fees are available, but as with the Legal Aid, these are restrictive in nature and are not applicable to most claimants.

Those seeking justice through the Employment Tribunal are often in a difficult position financially, especially if they have recently lost their job. This is especially so when the time period to bring an employment claim is so short. Gambling such fees, which to most of us are significant sums of money, will put many people off.

I know from personal experience of people with good cases, where the injustice is there for all to see, who have not gone ahead after deciding they are not in a position to pay the fees involved. Fees have, in short, lead to a substantial decline in the number of people exercising their rights. If this is so, the next question has to be, are the rights worth having in the first place if people are unable in practice to access them?

Interestingly, even the Confederation of British Industry (CBI) voiced its concerns about the high level of fees. Rob Wall, the CBI’s head of employment policy, has stated that while supporting the principle of fees to prevent vexatious claims, “we have never called for the level of fees the Government has introduced.” If even an organisation representing employers takes this position, something must be seriously wrong.

The decision of the Supreme Court has lead to the government stating it will immediately cease requiring the payment of fees and will go further and refund the payment of fees to those who have paid them previously. We will see if the number of claims at the Employment Tribunal recovers and yet there are two rather interesting points that follow. Firstly, there will have been many people who have been denied justice since July 2013 following the requirement to pay a fee to bring a claim. Secondly, it is notable that the government managed to take this unlawful decision despite all the criticism and controversy at the time. Perhaps this case will dissuade the government from continuing its apparent campaign to increase Court and tribunal fees whenever possible, especially as it has been demonstrated that unlawfully introducing or increasing them directly impedes the pursuit of justice.

The full Judgement can be found here: https://www.supremecourt.uk/cases/docs/uksc-2015-0233-judgment.pdf

Whittling at the spearhead of justice.

The torrent of legal reform in personal injury rages on, seemingly never able to rest even for a moment.  Now, the way for the reform that many lawyers feared most has been prepared. Chancellor George Osborne announced late last year that the small claims limit for personal injury would increase from £1,000 to £5,000.  Although no date has been set, it cannot be long until this comes to pass. Yet the Chancellor did not stop there as he went onto announce another, unheralded and more novel alteration to personal injury law.  He proposes that claims for general damages (that is pain, suffering and loss of amenity) are to be abolished for people with minor soft tissue injuries.

Both these changes are very significant for injured people. By and large, if a personal injury claim is in the small claims track of the County Court, the rules are that the Claimant will not be awarded their Solicitors’ fees even if they are successful against the Defendant (and vice versa).  Normally if you win a case at Court, your opponent must pay your lawyer’s fees but these cases are deemed to be too small to warrant the use of a Solicitor.  As using a Solicitor would be considered disproportionate to the size of the case, you cannot normally claim your Solicitor’s fees.

For example, in a debt case of say £2,000, if you win your case a Judge will not normally award you your lawyer’s fees in addition to the claim for £2,000.  This acts as a practical restraint on people obtaining legal advice from Solicitors.  If you cannot claim your Solicitor’s fees even if you win, it does n’t make sense to spend lots on legal advice and assistance as you won’t be able to recover it.  Clients often seek a limited amount of advice in such cases if they are unsure of the merits of their case or the procedure involved and may be happy to risk say £100 or so for some limited advice.

In cases without a personal injury element, the limit for small claims at the County Court was changed in April 2013 from £5,000 to £10,000.  This means that in debt cases, contract claims and so forth, if the amount you seek to recover is less than £10,000 it is very likely your case will be assigned to the small claims track.  As a result claims of less than £10,000 are now less likely to involve legal advice and assistance from a Solicitor.  Many people and businesses may consider that claims between £5,000 to £10,000 are sufficiently serious and complex enough to warrant obtaining legal advice but the law now does not allow them to claim the fees if they are successful from the opposing party.

In the run up to these changes in April 2013 it was widely speculated that the government would change the small claims limits as they applied to personal injury claims as well.  After backing away from this change in April 2013, the government has signalled that this change is now definitely going to take place. It is just a question of when.

The limit for these cases has for a long time been £1,000 for the injury claim. In a personal injury claim, a value known as general damages is given to the injury element; the more serious the injury, the higher the amount.  These rules mean that if the injury element of a personal injury claim is valued at £1,000 or less than your claim is in the small claims track and, as above, you will not recover any money spent on Solicitors from your opponent if your case is successful.  Again the idea is that these cases are too small to warrant the involvement of a Solicitor.

A claim of £1,000 for personal injury normally involves, for example, a claim for a whiplash injury that lasts around a week or so.  It could also be a very minor case of scarring that clears up completely in a short time, damage to a single tooth or injuries or wounds of a similar nature. No one who suffers an injury, particularly due to the negligence of someone else, ought to be belittled. Anyone who suffers in this way goes through a terrible time with all sorts of pain, frustration, distress and inconvenience.  Yet setting the small claims limit for personal injury claims at this level seems to be intuitively right.

The reforms proposed by Osborne increase this limit fivefold and this changes the range of injuries that will fall into the small claims track dramatically.  An injury valued at £5,000 can be very serious and many people suffering in this way would find it a traumatic experience.  The severity of such injuries means that they are likely to be cases involving substantial claims for loss of earnings, medical expenses or care (that is assistance from someone during recovery).

Injuries at £5,000 or so can involve fractures of an arm or leg, or a fractured jaw or clavicle (that is a bone in the shoulder).  It might also be the loss of your two front teeth.  It might involve a significant scar to the hand or back. In cases involve a whiplash injury suffered in a road traffic accident, it can include cases of suffering that last for a prolonged period of up to two years.  The point is that increasing the small claims limit to £5,000 suddenly includes injuries that are clearly not trivial, transient or minor.

Injured people making claims for compensation of this sort may be reluctant to obtain legal advice as they are unlikely to recover these fees from the opponent and so any fees they pay will effectively be a deduction from their compensation.  As a result, they are likely to deal with the case themselves and will to some extent be reliant upon the opponent, who is almost always represented by an insurance company, being fair with them.

Is that likely, given that the motivation for all these reforms comes from the insurance companies and their long term quest to cut down the legal fees and compensation they have to pay for claims?

The majority of personal injury claims involve injuries of less than £5,000 and so these reforms will be of great significance to many people and how they claim compensation in the future.

The insurance companies are often quoted as saying how outrageous it is that on average, the premium for every motor insurance policy includes £90 to go towards the expense of paying whiplash claims. This begs the question of what, exactly, is the point of motor insurance if it is not to pay people when they have suffered loss or damage.

The other even more dramatic reform is to abolish claims for general damages involving minor soft tissue injuries.  If you suffer one of these through someone else’s negligence you will simply not be able to claim compensation for your injury.  No further refinement of what is meant by a minor soft tissue injury has been provided. Guidance can however be obtained from a publication called, “Guidelines for the Assessment of General Damages” from the Judicial Studies Board. This is an important reference for personal injury lawyers in valuing claims.

Interestingly, the Guidelines refer to cases of whiplash involving neck and back injuries as being “minor soft tissue” or “soft tissue injuries” and this includes cases where the injured person has suffered up to two years after the accident.  At a stroke, the Chancellor wishes to prevent people suffering these potentially very serious injuries from claiming compensation for the injury, a potent weapon in his armoury of legal reforms to assist the insurance industry.

It is all too easy to be sceptical about lawyers and their interests when legal reforms are mooted.  Are we only thinking of ourselves and our ability to earn an income? I wonder how teachers, the clergy, Doctors or indeed anyone else would respond to such large scale changes in how their professions or businesses operate.  Given a government presumably philosophically attached to free market principles, it is odd that there have been such regulatory intermeddling.

Many people maybe tired of endless adverts on day time television for no win no fee injury lawyers.  Maybe there are fraudulent claims; but then it is the job of the insurance industry and its highly talented legal advisers to spot them. Yet these changes surely go beyond mere lawyers’ self interest.  They go too far.  Abolishing a large category of claimants as these reforms propose is a huge change and is not proportionate to the problems presented.

Whittle the spearhead of justice too far and you blunt the rule of law.

Court fees reforms - what do we pay our taxes for?

The Ministry of Justice has been inviting responses to proposed changes to the fees in civil and family litigation.  This consultation has already been ongoing for sometime and the Ministry has already released its response to Part 2 of the consultation and provided further proposals for reforms.

The new issue fee

The changes to the issue fee for claims worth over £10,000, especially if they are also over £20,000 or so, are eye watering.

This is, I understand, expected to come in for 2015/2016. The government has decided to press ahead with this and no more consultation is needed on these changes.

Claims worth less than £10,000 will remain unchanged.  At £10,000 or more a new way of calculating the fee is to be introduced. In these cases, the fee is going to be 5% of the size of the claim, up to a top limit of a fee of £10,000.

To get a feel for the new issue fees, I looked at a range of five cases from £11,000 in size to £180,000.  At around £20,000 the new issue fee really starts accelerating away from the values we have at present on the scale set down by HMCTS.

Amount of claim   Issue fee now   Issue fee now online    New issue fee

11,000                     455                    410                               550

17,500                     610                    550                               875

40,000                     610                    550                               2,000

75,000                     910                    815                               3,750

180,000                  1,315                  N/A                               9,000

For a claim of £180,000 the new fee is nearly SEVEN times the value at present!

The maximum fee at present is £1,920 for a claim of £300,000 or more.  Under the new system, the fee for a claim this size is £10,000 - that is more than five times as much.

Under the new system, the maximum fee is £10,000 and this is reached at a claim of £200,000 or more.

These new fees are massively higher than the fees at present. It is true that most claims are less than £10,000. It is also true that generally all claims, no matter what size, are important to Claimants (otherwise why bring them) and to Defendants, who find themselves having to fight them.  

Yet claims of £10,000 or more are to most people involved very significant legal challenges or even battles.  If it's a personal injury claim, a case of this size may involve a very serious injury or a substantial loss of earnings or both.  In commercial litigation, to many businesses a claim of £10,000 represents a serious threat to their livelihoods and continued existence, whichever side they are on. 

These greatly increased fees, following a whole series of previous reforms to legal costs, are another deterrent to people who might otherwise have recourse to our legal system to settle their disputes.

Points for consultation

The Ministry of Justice wishes to consult on changes to the issue fees for possession cases, the consent order fee and application fees. Unsurprisingly all of these involve increases to the existing fees.

The government proposes increases the fee for possessions claims by £75.  In the County Court the current fee is £280 so this will increase to £355.  At £355 this becomes a rather substantial amount of money to a landlord who may well already be out of pocket from a defaulting tenant who is failing to pay their rent properly. It must make it more tempting to landlords to try alternative, unlawful means to rid themselves of defaulting tenants.

Applications by consent are due to increase from £50 to £100, obviously a doubling of the existing fee.  This is not just an increase - it is akin to fining parties who have the temerity to reach a settlement.

The fee for making most applications to Court used to be £80 for a long time. It was then increased to £155 and the government is now proposing to increase it to £255.  To my mind, £255 is a very large sum for an application at Court.  £80 is a sensible value in my view; big enough to make you think seriously before applying but not so big as to put you off making an application when you need to just because of the size of a Court fee.  The figure of £255 is more than the issue fee for claims less than £5,000.

It's worth remembering that this will apply to cases of all sizes, even in the lower end of the personal injury claims, say £3,000 or so.  In those cases, a figure of £255 looks very high when compared to the fixed inter-partes costs a successful party can recover from the opponent at the end of the case.

These reforms are a further erosion of people’s ability to stand up for themselves using our legal system.  The senior judiciary have produced a response to the reforms that sets out in beautifully precise language the full ramifications of the government's approach to this issue and this is available here:  http://www.judiciary.gov.uk/wp-content/uploads/JCO/Documents/Consultations/senior-judiciary-response-court-fees-proposals-for-reform.pdf.

The rule of law on which a democratic society is founded rests on citizens having access to the courts.  A Court system has to be a service provided by the state in a democracy and this is not reliant on the costs involved.  The reforms undermine that in a practical sense and, which is more worrying,  the government's philosophy that has lead them to this position is an attack on the nature of our democracy.

The Law Society's President at St Mary's Stadium

Hampshire Incorporated Law Society (HILS) held its Annual General Meeting last night at the hallowed grounds of Southampton Football Club at St Mary's Stadium and I was delighted to be invited to attend.  As someone who is Southampton born and raised and a Saints fan, albeit in  completely armchair and ignorant fashion, it was a thrill to be there.

One of the guests at the meeting was Andrew Caplen and I remembered Andrew from a previous AGM for the Hampshire local law society I had attended in 2000 when he had been elected as their President.  Time of course has moved on and earlier this year, Andrew was elected as President of the national law society.  At HILS, we are naturally very proud that a Hampshire solicitor is the head of the Law Society and so it was a rather special meeting as a result.

Inside St Mary's stadium

It was fascinating to hear the very varied range of events and activities Andrew has been involved with already during his term as President. He explained that one of the first points he had dealt with was the controversy concerning the loan company Wonga. It had been reported that Wonga had been writing to some customers using the guise of entirely bogus legal firms and the Law Society had stepped in and requested that the Metropolitan Police investigate this activity.  Almost before he had a chance to sit down in his new role, Andrew appeared on Newsnight being interviewed by none other than Jeremy Paxman on the debacle. Fortunately, Paxman was rather on Andrew's side in the discussion.

Andrew recalled he had been questioned about the European Arrest Warrant particularly when it became clear that Judges, as is often the case, were not very keen to be interviewed personally about such pressing matters.  He had also been involved in discussions about sovereign debt restructuring which, he commented, was thankfully less intimidating than it might sound.

One of Andrew's themes in his discussion was looking forward to 2015 and the celebrations of the 800th anniversary of the sealing of Magna Carta.  In particular he will be a guest at the Global Law Summit and Andrew explained that one of the main points of discussion will be the importance of the rule of law.  Of course with all the current international instability it is perhaps unsurprising that this is the case.  Andrew's particular interest in the concept was how it related to access to justice, that is to say the rule of law could only be effective if citizens actually have access to justice and can exercise legal rights in a court of law.

The role of President of the Law Society clearly involved a lot of travel, both within the UK and abroad.  Rather movingly, Andrew told us how he had attended at an event in Japan and had been amazed to find himself one of a small group of people selected to meet the Emperor and Empress of Japan.  As well as making contact at this level he had also sought out a visit to a unit dedicated to tackling domestic violence in Japan to learn more about how different countries deal with this.

Throughout the evening, Andrew noted that the one person he couldn't seem to meet was the Lord Chancellor, Chris Grayling.  He had met him prior to becoming President and told an amusing story about correcting a speech that was connected to this yet he had not, despite trying, been able to see him after becoming elected as President.

Again and again Andrew returned to the problems facing legal aid and criminal law practitioners.  Despite extraordinary efforts, despite numerous presentations and proposals it seems the government are simply not listening.  Even more depressingly, Andrew suggested it seems that even if there were a change of government at the next election, it was unlikely that this would change greatly.

It had been an enjoyable evening, assisted with a delicious meal at St Mary's, and some very thought provoking talks were given.  Andrew Caplen is clearly enjoying being President, and quite rightly so, but this flows from his natural energy and passion for what he is achieving in the role. We at HILS continue to be very proud of our Hampshire President.

St. Mary's at night

An Overriding Amendment

Notes from a seminar with Professor Dominc Regan

Your hard working correspondent attended a dynamic presentation by Professor Dominic Regan in the grand setting of the Grange City Hotel in London earlier today and came away with a vivid insight into the up to the minute state of the Jackson reforms. 

For those living in Plato’s cave for the last demi-decade, the Jackson reforms have been a maelstrom of change for civil litigation lawyers, especially in the personal injury arena.   Thankfully with guiding lights such as the wise Professor, those of us hammering away at the coal face of justice have someone showing the way in all this turbulence.

Hard working lawyer left, glamorous Professor right

I won’t go into the detail of the Professor’s news and views; if you want that, go to one of his energising lectures. Instead some of his broader themes are worth mentioning.  One of the most profound reforms was the modification of the overriding objective of Rule 1 of the Civil Procedure Rules.  Like constitutional lawyers, we have long enjoyed righteously reminding Courts that cases must be decided justly, as if justice might proceed in any other way.  As a trainee solicitor long ago in the summer of 1999 I proudly heard myself make this very point to a patient District Judge who kindly and gently assured me that Courts had always striven to make decisions justly long before the implementation of the Civil Procedure Rules. 

But the reforms implemented on 1^st April 2013 have now added a slightly sinister sounding refinement to this golden axiom.  From then on, cases must not only be decided justly but also “at proportionate cost” and these words have influenced judicial decision making even rather more markedly than expected since their enactment.  This has been working in tandem with the new stricter approach to relief from sanction under CPR 3.9. Providing stark reminders of just what can go wrong, Professor Regan highlighted how serious the adherence to deadlines is now. Parties cannot seek to buy their way out of trouble by offering to pay adverse costs as they once might have done. This may be a shock to some firms and the way they operate their case loads.

As a consequence there is a focus on a newer concept of proportionality as the measure of costs. Yet this new measure has yet to be given any specifics of scale or measurement and it is feared much case law will have to be developed to arrive at the right meter.  The simple logic that if costs were reasonable and necessarily incurred they were therefore proportionate is the language of an earlier age. (Footnote: fear not too much, Home Office v Lownds still, according to Dominic, applies if a case is issued prior to 1^st April 2013 throughout the life of the case).

Other startling pointers were the suggestion of fixed costs on the multi-track. As well as a flight to clinical negligence work, catastrophic claims are also considered something of a refuge for claimant lawyers as they are currently free of the shackles of fixed costs. It will be interesting to see how multi-track fixed costs would compare to current costs levels, just as it is illuminating to compare the new fixed recoverable costs on the fast track to those costs claimant lawyers have been seeking to recover.  The use of costs budgets for the big commercial cases, even the heady heights of two million pound and up which currently avoid them, was mooted as well.

There is as yet no more news on the consultation on the discount rate from the Ministry of Justice and any possible changes to this important point are still awaited.

There is much more that could be said. Professor Regan is a natural orator and, in the eyes of this fan, a Cicero of our world of civil litigation. See and hear him and learn much.  He has a blog at http://profdominicregan.blogspot.co.uk/ which should be subscribed to. Not only are their legal insights but also much wisdom on wine and champagne.

The New Costs Regime - a ready reckoner..

This is a little cut out and keep ready reckoner for the forthcoming new costs regime.. you can print out on one side of A4 and copy the table of Fixed Recoverable Costs on the other side. This can be handed out to lawyers (sorry don't like the phrase fee earners) to keep so that they can have it to hand when working out recoverable costs at the end of a case.
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THE NEW COSTS REGIME - FOR RTA, EL AND PL CLAIMS

(Please note - figures for costs do not include VAT, disbursements and success fees)

If the CFA is dated 1^st April 2013 or after you cannot claim a success fee from the Defendant.

If the ATEI is dated 1^st April 2013 or after you cannot claim the ATEI premium from the Defendant.

If you are dealing with an RTA claim less than £10,000 and it goes on the portal on 30^th April 2013 or afterwards the profit costs at Stage 1 = £200 and at Stage 2 = £300. Total = £500.  The date of the accident does not matter.

If you are dealing with an RTA between £10,000 and £25,000 and the date of the accident is on or after 31^st July 2013 then it goes on the portal. Costs at Stage 1 = £200 and at Stage 2 = £600. Total = £800. 

If you are dealing with an EL/PL claim less than £25,000 and the date of the accident is on or after 31^st July 2013 then it has to go on the portal. 

If the EL/PL claim is on the portal and is less than £10,000 then costs at Stage 1 = £300 and at Stage 2 = £600. Total = £900

If the EL/PL claim is on the portal and is between £10,000 and £25,000 then costs at Stage 1 = £300 and at Stage 2 = £1,300. Total = £1,600

In addition to RTAs, EL and PL claims that go on the portal can proceed to Stage 3 with costs calculated in the same way as at present.

If a claim that is entered onto the portal on or after 31^st July 2013 then comes out of the portal the costs are calculated in accordance with the table overleaf.

Remember:  PL claims are basically claims that are not RTAs, EL or clinical negligence.

The value of the claim for these purposes is on a full liability basis so ignore any possible contributory negligence.

In all cases on the portal after 30^th April 2013 that are under £10,000 it will not be normal practise to obtain medical notes.

In cases on the portal over £10,000 you can request more than one interim.

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