ET claims see a sharp rise

Since the collapse of the Government’s fee regime, there has been a not-unexpected leap in the number of claims. For single ET claims, an increase of 118% between January and March 2018 compared with the same period a year previously. Since the launch of the ET fee refund scheme to 31 March, there have also been 7,700 ET fee refund payments, worth £6.6 million. So the Government’s ill-conceived fee scheme has been a costly exercise.

One concern is how the system will cope with processing this big hike in the number of claims, as its administrative and judicial capacity was reduced in line with the previous reduction in claims. This has implications for employers. A People Management article highlights advice from a lawyer, that from the HR and managers’ perspective, as it takes longer for claims to go through, ‘they will need to manage processes for the entire time it takes for claims to go through, while people might not want to cooperate.’ Given the sharp rise in people making claims, another key piece of advice is that employers should focus on 'prevention instead of cure' – every effort should be made to put in place alternative dispute resolution approaches such as mediation to help settle individual disputes at the earliest possible stage.

We also can’t rule out the possibility of a new fee regime being introduced in the future. Although this is unlikely to be for some time, any new scheme will hopefully be more effective, particularly in terms of ensuring access to justice for all those who need it.

Enforcement of tribunal award payments

Another area that is under reform in relation to employment tribunals is improving the process for the enforcement of employment tribunal awards. Following the 2017 review of modern working practices by Matthew Taylor, in February this year the Government released several public consultation documents, including one relating to this issue.

The consultation takes forward the Taylor review recommendations:

• Government should make the enforcement process simpler for employees and workers by taking enforcement action against employers/engagers who do not pay employment tribunal awards, without the employee/worker having to fill in extra forms or pay an extra fee and having to initiate additional court proceedings.
• Government should establish a naming and shaming scheme for those employers who do not pay employment tribunal awards within a reasonable time.

The Government agrees that action is needed in this area and, ‘in particular to tackle the current level of unpaid employment tribunal awards’. The consultation document cites some concerning statistics in this area – for example, research by the Department for Business, Innovation and Skills found that only 53% of successful claimants surveyed received full or part payment without enforcement action, and 35% had not received any payment at all.

Consulting on the Taylor recommendations for better enforcement

The CIPD's response to the consultation makes several points. While we welcome the streamlining of the enforcement process for payment of employment tribunal awards, we are concerned that the proposals are not wide enough in scope to address the recommendation in the Taylor review that the process should be simpler. Currently there are several different enforcement options open to claimants who have successfully obtained an award which the employer has not paid, which can be confusing for the individual to navigate. The Government’s proposals focus primarily on digitising the enforcement process and, although this will be an improvement on the complex paper-based forms for some claimants, enforcement will still essentially rely on individuals paying a further fee and initiating further court proceedings to recoup money that is owed to them as part of a legal judgment.

We held a series of roundtables with experts and CIPD members to help inform our response. Their view is that the concerns raised in the Taylor review require a more fundamental consideration of how the various avenues currently open to claimants wishing to pursue enforcement of their unpaid award could be simplified and/or reduced, and more responsibility taken by the state for enforcement at this stage.

Will naming and shaming be effective?

We welcome the Government’s intention to establish a naming and shaming scheme for those employers who do not pay employment tribunal awards within a reasonable time. We also think it makes sense to follow the established process already followed by the enforcement regime for non-payment of the National Minimum Wage and National Living Wage.

The proposed scheme could act as an incentive to prompt payment by companies whose brand and reputation would be adversely affected by public exposure. However, our panel of members and experts think there are some employers – particularly smaller ones operating on tight margins whose actions are driven more by cash flow and the bottom line than reputational damage – where we doubt there would be the desired behaviour change.

Do the reform proposals go far enough?

The proposed reforms in the Government’s consultation paper are put forward within the context of the current enforcement regime. While the CIPD is supportive of improvements and stronger state enforcement action within the existing framework, such as a naming scheme, we would welcome a more fundamental review of the effectiveness and fairness of the UK’s two-tier enforcement approach to see if a better balance could be achieved between individual and state enforcement, particularly where individuals have already taken responsibility themselves to enforce their employment rights and have pursued a tribunal claim.

The view in our roundtables was that there is a culture of non-payment on the part of far too many employers who are not fearful enough of the consequences of not paying a tribunal award; more holistic and radical (including legislative) change is needed on a number of fronts to transform this culture. This could include a shift to the state – such as HMRC – collecting the award on behalf of the individual and the money owed increasing if unpaid just as it does in the case an unpaid parking ticket.

It was also felt in our Roundtables that there should be more focus on compliance by employers with employment rights in the first place, which would free up more resources for the state to focus on the more hardened cases of non-compliance. For example, there needs to be clearer and stronger guidance on basic employment rights for employers and much stronger promotion of the guidance, particularly for new and smaller companies.