‘This “triumph for access to justice” will not be welcomed by all’. So declared Supreme Court judge, Lord Reed, on ruling unanimously in favour of Unison, following their appeal against the legality of the current system of employment tribunal fees. The finding held, on July 26, 2017, that the fees regime introduced in 2013 was unlawful and discriminated against women and the poorly paid.
Amongst those who are unlikely to have welcomed the decision will be insurers of employment practices liability. The Institute of Directors warning that the decision would ‘open the door to a spike in malicious or vexatious claims’, will resonate loudly within this group.
There is no doubting the impact that the introduction of fees has had. 191,541, tribunal claims were lodged in 2012/13. By 2014/15, the first full year after the fees were introduced, this had fallen to 61,308. This gave EPL insurers more stability around assumptions on profitability and pricing. Whilst an argument existed that those that did succeed were likely to cost more (due in part to the higher burden of proof and levels of confidence, together with the increased availability of tribunal time extending hearings), loss costs would have declined sharply. Moreover, in the four years since the fees were introduced, insurers will have launched products to market based on certain behavioural assumptions at existing levels (ACAS is generally considered to be the best barometer of employment relations in the UK), and existing participants may have calibrated their products to remain competitive. Almost at a stroke, there could be a funding deficiency in this line for some insurers. The ‘floodgates’ metaphor is a timeworn and often uninspired refrain, but this is as close as we’re likely to come to being able to evidence the impact of a legal change on outcomes, given the prior position.
Claimants may take the view they will continue with the claim because it will cost them nothing…
It is early days, and things may change in favour of EPL insurers. However, the change is effective immediately and, given the unambiguous ruling, it is likely nothing will happen to mitigate the position in the short term. It also remains to be seen what impact this will have on Early Conciliation. Claimants may take the view they will continue with the claim because it will cost them nothing, and because there is an almost statistically insignificant chance of exposure to fees, so we watch this aspect with interest. Whether reduced fees appear in time, we will see, but it is still quite difficult to see how they could be re-introduced in light of the unanimity amongst the seven judges. As for the insurers position, equally, time will tell. However, given this ruling, and other pending changes such as gender pay gap reporting, due to be introduced in April 2018 for firms with more than 250 staff, it certainly seems as though there has been a restacking of the odds in the employees favour.
For more detail take a look here.