Research on recovery of employment tribunal awards
Michael O’Donoghue, supervising solicitor at Bradford Law Centre®, writes:
The Business Secretary Dr Vince Cable, in a speech at the EEF, the manufacturers’ organisation, in November 2011, announced the government’s intention ‘to radically reform the tribunals system. Among the reasons for this he cited were that ‘there is a widespread feeling it is too easy [for employees] to make unmerited claims’. Since then there has indeed been radical reform. Changes introduced by the present government appear to be designed to redress this perceived imbalance. So, how easy is it for workers to recover money from the employment tribunal (ET), and how do the meritorious and the victorious fare? What impact might changes introduced in July 2013 have on claimants pursuing claims in the ET and recovering the award if successful? Finally, will the April 2013 changes to legal aid have an effect on ET claims?
Payment of tribunal awards: 2013 study
A government-commissioned study carried out by IFF Research, an independent research organisation which reported in November 2013, found that over one-half of claimants (51 per cent) received either part or none of the award made by the ET: 16 per cent received only part of the ET award and 35 per cent received nothing at all.
1Payment of tribunal awards: 2013 study, available at: www.gov.uk/government/publications/payment-of-employment-tribunal-awards.The sample of claimants was provided by HM Courts and Tribunals Service (HMCTS) and all claimants had been successful at their tribunal hearing or had received a default judgment resulting in a monetary award between September 2011 and November 2012. The research involved 1,200 interviews. The methodology was designed to replicate the approach of a similar study of claimants carried out in 2008 and published in 2009.
2Research into enforcement of employment tribunal awards in England and Wales, available at: www.justice.gov.uk/publications/docs/employment-tribunal-awards.pdf.The most common reason for non-payment was that employers became insolvent – 37 per cent. However, over one-half of claimants who gave this as the reason for non-payment believed that the company for which they had worked was now trading again under a different name or at a different location (so-called ‘phoenix companies’).
Overall, 61 per cent of unfair dismissal claims were at least partly paid without enforcement, compared with 49 per cent of other claims. Of the 27 per cent of unfair dismissal claims not paid at all (figures were rounded up), 19 per cent had not sought to take any enforcement action, but eight per cent had done so.
Only 41 per cent of claimants agreed that they were aware of the options open to them if the employer did not pay the award; this fell to only 28 per cent of those who did not use enforcement. The current methods of explaining enforcement options to claimants seem to have had limited impact on awareness of the options open to claimants if their employer does not pay. The ET does send an explanatory booklet (T426) to both parties following the promulgation of a judgment. However, it is clear that further work needs to be done to communicate the options available more effectively.
Apart from insolvency, other reasons for not being paid were the employer’s refusal to pay and being unable to locate the employer. Another issue was the hassle involved in pursing enforcement. However, in England and Wales the study has shown that the use of enforcement increased the proportion of individuals receiving full or part payment from 53 per cent to 66 per cent (in the 2008 study the figures were from 51 per cent to 61 per cent). In the meantime (ie, since the last study in 2008) there has been the introduction of the fast-track enforcement procedure whereby a High Court enforcement officer (HCEO) can be instructed through Registry Trust Limited, which may be responsible for the difference.
ET changes introduced in July 2013
A possibly discouraging factor is the introduction of fees in the ET in July 2013, together with the introduction of a more restricted fee remission scheme which makes it more difficult for claimants to pursue an ET claim. Claimants, therefore, have to consider whether they can afford to pay the fees, whether they are eligible for a remission of the fees and, if not eligible, if they do pay and succeed whether they are likely to recover the award made. While the tribunal can add the fees to the award, HMCTS will not repay the fees if the respondent does not pay. The research outcomes do not inspire confidence in claimants recovering an award in full.
Following changes under Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013 SI No 1237 Sch 1 from 29 July 2013, default judgments per se will no longer be made automatically. There is now provision in the rules for respondents who have, for example, not filed a response within the time limit to apply for an extension of time to file an ET3. Therefore, a hearing is more likely when the respondent has not filed an ET3 in time and that may trigger a request for payment of the hearing fee of £230 in a breach of contract claim, and £950 in an unfair dismissal/discrimination claim.
The introduction of the new online ET claim form (ET1) and response form (ET3), from 29 July 2013, has been found to be user-unfriendly. This is likely to have a greater negative impact on lower paid vulnerable workers, and may dissuade many from persevering with their claims.
Changes to legal aid
In addition to the lack of awareness in relation to the enforcement option, this situation is likely to be exacerbated by the withdrawal of legal help following changes, from April 2013, by the Legal Aid Agency (LAA) taking employment out of scope. The number of legal help and certificated cases in employment and discrimination cases in 2009/10 was 31,796, in 2012/13 it was 16,148. While discrimination in employment remains in scope, the projected number of cases anticipated by the LAA is less than 25 per cent. Basically, the absence of publicly funded advice to the lowest paid is likely to result in fewer claims being taken, and if taken they are less likely to have a better than even chance of recovering the full award.
Conclusion
The early indications are that ET claims are down on previous years – the issues discussed above may be part of the reason.