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Employment Tribunal Claims set to increase?

01 Nov 2017

In association with Quantum

In July of this year the Supreme Court ruled in favour of the trade union UNISON in its judicial review of the UK Employment Tribunal fees regime, unanimously holding that the legislation implementing the current regime is unlawful both under domestic and EU law.

The tribunal fees regime was quashed immediately, meaning that Tribunal fees ceased to be payable, and all fees paid since the regime was introduced were ordered to be reimbursed.

The fees which were introduced in July 2013 started at £390 but could be as much as £1,200 and were aimed at transferring the cost burden from the taxpayer, deterring vexatious claims and encouraging mediated settlement without legal recourse. Many commentators, however, believed that there was a political sub plot and condemned the legislation saying that it affected low paid workers disproportionately.

The 2013 change immediately caused a dramatic fall in the number of cases brought to tribunal. In the three years immediately prior to July 2013 the average number of new single claims was a little under 14,000 per quarter, however, in the period since the fees were introduced this reduced to less than 4,000 per quarter.

Source: Ministry of Justice

Whether the Supreme Court’s judgment spells the end for Tribunal fees in the UK remains to be seen. Whilst the Court has strongly endorsed the public importance of access to justice, given the existing funding pressures on the judicial system, it is possible that the government will seek to introduce a different fee regime at a lower level at some point in the future.

Whilst employers and their insurers will be keeping a watchful eye on tribunal claim numbers in the coming months there can be little doubt that we are likely to see an increase in new tribunals following the Supreme Court ruling.

It is interesting that most Company’s constitutions undertake to indemnify the directors against actions brought against them, including those brought by employees. Similarly, the constitution commits to having insurance back up to defend directors.

In practice, however, it is nearly always the company that is named in employment tribunals and insurance for that kind of claim is often not arranged leaving the Company to bear the cost.

Given the real potential for an increase in employee related claims it would prudent for companies to review any directors and officers insurance they already have or seriously consider arranging it if they haven’t in the past.

IoD members can access up to 35% discount on policies from Chubb Insurance and Quantum Underwriting Solutions, the IoD’s preferred providers of directors’ liability insurances.

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The views expressed in blogs such as the above are those of the author and do not represent the views of the Institute of Directors.

Headshot of Lee Rhondes, Founder, Director, Quantum

Lee Rhodes

Lee Rhodes is an insurance professional with 17 years' underwriting and 13 years' broking experience across all major disciplines. He is an equity-owning director in niche insurance broker Quantum Underwriting Solutions, which offers specialist advice and insurance solutions to affluent clients with significant personal assets across Europe.

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