16 May 2013 – The remission system – how will it work in practice?
Did you know that the Government is introducing a fee scheme whereby the Employment Tribunal will start to charge Claimants for bringing a claim at the Employment Tribunal?
The Government has now decided that this will start from the end of July 2013.
Once the new proposals are implemented, it means that Claimants will have to pay up to the following amounts in order to attempt to bring a claim and see it through to a hearing at the Employment Tribunal:
|The appeal of a decision of the Employment Tribunal
As you can see these are quite hefty sums of money, which is good news for employers as it means that (hopefully) the new scheme will act as a deterrent to employees bringing bogus Tribunal claims. It is hoped that it will also strongly encourage Claimants to reconsider any rash or disgruntled decision they may take to appeal an unsuccessful outcome made at the Employment Tribunal.
However, you need to be aware that the Government wants to protect Claimants who cannot afford to pay any or part of the new Employment Tribunal fees. To do this it proposes to extend existing law applicable to the civil court process to Employment Tribunals and the Employment Appeal Tribunal. This is called a remission service.
Basically, there will be a new system for assessing whether an individual is eligible for a free fee remission. This is now split into two distinct tests as follows:
Disposable capital test
The first limb of the test involves looking at an individual’s disposable household capital, including any savings and investments they may have.
The proposal is that an individual will qualify for a remission if they have less than the disposable capital limit as follows:
|Amount of fee
||Disposable capital limit
|Up to £1,000
|£1,001 – £4,000
|More than £4,000
If an individual passes the disposable capital test then the next test is to consider whether based on their income they should receive a full fee discount, make a partial contribution to their fee or pay the full fee. The remissions system could mean that an employee does not have to pay anything at all and can bring their claim for no fee at all.
There will be no fee payable if an individual is in receipt of any qualifying benefits which are as follows:
- Income support
- Working tax credit
- Income-based job seekers allowance
- Guarantee credit
- Income-related Employment Support Allowance.
There will be no fee payable if an individual’s gross annual income is a below a certain amount depending on how many children that person has and whether or not that person is single. See the below table for more information on income rates used for the remissions system:
|Number of children of party
|5 or more children
||As per 4 children plus the sum of £2,930 for each additional child i.e £30,580 for a single parent with 6 children
The disposable capital test helps employers. Without this element of the test, more people who have recently become unemployed, and are bringing their claim at the Tribunal, would qualify for remission based on income alone.
A final reflection… A good example is to think of an employee who has been dismissed and claims unfair dismissal. It may cost up to £1,200 to pursue an unfair dismissal claim and a dismissed employee with only £3,000 in savings and no household income would have to gamble over a third of their savings on tribunal fees at a time when they need the money the most in order to live. Statistics show that the average unfair dismissal award during the year 2012 was £4,500. Consequently, many dismissed employees may simply decide that access to justice is an expensive luxury they cannot afford.
For more information, please contact our Employment & HR team.