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version 22, draft 22

Employment Tribunal Fees set to Encourage Mediation and Arbitration

 Employment tribunal fees will be tailored to encourage businesses and workers to mediate or settle a dispute rather than go to a full hearing from summer 2013

Following the Ministry of Justice's consultation with businesses and the public, some of the fees will be slightly lower than initially proposed in order to strike a fair balance between the needs of business and tribunal users.

Bringing a claim or an appeal to the employment tribunal is currently free of charge with the full cost being met by the taxpayer. By introducing fees, people using employment tribunals will start to contribute a significant proportion of the £84m cost of running the system. The aim is to reduce the taxpayer subsidy of these tribunals by transferring some of the cost to those who use the service, while protecting access to justice for all.

Fees are part of the Government's programme to promote early resolution of disputes in order to help individuals and companies to get on with their lives and businesses. The intention is to encourage people to look for alternatives – like mediation – so that tribunals remain a last resort for the most complex cases.

Taxpayers will continue to meet the full cost of the Advisory, Conciliation and Arbitration Service (ACAS) which provides a free service to help workers and businesses settle disputes without the need to go to a tribunal.

Justice Minister Jonathan Djanogly said:

"It's not fair on the taxpayer to foot the entire £84m bill for people to escalate workplace disputes to a tribunal.

"We want people, where they can, to pay a fair contribution for the system they are using, which will encourage them to look for alternatives.

"It is in everyone's interest to avoid drawn out disputes which emotionally damage workers and financially damage businesses. That's why we are encouraging quicker, simpler and cheaper alternatives like mediation."

From summer 2013, mediation by a judge will cost £600 rather than the £750 proposed in the 2011 consultation. This offers a considerable saving on the £1,200 it would cost to take a 'level 2' claim all the way to full hearing. The lower fee to take the administratively simpler 'level 1' claims to a full hearing will be £390 – which drops to just £160 if settled before the hearing fee is payable.

Many people on low incomes may not be required to pay the full fees – under the same remission system which already exists for court users who pay fees to use the civil courts' services. Following this extension of this exemption system, the Government will review its use across both courts and tribunals and publish a consultation later this year as part of a wider review required by the introduction of Universal Credit in late 2013.

Fees to use the employment tribunal will be payable in advance, and most types of fee will only apply to the person bringing the claim. However the tribunal will have the power to order the unsuccessful party to reimburse the fee to the successful party. In practice, cases are often settled rather than there being a clear 'winner' or 'loser' and the issue of reimbursement would form part of the settlement.

The introduction of fees is part of the Government's Employment Law Review which aims to maximise flexibility for both employers and employees while protecting fairness and providing a competitive business environment. The Review includes a package of reforms to streamline and modernise the employment tribunals system, including routing all claims to ACAS to offer early conciliation before going to a tribunal, and encouraging more use of mediation through a best practice project in the retail sector and also regional mediation pilots currently being developed in Manchester and Cambridge.

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