No Tribunal Fees - What Next?
Following on from our article in September, "Fees were illegal - what now?" Straight Solutions has taken a look at what will happen next.
It's now been over two months since The Supreme Court ruled that employment tribunal fees were unlawful and we have seen informal reports from Employment Judges stating that they have seen a 2 to 7 - fold increase (depending on region) in claims over the months following the court ruling but many of these newly reported claims relate to wages claims, which should not progress further.
What will happen next?
Fees were illegal - what now?
The general feeling is that the removal of ET fees will be good for lawyers and conversely some insurers too. On the one hand, without fees we expect more claims but given that the reduced perception of risk to employers has been a big barrier to selling legal services, their absence should stimulate demand for professional advice.
BTE and defendant insurers will see increased costs for fighting an increased number of claims, but they should see more sales and in turn good profitability if they get their pricing right.
After 2013 the combination of introduction of ET fees, unfair dismissal being increased to 2 years service and the introduction of early conciliation at ACAS, claims dropped by 79%. In the same period our average costs for claims has escalated 4 fold due to the involvement of funders and their reluctance to settle without a profitable return, longer hearings due to Judges with time on their hands and cost escalating tactics.
With the removal of ET fees a few weeks ago there are clearly concerns that claim numbers will rocket. In light of the expected 40-50% increase in claims and a spike in vexatious ones now is the time to alert employers of the value of professional legal advice and effective insurance (from us of course).
That's a new claim every five minutes!
Protect the retainer, not the client?
Recognising that insurance premiums are driven mostly by previous claims experience and the cost of future representation, our most successful business partners approach the purchase of employment insurance as if they were buying cover to protect their service rather than the client.