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Forum shopping risks for a devolved tribunal system

Many employers have a nationwide presence with employees located all over the UK. This makes it important to be aware of differences in the law that apply to the nations making up the UK.  In this instalment in our series of articles highlighting these differences we consider the impact that devolution of the Employment Tribunal system will have across Great Britain. 

Devolution

January 2016 saw the publication of the draft Scotland Act 1998 (Employment Tribunals) Order which aims to achieve devolution of the Employment Tribunal system in Scotland and an associated Scottish government consultation.

Given the imminent devolution, Jonathan Rennie, Employment Partner, considers the impact this is likely to have across Great Britain.

Introduction of fees

It is well known that the UK government introduced Employment Tribunal fees in July 2013 with the primary objective of transferring some of the cost from the tax payer to those who use the service. What came as a surprise to most was the high level of fee imposed on service users, who often find themselves without employment or income due to a dispute with their employer. 

Impact

There has been a significant drop off in tribunal claims since the introduction of the fees. Claims overall have dropped by 68% since their introduction. The table below outlines the figures:

Tribunal fees

*Last full year without Employment Tribunal Fees

**Employment Tribunal Fees introduced July 2013

The 68% drop is reflective of the picture across the whole of the UK, but it is thought that the impact may be greater in Scotland and other regions of the UK where income is statistically lower.  

Our experience is that tribunal claims in Scotland have diminished disproportionately compared to English cases and that the drop off in claims in Scotland is greater than the reported 68%. The affordability of claims, or lack thereof, is thought to be a key factor deterring claimants in Scotland.

Challenge to tribunal fees

UNISON has challenged the introduction of the fees on a number of occasions without success. Most recently UNISON argued that the fees have diminished access to justice, particularly disadvantaging women and ethnic minorities. The Court of Appeal dismissed this, largely due to insufficient evidence on the impact that the fees have had on individual claimants. However, the judge said that he had a "strong suspicion that so large a decline is unlikely to be accounted for entirely by cases of 'won't pay' and it must also reflect at least some cases of 'can't pay'". UNISON has vowed to continue the battle against tribunal fees and have sought permission to appeal to the Supreme Court. 

A recent breakdown of statistical data identifies a dramatic 83% drop in sex discrimination claims since the introduction of tribunal fees. It is well known that women across the UK are generally in lower paid work and it may be that UNISON now seek to indentify suitable individuals who fall into the category of 'can't pay' to continue with their challenge.   

Is there scope for change across the UK?

The UK government started a review of tribunal fees in June 2015. The purpose is to consider the effectiveness of the fees at meeting their objectives. Whilst the outcome of this review is unlikely to be the abolishment of fees across the UK, it is considered likely that they will be reduced to a more affordable and proportionate level. It is expected that the UK government will take note of the significant drop in claims and re-think the tribunal system so that a balance can be struck between access to justice for employees and protecting employers from weak and meritless claims. 

What about Scotland?

The Smith Commission recommended that tribunal management should be devolved to the Scottish government. Indeed, a draft Order (the Scotland Act 1998 (Employment Tribunals) Order) has recently been published to achieve exactly that together with an associated consultation published by the Scottish government.

In light of the Smith Commission proposals and the progress to devolve the Employment Tribunal system, it is expected that Scotland will follow its own path in respect of tribunal fees. The Scottish government announced in its 'Programme for government agenda for 2015/16' that it "will abolish fees for Employment Tribunals, when [it is] clear on how the transfer of powers and responsibilities will work." In the recently published consultation on the draft devolution Order, the Scottish government reiterates its commitment to abolishing fees in the Employment Tribunal.  We await further announcements to indicate the anticipated timescale. 

Abolition of tribunal fees in Scotland could potentially have the unintended consequence of encouraging forum shopping. The indication in the draft Order and consultation is that provision will be put in place to firmly establish the jurisdiction of the Scottish tribunal once devolution takes place, no doubt with the aim of limiting the potential for such behaviour.  However, the proposals indicate that there will be two categories of cases; the first being “Scottish cases” and the second being “concurrent cases”.  This second category encompasses cases that have links with both Scotland and England/Wales but which can be heard in a Scottish tribunal.  It is under this second category that the risk of forum shopping may lie. 

Scottish cases

To qualify as a Scottish case, which can only be heard in the Scottish Employment Tribunal, all of the following proposed criteria must be satisfied:

  • The respondent resides or carries on a business in Scotland; and
  • One or more of the acts or omissions complained of took place in Scotland; and
  • The claim relates to a contract under which the work is performed wholly or ordinarily in Scotland.

Concurrent jurisdiction

It will be possible to apply to have a concurrent jurisdiction case heard in Scotland, if any (rather than all) of the following proposed criteria is satisfied:

  • The respondent resides or carries on a business in Scotland; or
  • The acts or omissions complained of took place wholly or mainly in Scotland; or
  • The claim relates to a contract under which the work has been performed wholly or mainly in Scotland; or
  • The tribunal has jurisdiction to hear the claim by virtue of a connection with Great Britain, and the connection in question is wholly or mainly a connection with Scotland.

Under these criteria, a claim could potentially be brought in the Scottish Employment Tribunal against an employer who is headquartered in Scotland, even if the individual is based elsewhere in the UK. Such practice would no doubt increase if tribunal fees were abolished in one jurisdiction and not the other.

Concluding remarks

This is an area for employers to watch. It is expected that there will be further reform of the Employment Tribunal system and fees, both across the UK and within Scotland in the medium term. With further devolution and the Smith Commission a key reforming agenda across the UK, employers may soon be facing a different set of rules in different jurisdictions. 

We have expertise in Scottish employment law issues, with offices in Edinburgh and Glasgow.  Please get in touch if you would like to discuss any matters affecting your business with us.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at February 2016. Specific advice should be sought for specific cases. For more information see our terms & conditions on www.TLTsolicitors.com

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