Corporate Financial Frictions and Employee Mental Health

A growing amount of literature documents that binding financial constraints during economic distress or financial distress, including impending bankruptcy, can have an adverse effect on firms’ human capital. During economic distress, firms suffering from financial frictions might dismiss short-tenured employees with high future expected productivity due to their relatively low severance pay (Caggese, Cuñat and Metzger, 2019). On the other hand, workers with the highest cognitive and non-cognitive skills might also leave financially distressed firms voluntarily (Baghai, Silva, Thell, and Vig, 2016), while talented job applicants might be reluctant to join (Brown and Matsa, 2016).

In our recent paper entitled ‘Corporate Financial Constraints and Employee Mental Health’, we document a novel cost of financial constraints on firms’ human capital: we provide evidence that financial constraints during an episode of economic distress can have an adverse effect on employee mental health. Deteriorating employee mental health is not only a personal concern of employees but also a concern for firms as mental health is an important determinant of labor productivity. To study the effects of financial constraints on employee mental health, we build a rich dataset based on administrative microdata from the Netherlands that links firm-level financial data to employee-level antidepressant use. Antidepressants are frequently prescribed as a first line of treatment for mental health complaints including major depression disorder and anxiety disorders as well. To identify the causal effects of financial constraints, we exploit variation in firms’ need to refinance their long-term debt in 2008, a period when refinancing became more difficult due to the credit crunch. The Netherlands is an ideal laboratory for this exercise as the country experienced a strong negative bank credit supply shock in 2007-2008, and bank lending is the main source of external financing for Dutch firms.

We find that employees of firms that had to repay a higher share of their long-term debt in 2008—at least 25% of their outstanding long-term debt in our baseline specification—exhibited a 0.44 percentage points higher average probability of antidepressant use in the 2008-2012 period. This is an economically significant 9% increase with respect to the 5% average probability of antidepressant use in our sample.

A possible channel from financial constraints to deteriorating employee mental health is job loss or the threat of job loss. Several studies have documented that the credit crunch associated with the Global Financial Crisis had a negative effect on employment levels. We also find that employees of firms that had to repay a higher share of their long-term debt in 2008 had a 6.2 pp higher probability of job separation in the 2008-2010 period, whereas employees of these firms did not exhibit different turnover prior to the crisis.

While job loss is a potential transmission channel for employees who actually lost their jobs due to the binding financial constraints, the increasing threat of job insecurity could have also had an adverse mental health effect on employees who eventually managed to keep their positions. Arguably it is the mental health burden on this latter group that is of greater concern for employers given employee mental health’s role in labor productivity. We separately study this sub-sample of employees and estimate an average treatment effect on the probability of antidepressant use in the 2008-2012 period of 0.28 pp. This result indicates that much of the 0.44 pp total treatment effect accumulated at employees who managed to keep their job.

Treatment heterogeneity estimates also support the argument that job insecurity is a driver for greater antidepressant use for employees who stayed in their jobs. Based on the relevant economics and psychology literature we identify five personal/household characteristics that are expected to increase the mental health burden of job insecurity: older age, being male, having no partner, having children in the household, and having a salary that constitutes the larger part of the household income. When we interact our treatment indicator with these moderator characteristics, we find statistically significantly larger treatment effects for employees without a partner, those with at least one child in their household, and for employees whose salary constitutes a large share of their total household income. Treatment effects appear to be larger for employees who are at least 45 years old, but the difference is not statistically significant at any conventional level, whereas male and female employees appear to be similarly affected.

Our study contributes to two broad lines of literature. First, a growing literature in finance studies the effects of financial constraints on firms’ human capital. We combine firm-level financial data with rich employee-level data on antidepressant use to document a novel cost of financial constraints, their detrimental effect on employee mental health. We show that the mental health toll of financial constraints is not restricted to dismissed employees but is also substantial for employees who stay with the firm. As argued above, the mental health of employees, particularly of those not dismissed, should be a prime concern of firms due to mental illnesses’ burden on employee productivity.

Second, a large body of literature examines the health effects of financial and economic crises, and among other findings reports a negative correlation between unemployment rates and mental health status. We also study how employment relations contributed to the mental health of employees during a crisis period, but contrary to the previous literature, we use employer-employee matched data to disentangle the mental health effects of the financial crisis (credit supply shock) from the effects of the ensuing economic crisis (the Great Recession). Furthermore, we show that crisis periods may have an adverse mental health effect even on employees who manage to keep their jobs but who may suffer from decreased perceptions of job security.

Dániel Kárpáti is a PhD Student at the Department of Finance, Tilburg University.

Luc Renneboog is a Professor of Corporate Finance, Tilburg University, and a research member of the European Corporate Governance Institute (ECGI).

The original version of this article was first published in Personnel Today By Dániel Kárpáti, and Luc Renneboog

EE Employee Discrimination With Mental Health Condition

EE Employee Discrimination With Mental Health Condition

An EE call centre agent with anxiety, depression and post-traumatic stress disorder (PTSD), who was told to ‘get a grip’ by her manager, was discriminated against because of reasons arising from her disability.

The Cardiff employment tribunal found that a line manager’s comments and behaviour when claimant Bethan Oakley was late returning from a lunch break caused her to become “extremely distressed”, despite his knowledge of her disability.

Oakley began working as a customer services representative at the telecom company’s offices in Merthyr Tydfil, South Wales, in October 2013.

In 2019, Gareth Roberts became Oakley’s line manager. She informed him that she had been attending counselling sessions via EE’s health and wellbeing provider. Her treatment notes confirmed she had been suffering with PTSD following the death of her father, which she had witnessed and to whom had delivered CPR. She regularly had nightmares about her father’s death, often became upset and overwhelmed at small things and cried for no reason.

At the tribunal it was accepted by Roberts that he understood and was aware of her mental health conditions, which amounted to a disability under the Equality Act 2010.

On 27 September 2019, Oakley accompanied a colleague to a sickness review meeting for moral support. The meeting was with Roberts and lasted two hours – an hour over what Oakley had expected. She missed her lunch break as a result.

As the canteen had closed by the time the meeting concluded, Roberts allowed her to take 30 minutes to get lunch off site.

When she returned, she went to her desk with her food. EE’s office had a policy that employees were not allowed to eat at their desks, but Oakley wanted to go through the callbacks and emails she had missed. Roberts told her she wasn’t allowed to eat at her desk and to go to a break out room to finish her lunch.

After no more than five minutes, Roberts entered the break out room to tell Oakley she was late. The claimant alleged he was aggressive towards her and stood over her while she cleared the table. He told her they were very busy and that she was in the break out room not doing her job.

‘Get a grip’

The claimant became upset and began to cry. She said she did not like the way Roberts was speaking to her and that she had already apologised for being late.

At that point, Roberts told her to “get a grip” and to “come on”. He told the tribunal that this latter comment was to reduce the tension in the room and accepted he could see she was upset. The claimant felt his behaviour was humiliating, which Roberts disputed at the tribunal.

Oakley returned to her desk and Roberts continued to argue with her about the fact that she had been late and that eating at desks was not allowed. When he left her desk after Oakley she did not want to speak to him, Oakley began to shake and had difficulty breathing. She told the tribunal this had been a panic attack.

She went into another break out room to calm down and a colleague, along with Roberts, entered. She told Roberts she did not want to speak to him and he said he wanted her back online in five minutes. The claimant said she would not be able to as she was too upset, at which point Roberts said she would have to take sick leave if she could not return to work. She left her shift early.

A few days later, Oakley sent a resignation letter to EE stating, “I was humiliated in front of everyone, being harassed and bullied into experiencing the worse panic attack of my life, something that I have never had happen to me previously in work”.

On 7 October 2019, after having had an email from EE that invited her to discuss the issues raised in her letter, she retracted her resignation and said she may have acted too hastily. She raised a grievance that suggested Roberts had harassed her and had “historical cases of abuse/harassment of other female staff with mental health issues/vulnerabilities in the workplace which have been covered up/neglected”. She also alleged she had been denied first aid care when she had a panic attack, but evidence given in the tribunal hearing suggested that she turned down first aid when it was offered.

Oakley refused to return to work until the issues were addressed and Roberts had received disciplinary action.

EE’s investigation concluded that Roberts’ actions were not discriminatory nor did they amount to harassment.

It partially upheld the claimant’s grievance about the “get a grip” comment and offered an apology.

The claimant resigned after finding a new job in December. In her resignation letter she suggested that the grievance outcome letter was inaccurate and that she was not given a chance to rebut the statements made by Roberts during the investigation.

Tribunal ruling

In the tribunal’s judgment last month, Employment Judge Havard said: “[The tribunal is] satisfied that the respondent treated the claimant unfavourably as a result of the way in which Mr Roberts spoke to, and behaved towards, the claimant. Such conduct not only caused the claimant to exhibit symptoms of distress/panic attack which led to her being unable to continue to work on the afternoon of 27 September 2019 but he continued to talk to her in an unacceptable way during the time that the claimant was exhibiting symptoms of distress.

“The tribunal also considered that the respondent treated the claimant unfavourably by Mr Roberts expecting the claimant to resume work in circumstances where she had demonstrated, and continued to demonstrate, symptoms of distress and panic attack and an inability to work.”

It agreed that the way she had acted arose as a consequence of her disability, which EE and Roberts had been aware of.

“It must have been evident to him that the claimant was a vulnerable individual. However, it was significant that, whilst he admitted that he knew the claimant was disabled, Mr Roberts stated that he would treat every employee under his leadership in exactly the same way,” the judgment added.

The tribunal upheld Oakley’s claim of constructive dismissal, wrongful dismissal, disability discrimination and disability-related harassment. Claims of sex harassment and victimisation were dismissed.

Compensation will be determined at a later hearing.

EE told Personnel Today it did not have a written statement in response to the tribunal’s findings.

The original version of this article was first published in Personnel Today By Ashleigh Webber

Don’t Confuse Flexible Working With Remote Working

At the end of January a People in Law conference heard from Iain Harrison, a senior manager at EY about the difficulties and potential rewards of establishing a new hybrid working model once the pandemic has receded. Adam McCulloch listened in.

Businesses must not confuse flexible working with remote working – they are two different things. UK workplaces have been faced with a revolution, not evolution, over the past year as a result of the pandemic, Iain Harrison, people consulting, EY, told the People in Law conference at the end of last month.

Harrison also said that few people “realised how important HR was until the pandemic”.

He said that people were mistaken when they talked about there being a great experiment in flexible working during the pandemic. It’s actually an experiment in remote working, he told People in Law delegates, with some employers increasing digitisation exponentially and claiming that they would never return to the old workplace-centred way of doing things. But was this something of a sticking plaster approach that didn’t recognise the importance of continuous human interaction, Harrison asked

“Are clients going to want remote meetings? Will we return to a real desire for in-person contact and what does this mean for our structures?” Harrison said.

Harrison suggested that remote working was no more flexible than having to go into the office. “We all have stories of colleagues who have not fully embraced remote working. Confirmation bias … oh we can do everything remotely … but it doesn’t mean that things should be done remotely. The thought process hasn’t evolved fully enough to make the right choices,” said Harrison.

He said that companies had made missteps during the pandemic, implying that permanently changing the working model did not address the question of whether the model fitted how firms worked with their clients.

There was also the question of how remote working had disadvantaged some groups of workers. “We’ve seen a disproportionate impact on women in the pandemic. It’s taking women backwards. So the new [hybrid] models [of working] are an opportunity to make up for that,” said Harrison.

Empty buildings

He went on to question how the office would lose value as part of a business’s branding if managers were to invite clients to largely empty buildings. Harrison saw offices as being linked to social activities – a shift from our traditional view of them as places just for work. He said the view would become more one of “Work is something I do in different places… the office does not exist as the main place of work.”

One of the most important functions for offices, he said, was how they provided a venue for random meetings with colleagues; one of the benefits was that employees were in proximity to more experienced colleagues and could “earwig” conversations. “So flexibility reduces the chances of these important interactions,” said Harrison.

“Putting together a hybrid model can’t be done by accident,” said Harrison, citing research by Cushman and Wakefield, whose study showed how the random meetings and encounters that “give wonderful insights on taking your work forward” would be impacted by more flexible working. The research showed that the chances of a team coming together reduced exponentially depending on how many days a week people were at home. If team members worked at home three days a week, the chances of meeting a colleague dropped to 12%.

This told us, said Harrison, that “you can’t choose to work at home whenever you want… there must be some form of design”. The fact that, for example, junior lawyers learned a lot by “osmosis” was highly pertinent here, yet there were employees who had joined professional services firms nearly a year ago who had never met any colleagues.

Decisions needed to be made on who needed to work together and leadership must develop real time for engaging with people and ensure it had the capacity to do this. HR could help with this but it had to be led “within the line”… and had to be supported by rostering, facilities and real estate to ensure there’s space for teams.

Presenteeism

Harrison said many employers and employees feared that “return-to-office presenteeism” could develop very quickly where people wanted to be in the office, where the “seat of power” was. This had been seen at some government departments where people had needed to head in to the office and presenteeism crept back in. “Thankfully some of the leaders said I’m not going back in and I’ll continue to work remotely but inclusively. That role modelling is so important from leaders.

“The culture and behaviours are different levers that need to be in place to support this new way of working. We’ve seen a lot more organisations needing to focus on culture as a forethought not an afterthought.”

One of the biggest risks, said Harrison, was around collaboration and relationships. As people come into the organisation how do people feel they’ve joined an organisation – what differentiates one business from another? “Onboarding is a real challenge and one of the hardest challenges of a new hybrid model.”

“We’ve had to work doubly hard to make sure people gain that shared knowledge and shared experience,” he said.

There was a risk that the benefits of the hybrid model would not be felt because leaders would just decide it was too difficult to achieve, agreed Harrison in response to a question. But this was why really understanding the drivers behind hybrid working was vital – “we need to get the hard metrics and put them in the dashboard”.

Shared experience

He saw the past 12 months as a shared experience, one that had affected clients, supply chains, leaders equally. “We now all have an experience of remote working. We are seeing greater acceptance of individual red lines… many people might now feel they can meet remotely because of a family issue, client expectations have changed because the clients themselves have had to lead a different kind of working life. We have to be a lot more bold in expressing our needs.”

HR must facilitate the conversation about where certain tasks must take place, with the ability of people to move around roles becoming important.

The new hybrid style of work “will require trust” concluded Harrison, at the People in Law conference. “Team leaders must be trusting about workers. Output must be focused on. Guardrails and guidance … a more adult to adult relationship in the employment contract as opposed the adult-child-type relationship we used to have.”

The original version of this article was first published in Personnel Today by Adam McCulloch

Employment law updates – Coronavirus

Employment law updates: Coronavirus

Coronavirus Job Retention Scheme (CJRS) updates

Employment law updates – Coronavirus Redundancy payments:

  • The government announced on 30 July that workers who were furloughed will be entitled to a statutory redundancy payment based on their pre-furlough salary and not the reduced furlough salary. This was implemented by the Employment Rights Act 1996 (Coronavirus, Calculation of a Week’s Pay) Regulations 2020 which came into force on the 31st July.
  • Employees with more than 2 years of continuous service who have been made redundant are entitled to a redundancy payment up to a statutory maximum (which remains the same). This is based on age, length of service and salary.
  • The changes will also apply to Statutory Notice Pay and awards for unfair dismissal.

Furloughed workers:

  • Employers have been able to bring furloughed workers back to the office for any amount of time and for any kind of shift pattern since 1 July while still being able to claim the CJRS grant.
  • From 1 August the Government has advised that employers and employees should be able to exercise discretion as to whether they can work safely from the office.
  • The furlough scheme will end on 31 October 2020.

https://www.gov.uk/government/news/new-law-to-ensure-furloughed-employees-receive-full-redundancy-payments

https://www.gov.uk/government/publications/changes-to-the-coronavirus-job-retention-scheme/changes-to-the-coronavirus-job-retention-scheme

https://www.gov.uk/government/speeches/pm-statement-on-coronavirus-17-july-2020

For employment law advice please contact Rupert Farr: Rupert.Farr@blaketurner.com or 020 7480 6655.

Coronavirus: Employment law update

Coronavirus employment law update:

Blake Turner LLP is currently assisting and advising numerous clients navigating the impacts of coronavirus on employment related matters. Please contact Rupert Farr for more information at Rupert.farr@blaketurner.com or on 07799 065638.

The impact of the coronavirus (COVID-19) pandemic on businesses across the UK has been critical. Businesses across a wide range of sectors have been forced to let go of staff or have incurred significant costs due to staff absence. Measures were announced in the Chancellor’s most recent Budget to mitigate the impact including; Statutory Sick Pay (SSP) relief for SMEs, tax breaks, government-backed loans and an HMRC helpline. However, there are fewer protections for staff in place and freelancers may find themselves without work for an indeterminate period. As the situation progresses, it is likely that many more staff will have to be let go, and it is important that both employers and employees are aware of their rights and obligations. A statement was recently released by the Government strongly encouraging all workers who are able to work from home to do so. However, is not yet clear whether businesses will be forced to shut down to stop the virus from rapidly spreading. Many workers will not be able to work from home; particularly those in sectors such as retail, manufacturing and hospitality.

Employers should keep abreast of Government updates on COVID-19, and advise customers and employees on how they plan to deal with the impacts of the virus. Ideally there should be a point of contact for COVID-19 matters. Employers should also ensure that remote working arrangements do not result in weaker protections for client data or confidentiality. They should monitor employees who may have contracted COVID-19 and implement measures to minimise the risk of the virus spreading, for example, by reducing travel to the bare minimum. Particular attention should be given to those employees with disabilities and underlying health conditions and they may want to consider making alternative arrangements for those who are high-risk. Businesses should also check with insurance providers whether they are covered; this is unlikely to be the case for the majority.

Employees who have symptoms, or live with people who have, should check the most up to date UK Government and NHS advice online. SSP will be available from day one instead of day 4 and for those who have been let go, Universal Credit and Employment and Support Allowance is available.

Government advice and resources available to employers, employees and businesses:
https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19

Blake Turner LLP is currently assisting and advising numerous clients navigating the impacts of coronavirus on employment related matters.

Please contact Rupert Farr for more information at: Rupert.farr@blaketurner.com or on 07799 065638.

For more information about business support relating to the Coronavirus Job Retention Scheme click here.

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Employer pension contributions

Employer pension contributions count towards a week’s pay

Facts

In the Employment Appeal Tribunal (“EAT”) and in the matter of University of Sunderland (“University”) v Ms K Drossou, the University of Sunderland appealed against the finding that employer pension contributions are to be considered when calculating the claimant’s weekly pay.

Ms Drossou worked for the University and was dismissed as a result of an irretrievable breakdown in working relationships. Ms Drossou was considered to be the primary cause of the breakdown.  The employment tribunal found that she had been unfairly dismissed and ordered the University to reinstate her. The University did not comply with the order and the tribunal awarded compensation instead. The EAT departed from the usual practice of excluding pension payments in calculating the weekly wage on the basis that section 221(2) of the RTA 1996 does not state that the amount payable by the employer under the contract of employment has to be payable to the employee and remuneration in section 221(2) means a reward in return for services and pension contributions are no less a reward for service than basic pay. The University appealed this finding.

Decision

The appeal was dismissed. The EAT agreed with the tribunal with respect to the above reasons. The EAT drew the distinction between section 221(2) and section 27(1) of the RTA 1996. The latter specifies that the sums must be payable to the worker whereas those words are absent in section 221(2).

Comments

Pension payments have not been taken into consideration when calculating a claimant’s weekly wage on the basis that the payment is not received directly by the employee but paid into a pension fund. This decision has increased the potential value of a claimant’s weekly pay. This decision will be important for employers who pay a high employer contribution rate. It is yet to be seen whether there will be further litigation following this decision or whether the correctness of the EAT’s judgment will be challenged.

 

IMPORTANT: This blog is only intended as a general statement of the law and no action should be taken in reliance on it without specific legal advice.

 

For further information on this or any other employment related matters please contact Rupert Farr on: 020 7952 6216 or rupert.farr@blaketurner.com.

 

Statutory adjudication to the construction industry

The Housing Grants, Construction and Regeneration Act 1996

The Housing Grants, Construction and Regeneration Act 1996 introduced statutory adjudication to the construction industry in addition to contractual adjudication which already featured in a number of standard form contracts.

Statutory adjudication provides for a 28 days fast track dispute resolution procedure.

In the almost 20 years since adjudication has been available through this piece of legislation, Lewis Cohen has represented a number of claimants and respondents in the process dealing with a number of issues including final account disputes, claims for delay and disruption and claims for defective workmanship and negligent design.

Not only does Lewis have a breadth of knowledge from his experience in this field but he recently studied for two years on the RICS Diploma course and is now a qualified adjudicator.

Adjudication, by its nature, remains a private dispute resolution procedure unless the decision is taken to court for enforcement.

Lewis has experience in successfully enforcing adjudicator’s decisions in the Technology & Construction Court.

Given the fast track nature of adjudication, this requires a flexible response when defending claims and Lewis and his team are able to offer immediate advice and a rapid response when acting for both the claimant and the respondent.

 

Sexual and racial discrimination case

Sexual and racial discrimination case

Blake Turner Solicitors recently acted in a discrimination case for an employer who faced a claim of sexual and racial discrimination for an employee who had worked there for less than six weeks.

Despite obtaining a Deposit Order against the Claimant at an early stage in the proceedings (on the basis that the Claimant had low prospects of success), the Claimant decided to pursue the matter all the way to the full Tribunal hearing.

After one aborted hearing in August, the employer was successful in defeating all heads of the claim.  As the judgment was based on the same findings as the Deposit Order, the Claimant was deemed to have behaved unreasonably in continuing with the proceedings.

As a result we made an application on behalf of our client for a Costs Order against the Claimant.  Costs Orders in Tribunal proceedings are extremely rare and are very much the exception to the rule.  Indeed they are only obtained in 0.07% of cases.  We were successful in obtaining the Order after a day’s hearing before the same Tribunal which heard the case.

For further information on this or any other employment related matters please contact Rupert Farr on: 020 7952 6216 or rupert.farr@blaketurner.com

Prison for employee for deleting evidence

Former employee sent to prison for deleting evidence in breach of court order

Facts
In OCS Group UK Ltd (“OCS”) v Dadi and others, a former employee of the claimant was committed to prison for six weeks for breaching an injunction to preserve evidence pending trial of an action against Dadi for breach of confidence.

Mr Dadi had worked for OCS. OSC lost a contract to one of its competitors – OmniServ. Mr Dadi was transferred to OmniServ under TUPE. Before the TUPE transfer, OCS brought a claim against Mr Dadi on the basis that Mr Dadi had conspired with one of the other defendants, Mr Ahitan, by emailing confidential information belonging to OCS to his personal email account over a period of time. Mr Ahitan worked for OmniServ but previously worked for OCS as Mr Dadi’s manager.

OCS obtained an injunction against Mr Dadi which prohibited him from disclosing or making use of any of OCS’s confidential information, required him to provide information to the court about what discourse he had made of that information, required him to preserve hard copy and electronic documents, and, prohibited him from disclosing to anyone else (except his legal representatives) the existence of the order or the possibility of proceedings being commenced.

The standard notice on the front page explained that breach of the order would be a contempt of court which could result in imprisonment.

OCS’s lawyer personally served the order and read out the notice. Immediately following this, Mr Dadi telephoned Mr Ahitan and informed him of the injunction. He also deleted several emails from his personal email account. The following day, Mr Dadi deleted a further 8,000 emails and told various family members about the injunction.

OCS applied for Mr Dadi to be committed to prison for contempt of court.

Decision
Mr Dadi was sentenced to six weeks in prison for contempt. The court emphasised their strong disapproval of his conduct and imposed the prison sentence also to act as a deterrent. The court took into account that the acts were “deliberate and contumacious breaches”.

The breaches had significantly prejudiced OCS and cost them considerably in forensic examination to salvage information that should have been left untouched.

Comments
It is not unusual to see a sentence such as this for breach of an injunction but it is not often these powers are being used in an employment context. This case highlights the importance of complying strictly with injunctions aimed at preserving evidence. The court will have little sympathy with pleas of naïveté especially if an employee goes to great lengths to cover their tracks. The notice on the front of the order is there for a reason.

IMPORTANT: This blog is only intended as a general statement of the law and no action should be taken in reliance on it without specific legal advice.

For further information on this or any other employment related matters please contact Rupert Farr on: 020 7952 6216 or rupert.farr@blaketurner.com.

Employment Tribunal fees ruled unlawful

Supreme Court rules Employment Tribunal fees are unlawful

Facts

In 2013 the Government introduced employment tribunal fees of up to £1200 in order to reduce the number of weak and vexatious cases brought by litigants. As a result, this has led to a 79% reduction of cases brought in the Employment Tribunal in the last three years.

The trade union, UNISON, brought a case seeking judicial review of the fees arguing that the fees prevented workers accessing justice and were therefore unlawful. The fees were originally brought in for the objective of transferring part of the cost burden from the taxpayer. Fees ranged from £390 to £1200 depending on the complexity and time spent on the issues.

Decision

The lower courts dismissed UNISON’s claim but the Supreme Court has ruled that the Government was acting unlawfully and unconstitutionally when the fees were introduced. The Government have committed to reimburse all fees if it is found they acted unlawfully. It is expected that £32m will need to be repaid to Claimants.

Fees will be stopped immediately and the process of reimbursement will begin. The taxpayer will now be forced to pick up the bill.

Discrimination cases cost more for claimants because of the complexity and the time the hearings took. The Supreme Court held that the fees were indirectly discriminatory because a higher proportion of women would bring discrimination cases.

 

Comments

This case has provided a fundamental change for claimants who were previously obliged to pay fees for bringing a claim against an employer. The change in law with regard to fees will now make it easier for employees to bring claims against an employer. The ruling has been described as, “a major victory for employees everywhere.” It remains to be seen whether there will be a large increase in cases brought to the Employment Tribunal but it will certainly not lead to a decrease!

 

IMPORTANT: This blog is only intended as a general statement of the law and no action should be taken in reliance on it without specific legal advice.

 

For further information on this or any other employment related matters please contact Rupert Farr on: 020 7952 6216 or rupert.farr@blaketurner.com