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Workers could be charged a fee to take their bosses to court under plans being explored by Labour as it faces pressure from businesses lobbying to water down its landmark changes to employment rights.
In a development described by unions as a “disaster”, sources in Westminster said ministers were looking at reviving a proposal made by the last Conservative government to impose fees on employment tribunal claims.
A source close to the government said a plan was agreed in chancellor Rachel Reeves’s June spending review, as part of efforts to find savings in the Ministry of Justice budget, in a drive to recover some of the costs of running the service.
Under the leadership of the then prime minister, Rishi Sunak, the Conservatives proposed a £55 fee for workers making an employment tribunal claim in early 2024, in plans thrown up in the air by Keir Starmer’s general election victory.
However, sources said budget pressures and efforts to tackle an overwhelmed tribunals service had led ministers to look again at the plan. “It has been kicking about in terms of the Ministry of Justice inheritance,” said a government source. “Obviously, the spending settlement has meant that a lot of people are looking for revenue raisers.”
A separate Labour source said a plan had been made to reintroduce fees before the end of the current parliament, but warned it would be “counterproductive” given the government’s pledge to strengthen workers’ rights. “The unions will go bananas,” they added.
It is understood David Lammy, who replaced Shabana Mahmood as justice secretary in last month’s reshuffle, is reviewing his department’s policies before a decision is made.
Unions argued that tribunal fees would risk pricing workers out of accessing justice. Paul Nowak, the general secretary of the TUC, said: “Everyone should be able to enforce their rights at work. Reintroducing tribunal fees would be a gift for bad bosses and price many low-paid workers out of justice – especially women.
“Tribunal fees were a disaster when they were introduced under the Tories. They blocked genuine claims from going forward and cost more to administer than they raise.”
A Ministry of Justice spokesperson said the government had “inherited a justice system in crisis” with huge court and tribunal backlogs and widespread funding and sustainability pressures. “Decision-making about the department’s spending and fees for the next few years following this summer’s spending review is ongoing,” they said.
Employment tribunals are the primary vehicle for workplace justice, ruling on disputes between workers and employers on issues ranging from equal pay to unfair dismissal and discrimination.
Making a claim had been free since tribunals were established in the 1960s, until David Cameron’s coalition government introduced charges in 2013 under the Tories’ austerity drive – provoking protests by trade unions.
Fees were then scrapped in 2017 after the supreme court ruled they were unlawful, following a case brought by the Unison trade union. Labour under Jeremy Corbyn had also made scrapping fees a 2017 manifesto pledge, arguing that they protect unscrupulous bosses and “literally price people of of justice”.
With significant delays and a shortage of qualified judges, the UK’s employment tribunal backlog has ballooned, with a queue of 45,000 single open cases at the end of March. Business leaders have also warned Labour’s plans to boost workers rights could further overwhelm the service. Government estimates anticipate a 15% rise in claims.
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After the spending review, the Federation of Small Businesses warned that the “swamped” tribunals service had been handed no extra money to address the backlog before an anticipated surge in cases.
Labour’s employment rights bill will give workers the right to take employers to tribunal for unfair dismissal from day one in a job, instead of two years under current legislation. It will also extend the time limit for bringing most tribunal claims from three months to six.
Ministers have pledged to implement the package “in full” after Starmer’s reshuffle fuelled unease among unions following the resignation of Angela Rayner, who had championed the plan.
Under Rishi Sunak, the Tories estimated that a “modest fee” of £55 could generate up to £1.7m a year in revenue, helping to cover some of the £80m annual running cost of the service.
While those in financial hardship would be offered fee remission, the previous government acknowledged charges could deter some workers. When fees were in place between 2013 and 2017 the number of quarterly applications fell by about two-thirds.
Employees who bring tribunal claims currently do not have to pay a fee to make a claim. However, they do face potential legal fees in preparing the claim and representation at trial. Employees typically do not have to pay employers’ costs if they have a reasonable case.
Reeves set out her spending review – including prioritising investment in health and defence – in June, including cuts to budgets across several government departments. Separately, she now faces the prospect of having to find up to £30bn in tax rises or spending cuts in November’s budget.
