Claims for unpaid wages represent almost a fifth of all actions in the Employment Tribunal. Such claims are usually brought by employees looking to recover relatively modest sums of money, usually in the hundreds rather than the thousands. Whilst these cases do not necessarily see awards of big sums, they are just as important to those Claimants who have had wages withheld; in the current financial climate, more than ever, every penny counts.
The introduction of issue fees in the Tribunal means that now for many Claimants the costs involved will simply outweigh the benefits. Whilst an unpaid wages claim is categorised as a ‘Type A’ claim and therefore in theory a less complicated type of case, it will cost a Claimant £160 just to instigate proceedings. Add into the mix the cost of a hearing and the average Claimant will be shelling out close to £400 just to get the money owed to them, and this is without paying for any legal advice or representation. Ultimately it is likely that many Claimants will conclude that the cost does not justify the end.
There is a discretion in the new Tribunal Procedure Rules which allows for the recovery of issue fees for a successful Claimant but at this stage it is unclear how often, if at all, this discretion is likely to be exercised. Until further guidance is received on this question Claimants are essentially taking a costly gamble, one which may well not pay off in the long run.
Having concluded that bringing an action in the Employment Tribunal is simply too costly, what is a Claimant to do? Is this the end of any hope and chance of recovering the monies owed to them? All is not lost as there is an alternative option, which now more than ever, is a potential route worth exploring with employees: the County Court.
Usually claim for withheld wages amounts to a breach of contract. The normal remedy for breach of contract is a civil action in the County Courts for damages. The cost of issuing in the county court does depend upon the value of the claim, but as the sum is likely to be relatively modest, the cheaper way to recover the wages may be to issue proceedings in the local County Court.
The purpose of the Employment Tribunal is to ensure the adjudicators are experienced and well versed in the complexities of ever changing employment legislation. Whilst ultimately District Judges are perfectly competent and able to deal with such claims, depending on the nature of the case it might still be preferable to pay a little more and remain with the specialist tribunal. It is very much doubted that the District Judges in the County Courts are going to be thrilled with their lists being clogged up with matters which may be more appropriately dealt with in the Tribunal.
There are some other potential drawbacks to issuing in the County Court, including the possibility of the Respondent counterclaiming; an action under the Employments Right Act protects from any counterclaim. Claimants will also have to demonstrate mitigation of loss in the County Court.
The pros and cons will ultimately have to be weighed up by the Claimant when considering the alternative of issuing in the County Court. It is probably going to save several hundred pounds, and in general as costs follow the event, there is more certainty in terms of recovery of fees for a successful Claimant. It is suggested that a Claimant with a strong case and little likelihood of a counterclaim being successful would most definitely be better off at the local County Court and issuing small claims proceedings. Certainly if costs are a pertinent consideration for Claimants the benefit of local county courts as opposed to having to travel to a Tribunal will be another factor swaying the decision.
The question of whether Claimants will bother remains to be answered and it is most likely that the full impact of the fees will not be seen for several months to come; it is predicted that there will be less claims as employees do the sums and calculate that it really is not worth the time or money. Time will tell if the introduction of issue fees has resulted in the redundancy of the Employment Tribunal for unpaid wages claims, as it seems that there is another court that provides the same service but has inadvertently undercut the Tribunals.
If you are an employee considering proceedings against an employer for recovery of unpaid wages please contact the clerks at 12cp and one of our team of specialist employment barristers would be happy to offer help.
12 College Place
For more information on Employment Law click here.