Costs resulting from the introduction of tribunal fees could outstrip the annual estimated savings of £10m, employment lawyers and unions have warned.
From today workers taking on employers in tribunals will face fees of up to £1,200.
The Ministry of Justice was not able to provide an estimate for how many tribunal cases will be dropped as a result of the changes, but employment lawyers have suggested it could lead to a 25% fall in cases.
Elizabeth George, barrister in the employment team at Leigh Day, claimed the changes will cause chaos in the tribunals system due to a lack of preparation.
She said: ‘The introduction of fees provides a greater security for bad employers to dismiss unfairly because they rightly believe claimants will be deterred from challenging the unfairness through a tribunal claim.
‘While that will save tribunal administration costs there have been countless studies that show the cost to the state of people losing their employment in terms of state benefits and the drain on health services.’
Plans to waive fees for people on low incomes will affect just a small minority of individuals, she said.
Tom Kerr Williams, partner at DLA Piper, said the changes could have an adverse impact on employers.
He predicted the number of claims received by the tribunal service would fall, but by contrast expected the cases that do go to tribunal will be ‘pursued more vigorously’ by claimants.
‘If individuals are forced to put their money where their mouth is at an early stage, they may be more likely to stand and fight regardless of the legal merit of their claims.
‘Employers will therefore need to be ready to deal seriously with those claims that do make it through,’ he said.
Unite general secretary Len McCluskey said: ‘We estimate that this will affect 150,000 workers a year. This is not an aid to economic recovery but a means to keep working people frightened and insecure.’
The justice minister Helen Grant said: ‘It is not fair on the taxpayer to foot the entire £74m bill for people to escalate workplace disputes to a tribunal. We want people, where they can afford to do so, to pay a contribution.’