Legal update, stampLandmark Supreme Court Ruling on Employment Tribunal Fees: what happens next?

Today the Supreme Court has unanimously ruled that the employment tribunal fees introduced in 2013 are unlawful.

The Current Position

The appeal was lodged by UNISON against the current fee system implemented in UK Employment Tribunals (ET) and Employment Appeal Tribunals (EAT).

Under the current fee regime, an issue fee was paid on presenting a claim to the ET plus a hearing fee was paid before the hearing of the claim. Fees depended on the type of claim brought:

  • Type A (e.g. unlawful deductions from wages)
  • Type B (e.g. equal pay, unfair dismissal, discrimination)

The fee for issuing and hearing a Type A claim was £390, while the cost increased to £1,200 for Type B claims. Provision was in place for full or partial remission of fees based on disposable income but the risk was carried by the claimant as to whether any fee would be refunded.

Before the current fee system was introduced, claimants could bring claims and pursue proceedings in the ET and Employment Appeal Tribunals (EAT) at no cost.

Effect of Fees

Justice groups have researched the effect of introducing ET fees which concluded, amongst other things, the following effects:

  • A 70% reduction in claims.
  • A greater fall in the number of lower value claims.
  • Fees were the primary reason for not bringing a claim.
  • It failed to deter frivolous claims or those with no merit.
  • It did not appear to have improved the number of cases settled through ACAS (the Advisory, Conciliation and Arbitration Service).

Why Were ET Fees Challenged?

Despite the opposition to ET fees by legal professionals and members of the public, this particular case stems from judicial review proceedings brought by the trade union, UNISON. It argued that the introduction of ET fees was not a lawful exercise of the statutory powers of the Lord Chancellor, and that imposing the fees interfered unjustifiably with the right of access to justice under both common law and EU law.

Judgment: Unlawful Fees

Access to justice is inherent in the principle of the rule of law. Even where fees are affordable at first glance, they prevent access to justice where they make it irrational or nonsensical to bring a claim. This is relevant to claims of low (or no) value, and where the individual would have to be certain that their claim would succeed – making it a logical step to incur fees. The Supreme Court compared the level of fees in employment tribunals with those in the small claims courts, where it is cheaper to bring a claim for a small sum of money. The obligations under the ET fees regime also bore no relation to the varying values of claims brought.

The Supreme Court members concluded that, as tribunal fees had the effect of preventing access to justice, they were unlawful under both domestic and EU law. As the tribunal fees had this effect as soon as they became law, they were unlawful in their entirety and should therefore be quashed.

It was also found that tribunal fees were indirectly discriminatory under the Equality Act 2010 as the higher fees for Type B claims (unfair dismissal, equal pay and discrimination) put women at a disadvantage, because more women bring Type B claims than Type A claims.

Further, the Supreme Court ruled that tribunal fees presented unjustified limitations on the ability to enforce EU rights, and claims based on EU law. While this remains a discussion point with Brexit on the horizon, in any event, the ruling was that tribunal fees were, and remain, unlawful under UK domestic law.

3 Fundamental Questions: What happens now?

As of today (26th July 2017) tribunal fees cease to be payable for claims in the ET and appeals to the EAT. Fees previously paid must be reimbursed.

Despite the clear ruling of the unlawfulness of tribunal fees by the Supreme Court, there are still unanswered questions:

  1. Will fees be completely abolished?

This is unlikely; perhaps a new system of fees will be introduced. A sliding scale directly relating to the value of the claim is arguably a sensible structure.

2. Can repayments be made?

The Supreme Court has made it clear that all fees paid between 2013 and today’s date will have to be refunded by the Lord Chancellor. This is easier said than done, as fees in many successful claims will have already been paid by the Respondent as ordered by the ET.

3. What happens at the Tribunals now?

The ET and EAT will be extremely busy with tasks such as the immediate rewriting of Tribunal rules and reprogramming the current online claim form system.

A more difficult question to answer is: what about individuals who may have had a claim but previously chose not to take it further because of the fees. Can these people be compensated or be allowed to present their claims even though they may have missed the tribunal deadline for lodging their claims?

Conclusion: what is the full impact for access to justice?

While this decision will be welcomed by prospective claimants, justice campaigners and employment lawyers alike, it may not be so well received by business owners. The ET and EAT now face the unenviable task of organising repayments and the administration involved in amending the current claim system.

Ultimately the winner is access to justice – it has received the full and clear support of the nation’s highest domestic judicial authority, and today’s decision will impact on more than prospective and future claimants.

If you would like advice about how this decision could impact on you, please contact our employment team.