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Employment Tribunal Fees - Supreme Court Ruling Explained

Employment Tribunal Fees - Supreme Court Ruling Explained
Thursday 27th July 2017

Since the coming into force of the Employment Tribunals and Employment Appeal Tribunal Fees Order 2013 (‘the Fees Order’) on 29 July 2013, any employee hoping to bring a claim against their employer / former employer in the employment tribunal has been liable to pay fees of up to £1,200 in order to do so.  The stats suggest that, following the introduction of the Fees Order, the number of tribunal claims being brought against employers (especially lower value claims) has fallen by approximately 70%.

Yesterday, the Supreme Court handed down a highly significant judgment in the case of R (on the application of UNISON) –v- Lord Chancellor, in which it ruled unanimously that the employment tribunal fees imposed by the Fees Order are in fact unlawful under domestic and EU law, and therefore shall be quashed with immediate effect.  Following the decision, the justice minister Dominic Raab stated that the government would cease taking fees for employment tribunals "immediately".

Delivering the leading judgment, Lord Reed stated that the “dramatic and persistent” fall in the number of employees pursuing claims in the employment tribunal since 2013 suggested that the Fees Order was indeed hindering employees’ right of access to justice, and was therefore unlawful.  In reaching this conclusion, the following factors appear to have been material:

  • The level of the fees imposed on claimants is such that they are clearly not affordable for everyone. Coupled with the under-utilisation of the fee remission regime, it was concluded that many prospective claimants since 2013 have opted not to pursue claims simply because they were unaffordable;
  • The court was convinced by several hypothetical examples, put forth by UNISON, of situations in which the level of the fees, when weighed against the potential tribunal award (and the likelihood of an award being paid in full by a respondent), would actually render it ‘irrational’ for an employee to pursue a claim against their employer; and
  • The fees cannot not be justified as a “necessary restriction” on employees’ rights of access to justice.  In practice, the fees have generated far less revenue to support the tribunal system than anticipated, whilst also apparently failing to encourage parties to settle disputes during the ACAS early conciliation period.

In a separate judgment, Lady Hale stated that the Fees Order was also indirectly discriminatory, contrary to the Equality Act 2010.  The reasoning behind this was that the Fees Order requires higher fees to be paid by Claimants for “Type B” claims than for “Type A” claims.  As women are more likely to bring “Type B” claims, the Fees Order essentially puts women at a particular disadvantage.

Impact of the Ruling

The judgment is likely to have a material impact upon both employers and employees alike, and the Government’s response to the Supreme Court ruling in the coming days and weeks will need to be monitored closely.

With the fees today having been declared unlawful, there are now a number of pressing issues for employers to consider:

  • Employers should prepare themselves for a rise in the number of employment tribunal claims that they may face.  In particular, although Claimants will still be required to engage with ACAS’ pre-claim conciliation service, the removal of the fees would appear to increase the likelihood of more speculative claims being brought by employees.
  • The Ministry of Justice has already issued a statement confirming that tribunal fees incurred by claimants since the introduction of the Fees Order will be refunded.  How the Government proposes to deal with this will be watched closely by employers who have been ordered to reimburse a claimant’s fees as part of a judgment or settlement since 2013 - there could well be scope for an employer to recover such costs from the Government.
  • There is potential that employees dismissed after July 2013 could now have grounds seek extensions of time for bringing their claims, on the basis that the unlawful Fees Order effectively prevented them from doing so.  In the event that this is permitted, employers may well undertake a review of any employee grievances / dismissals since 2013 to assess the scale of any potential liability they may have.

From the Government’s perspective, aside from the estimated £32m in fees to be reimbursed to claimants, there is also the wider question of whether the Tribunal Service is set up now to deal with a larger volume of claims, given that substantial cuts were introduced on the assumption that the reduction in claims would be a permanent trend.