The Supreme Court has determined that the system of charging fees to claimants to Employment Tribunals is unlawful. The fee system must now be scrapped and the Government will have to refund to claimants an estimated £32 million spent on fees over the last four years. The union UNISON finally succeeded in its application for judicial review of the fees regime. It had failed previously at both the High Court and the Court of Appeal.
The Government introduced Employment Tribunal fees on 29 July 2013. The fees payable were set at two levels, depending on the type of employment claim brought. Fees for “Type A” claims, such as non-payment of wages, were £390. Fees for more complex “Type B” claims, such as unfair dismissal and discrimination, were £1,200. Appeals cost £1,600. Unlike in the Courts, the value of the claim had no bearing on the fee payable.
The Court considered the evidence and determined that the fee regime was unlawful because it disproportionately impeded the public’s access to justice, which was a legal and constitutional right. It also considered that the higher “Type B” claim fees were indirectly discriminatory on grounds of sex, as they adversely affected more women than men.
The “real world” effect of the introduction of fees had been to reduce Employment Tribunal claims by between 66% to 70%. The Court said this fall was “so sharp, so substantial and so sustained as to warrant the conclusion that a significant number of people who would have otherwise brought claims have found the fees to be unaffordable”. The Government had introduced a system of fee remission, which subject to means-testing, allowed some claimants to be excused the fees. But looking at examples of workers in low to middle income households in particular, it noted that the drop-off in claims was “dramatic” notwithstanding the remission system and the problems were “systemic”. The Court said that the fees were “so high in practice to prevent even people who can afford them from pursuing claims for small amounts”.
In introducing the fee system, the Government sought to achieve three aims. First, to transfer some of the cost of running Employment Tribunals from the taxpayer to users of the Tribunal. Second, it wanted to incentivise settlements before Tribunal and thus decrease reliance on the system. Third, it wished to discourage employees from pursuing weak or “vexatious” claims, which the Government perceived were clogging up the system.
However, the Court considered that none of those aims had been met. It identified that fees had made a less significant contribution to Tribunal costs than expected. The number of claims settled at conciliation before Tribunal had reduced. The proportion of claims that were successful at Tribunal also decreased. The judgment impliedly criticises the Government for treating the Employment Tribunals Service as a public service with “users” who only act for the benefit of themselves. The Court gave a detailed history of the legal right of access to justice in British law and the importance of the rule of law, going all the way back to the Magna Carta. It determined that the fees were unlawful under both domestic and EU law.
The judgment also attacks the Government on its approach to the introduction of fees. It notes that in considering the likely impact of fees, there was no research beforehand specifically with Tribunal users. On the level of fees, the Court noted that “Counsel for the Lord Chancellor were unable to explain how any of the fees had been arrived at”. The Court also observed that the fees prescribed bore no direct relation to the value of the claim and therefore could not be considered a deterrent.
In response, the Government agreed to abide by the judgment. At the time of writing, it has reportedly stopped requiring payments at hearing centres that accept Employment Tribunal claims in person and is taking steps to amend the online claim system to remove fee payments.
At present, there is no indication of when fees already paid will be returned. This will be a massive administrative exercise, not least because the Tribunal will have to refund many unsuccessful claimants. But there is a further complication. Where claimants have been successful, employers have often been ordered to repay the (unlawfully charged) fees. It is currently unclear how employers will be able to recover the repaid fees in this situation. The Tribunal’s procedural rules will also require amendment.
Although this is a significant decision for those campaigning for access to justice and those on low wages who were deterred from claiming, many lawyers expect the Government to consider a new fees regime. The Court noted that charging fees could in principle be a way of securing access to justice, by making resources available for the justice system. It also commented that deterring the bringing of frivolous cases can increase efficiency in the system. However, the Court considered that fees would have to be set at a level that everyone can afford, taking into account the realistic availability of remission. It appears that in light of this judgment, which acknowledges the “imbalance of economic power” between employers and employees, the Government will have an uphill struggle to introduce a new fee system that will not interfere unduly with the right of access to justice.
If you have been prevented from bringing a claim because of Employment Tribunal fees or you are an employer concerned about the implications of the judgment, please contact Julian Parry, Head of HR and Employment Law, at Beers LLP on (01752) 246011 or email email@example.com.
The Supreme Court judgment can be found here:
26 July 2017