Supreme Court: Employment Tribunal Fees Introduced 4 Years Ago Are Illegal
This week the Supreme Court upheld a challenge by Unison that employment tribunal charges were discriminatory.
The government is now due to scrap employment tribunal fees and pay back around £27 million in previous fees.
The court has ruled that the government was acting unlawfully and unconstitutionally after bringing in the fees, some of up to £1,200, in 2013 for things like unfair dismissal, equal pay and redundancy.
The fees have since seen claims in employment tribunals drop by about 70%, resulting in the argument that the fees themselves impeded access to justice.
Elaine Motion, Executive Chairman of Balfour+Manson, said the unanimous 7-0 decision sent out a clear message that the controversial decision by the UK Government to introduce tribunal fees in 2014 was wrong under both domestic and European law.
“The UK Supreme Court has decided unanimously that imposing significant fees has had a detrimental effect on access to justice,” said Mrs Motion, who represented one of the unions involved in bringing the legal challenge.
“This is the one of the most significant judgments in employment law in the modern era. All the evidence pointed to fees denying the principle of access to justice – and the Supreme Court’s decision is therefore a resounding victory for justice itself.”
Below, legal experts have provided their thoughts to Lawyer Monthly.
Richard Nicolle, Employment Law Partner, Stewarts Law:
This ruling will leave many employers who have been stung by vexatious employment law claims in the past living in fear of a rise in costs to their businesses. Our analysis of the data shows that the success rate of cases making it to tribunal since the introduction of fees did not rise as might have been expected – suggesting vexatious and valid claims were being equally deterred. Today’s ruling determines that the cost of delivering that objective was too great in restricting access to justice and the protection of employee rights.
The Court has suggested that it is wrong to think that it is only those who use employment tribunals that benefit from them. When a tribunal’s focus is to uphold the law in relation to circumstances such as protecting the rights of the worker, the tribunal is in fact protecting the rights of all workers and not just those whose rights have been neglected.
It remains to be seen whether the Government will now drop tribunal fees in their entirety or seek to introduce them in a revised version which addresses the concerns set out in the Supreme Court’s judgment. Given the other higher priority objectives on the Government’s agenda it may be that this particular issue is put to one side for at least the medium term. That the Order has been quashed leaves open the possibility that fees are removed in this period of uncertainty.
Suzanne Horne, Head of the international employment practice, Paul Hastings:
This is an incredibly significant decision for employers but just how momentous the fallout will be remains to be seen. Before all else, the government will be obliged to pay back all fees obtained since 2013. However, this may be just the tip of the iceberg as lower paid potential claimants, turned off previously by exorbitant Tribunal fees, enter the fray with union backing. Fundamentally, though, it is still unclear whether those who did not bring a claim in the last three years because of the fees will be able to submit a claim given that most will be out of time.
Tribunal fees have long since been described as preventing access to justice– a fact clearly evidenced by the seismic reduction in claims since their introduction. And today, the second tier fees have also been held to be indirectly discriminatory to women. Given it was a Labour manifesto pledge to abolish the fees, this setback for the Conservatives could be the first real test for the fragile coalition. Under normal circumstances, the Government would attempt to rush through new legislation to re-design the fees regime and limit claims pre-dating this decision – however Theresa May’s slim majority makes this difficult. Whatever their next steps are, today’s ruling may soon transform the trickle of tribunal cases into a deluge.
Tabytha Cunningham, Associate Solicitor, Coffin Mew:
Tribunal fees have always been controversial. In this case, ultimately the Government could not convince the Supreme Court that its objectives in introducing fees, such as to reduce vexatious claims, had been met. It found that the fee system was set at an unaffordable level and could create impossible situations for many employees, for example where a claim is worth less than the fees payable.
It also felt that the Government had overlooked the importance of an effective system for society, and that lack of access to justice could encourage employers to act without fear of repercussions.
The unprecedented drop of approximately 70% in claims when fees were introduced clearly supports the Supreme Court’s decision that these fees reduced access to justice.
In the longer term, it’s unlikely that fees will be abolished completely. The problem is the suitability of the current system, not paying a fee in principle. We expect that the Government will now consult on an alternative system, most likely with fees at a lower level, or with a reciprocal requirement for employers to also pay fees to level the playing field.
In the short term, however, employers should brace themselves for a surge in Employment Tribunal claims.
Christina Tolvas-Vincent, Partner, Bond Dickinson:
The Supreme Court has today handed down its decision in R (on the application of UNISON) v Lord Chancellor. The issue was whether fees imposed by the Lord Chancellor in respect of proceedings in employment tribunals (ETs) and the Employment Appeal Tribunal (EAT) are unlawful because of their effects on access to justice.
Fees were imposed in July 2013 under the Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013 (Fees Order). Claimants have to pay up to £1200 to issue a claim and have it heard in the ET. Fees are also payable for bringing an appeal in the EAT. Fees can be fully or partially remitted depending on the income and capital of the claimant and their partner, and the number of children they have. A fee can also be remitted in exceptional circumstances.
UNISON applied for a judicial review of the Fees Order and argued that it was not a lawful exercise of the Lord Chancellor’s statutory powers because the fees interfered unjustifiably with the right of access to justice under the common law and EU law, frustrated the operation of legislation granting employment rights, and discriminated unlawfully against women and other protected groups.
The High Court and Court of Appeal both rejected UNISON’s application. The Supreme Court unanimously allowed UNISON’s appeal, finding that the Fees Order was unlawful under domestic and EU law because it prevented access to justice. It must therefore be quashed. The Supreme Court pointed out that fees bear no relation to the value of the claim and therefore act as a deterrent to claims for small amounts of money or non-monetary remedies. The evidence showed that the effect of the Fees Order was a dramatic fall in the number of claims and it contravened the EU law guarantee of an effective remedy before an ET. It was also indirectly discriminatory because the higher fees for discrimination claims put women at a particular disadvantage. This is because a higher proportion of women bring these claims than claims that attract lower ET fees.
The Lord Chancellor previously gave an undertaking to repay all ET fees paid since 2013 if the Fees Order was found to be unlawful and the Government will need to set up a system for repayment. It is unclear what will happen where a claimant was successful in the ET and the respondent employer reimbursed the fees. We are likely to see an increase in ET claims, as fees will have to be abolished with immediate effect, and the Government will presumably now give some thought as to how it can implement a lawful scheme for ET fees, perhaps by introducing a scale of fees linked to the value of claims.
A UK Bar Council spokesperson:
This decision from the Supreme Court is welcome to all who believe in the fundamental importance of the rule of law. There are broad and encouraging implications for those of us that believe in the case for increasing access to justice in our society. The decision makes it clear that in order for the Courts to perform their role of ensuring the law is applied and enforced, people must have unimpeded access to the them. Charging fees which deter or prevent access is unlawful, and undermines the government of society by the rule of law.
In addition, and specifically, we welcome the fact that in relation to issues that arise in the work place, the Supreme Court has ruled in favour of giving people who face age, sex or race discrimination the right to challenge their employer without being deterred by high tribunal fees.
Ruth Kennedy, Barrister in the employment team. 2 Temple Gardens:
The Supreme Court’s recognition today of the profound impact that the Fees Order 2013 has had on access to justice is a huge step forward for UK employment law.
It also clearly demonstrates that the courts are prepared to intervene when the Lord Chancellor seeks to use his powers, using blunt tools to reduce the cost to the state of facilitating litigation.
Now the Lord Chancellor will have to honour his predecessor’s promise to pay back the fees already paid, which is sure to be a costly endeavour.
However, this ruling still does nothing for the claimants that would have brought claims, but for the fees.
