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Employment Tribunal fees abolished

Tue 29 Aug 2017

In a case with wide-ranging implications, the Supreme Court has granted Unison’s appeal in R (Unison) v Lord Chancellor [2017], and by unanimous decision brought an end to the controversial scheme of Employment Tribunal fees. The Supreme Court has engaged in a spirited defence of the rule of law, which will have a real practical impact for both employers and employees alike.

Lord Reed gave an incisive leading judgment, drawing firstly on a constitutional right of access to the courts. He was dismissive of the suggestion implicit in the scheme of fees that access to justice was only of value to the particular individuals involved. Strikingly, Lord Reed noted that without such access, "laws are liable to become a dead letter, the work done by Parliament may be rendered nugatory, and the democratic election of Members of Parliament may become a meaningless charade". He stressed that in enacting employment rights, Parliament had made a decision that such rights were in the public interest.

A barrier to justice

Lord Reed was clear that access to justice had been blocked by the scheme of tribunal fees.  This was evident from the fall in the number of claims, which had been "so sharp, so substantial and so sustained", and led to the conclusion that individuals had been deterred.  Lord Reed added that the fees must be reasonably and not just theoretically affordable. Even where fees were affordable, he noted that at times they rendered it "futile or irrational" to bring a claim.  In particular, the Supreme Court had clearly been influenced by the fact that in nearly half of the cases won by employees, employers failed to pay half or all of the sums they were ordered to pay in compensation.

The Government claimed that the fees were necessary to uphold the system and transfer some of the cost burden from taxpayers to users. However, it was not believed that the level of fees were set at what was necessary to balance this against the right of individual claimants.  Furthermore, the Government had not shown that the level of fees was necessary to achieve its secondary aims of motivating individuals to settle outside of the system and stopping weak claims from being pursued.

Indirect discrimination

Lord Reed also concluded that the Fees Order compromised the exercise of rights derived from EU law, and was therefore unlawful under EU law also. To add further criticism, in a further judgment Lady Hale determined that the order had been indirectly discriminatory and in breach of the Equality Act 2010, as higher fees were due under the order for claims which were statistically more likely to be brought by women. 

What now for fees?

Lord Reed held that the Fees Order had exceeded the power that Government Ministers had to make such orders, and duly determined that it be "quashed" in its entirety. As such, the Fees Order is abolished. 

Furthermore, as the Fees Order had been void from the outset, thousands of former and current Claimants are now entitled to have those fees refunded, and the Employment Tribunals are developing a scheme to process such refunds. Controversially, this is likely to include cases where successful Claimants had already recovered the fees from Respondents. 

We anticipate that the number of Employment Tribunal claims will now increase, although whether they will hit the same levels as were experienced before the fees remains to be seen.  Another unknown quantity is whether some Claimants who did not bring claims at the time will now be able to do so, by asking for an extension to the time limit for bringing a claim on the basis that they could not have done so previously as they could not afford the fees. We are already aware of these sorts of issues being dealt with by Employment Tribunals at first instance and, at least in one case, the Employment Judge allowing such a claim to succeed.

Equally unclear is the question of whether we are likely to see a new Employment Tribunal fee regime introduced. The Government will no doubt be keen to reinstate its flagship policy, but will need to be wary. Whilst the Supreme Court was very critical of the former Fees Order, it is not impossible that a reformed fees regime – perhaps with both parties paying a much lower sum – might be lawful.   

For more information on this article please contact the Employment Team.