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Posted 26 July 2017
by Stephen Jennings

Supreme Court Rules Employment Tribunal Fees Unlawful



The Supreme Court has today unanimously ruled that the government acted unlawfully when introducing employment tribunal (ET) fees in 2013. From today, anyone who brings a claim against their employer in the ET (and appeals in the Employment Appeal Tribunal) will, for the time being at least, not have to pay a fee.  

Background

In 2013 Chris Grayling, the then Lord Chancellor, introduced fees in the ET for the first time. His reasoning was an attempt to encourage early resolution of employment disputes and to reduce the number of weak or vexatious claims in the ET. The introduction of fees was challenged by UNISON and it is this challenge which the Supreme Court considered in its ruling.

The decision

In its decision, the Supreme Court emphasised the importance of the rule of law (the legal principle that law should govern a nation, as opposed to being governed by decisions of individual government officials) and in particular that specific statutory rights granted by Parliament may not be reduced by statutory instrument from a minister. The Supreme Court noted in particular the modest financial value of employment cases and contrasted the level of fees in the ET with the small claims court (where the court issue fee is dependent on the financial value of the claim) concluding that not only was the current level of ET fees unaffordable for many prospective Claimants, but also rendered it “futile or irrational” to bring claims of low value and thus prevented access to justice. The Supreme Court considered the significant impact that the introduction of fees has had on claims in the ET – a reduction of some 70% – and emphasised that unimpeded access to the courts is a benefit to the public and not just to the parties themselves. Lord Reed, who delivered the judgement which all other Supreme Court Judges agreed, stated:

“without [access to the courts], 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. That is why the courts do not provide a public service like any other.”

Lady Hale also held that the fees regime was indirectly discriminatory against those with a protected characteristic. The parties accepted that the Fees Order had a disparate impact upon women, so that the question was whether it was justified as a proportionate means of achieving a legitimate aim. Lady Hale held that the treatment was not justified.

What does this mean?

As of today, there will be no fees to pay to bring a claim in the ET. The government will have to refund around £30 million to thousands of people charged for taking claims to the ET since the introduction of the fees in July 2013. This poses many unanswered questions as to the practicalities and administration of this. For example, can an unsuccessful Respondent who has been ordered to pay the Claimant the ET fee recover this cost? The likely answer is yes, but it could take a considerable amount of time to administer as there will inevitably be a requirement to review all the decided cases over the last four years.

This does not necessarily mean that no new ET fee structure will be implemented. The Supreme Court decision did not rule that the introduction of any fees in the ET would be unlawful; simply that the current fee structure is unlawful. The government was already looking at the existing ET fee regime before this decision so it is likely that there will now be a period of consultation with the view to introducing a different fee structure; possibly with fees set at a lower level or fees payable by both the employee and the employer.

There may also be decisions for the ET to make in respect of historic claims. There is a very short limitation period in which to bring a claim in the ET. Following the decision, there is a strong possibility that employees will now come forward and argue that they would have brought a claim in the ET within the limitation period but chose not to do because they were unwilling or unable to pay the fees. The current ET rules state that e.g. an unfair dismissal claim can be brought out of time where it was “not reasonably practicable” for the individual to bring the claim within the limitation period and in other types of claim (e.g. discrimination claims), an ET may extend time where it considers it “just and equitable” to do so. This raises questions as to whether the ET will accept the payment of fees as a valid reason to extend time and we will almost certainly see this question before the ET in the forthcoming months. It is likely that each case will need to be considered individually and decided on its own facts unless and until a precedent is set which determines the issue, and this may not be for some time.

Finally, we can expect to see changes to the ET rules and current online Claim Form system to reflect this decision.

Keep an eye on our blog for further updates and commentary on the impact of this decision. For further advice contact our specialist employment team on 01392 207020 or e-mail employment@tozers.co.uk

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About the author

Stephen Jennings

Partner

Partner in the litigation department specialising in employment law, he is the relationship manager for many of the firm's employment clients