Supreme Court declares Tribunal fees unlawful

26 July 2017

Today, the Supreme Court handed down their decision in R (on the application of UNISON) v Lord Chancellor [2017] UKSC 51 that Tribunal fees are unlawful.


Background

Tribunal fees were introduced for all claims issued in the Employment Tribunal and Employment Appeals Tribunal from 29 July 2013, under the Tribunals and the Employment Appeal Tribunal Fees Order 2013.  For simple (type A) claims, the fees were £390 in total.  For more complex (type B) claims, which include unfair dismissal and discrimination claims, the total fees were £1,200. The aims of the Fee Order were to deter unmeritorious claims, encourage earlier settlement and to transfer some of the cost burden of running the Tribunals to those using their services.

Following the introduction of fees, claims reduced by 70%.  The Fee Order included an option for fee remission, but this was extremely limited and used only 51 times between July 2015 and December 2016.  UNISON bought judicial review proceedings on the basis that the Fees Order unjustifiably interfered with the right to access to justice, frustrated Parliament's attempts to grant employment rights and discriminated against women and other protected groups.  


The Supreme Court's view

The Supreme Court unanimously allowed UNISON's appeal (against unsuccessful, earlier, challenges) and confirmed that the current fee regime was unlawful under English and EU law because it was "inconsistent with access to justice".

The Court relied on the evidence of the reduction of claims and stated that the fees were a deterrent to smaller claims, or claims where the employee is seeking a non-financial remedy (which, together, make up the majority of the Tribunal's work).

The Courts rejected the Lord Chancellor's argument that fees were justified as a necessary intrusion on the rights of access to the courts. The Government has not been able to produce any evidence to show why the fees had been set at that particular level and research suggested that they were not set at an affordable level. The Court concluded that the introduction of fees had not achieved any of the stated aims and that the Tribunal's role went beyond providing a service to those who make claims, but to society as a whole.

The Fees Order was also held to be indirectly discriminatory against women and those with other protected characteristics.  The Court accepted UNISON's evidence that women are more likely to bring Type B claims, which attract a higher fee, than Type A claims and this creates a disparate impact on women. The Lord Chancellor was unable to provide justification for the difference in fees or any evidence that the higher fees achieved the aims of the Fee Order generally.


What will this mean for employers?

  1. All fees that have been paid since 2013 to date will need to be refunded by the Lord Chancellor's Department, who have confirmed that they will do so. Where employers have been ordered to pay the employee's fees in successful cases, they will receive the refund accordingly.
     
  2. There may be a rise in the number of claims brought against employers initially, and the British Chamber of Commerce has expressed concern that this would take businesses back to a time where they 'would often settle to avoid a costly and protracted process, even when their case was strong'.  Although it is expected that the Government will now consult on a new fee regime for the Tribunal, this could involve setting fees at a lower rate, or based on the current system used in the County Courts where the fee is set depending on the value of the claim, or even the introduction of a fee payable by the employer when it lodges the ET3.
     
  3. It is yet to be seen what will happen for those individuals who chose not to bring a claim because of the introduction of fees. Tribunals may now consider claims against employers that would usually be time-barred and may extend time beyond the usual 3-month limit in some cases, on the basis that this judgment makes it 'just and equitable' to do so.

For more information please contact one of the team.



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