Supreme Court rules that employment tribunal fees are unlawful

Money Coins

The Supreme Court has ruled that fees imposed on claimants to take employment law complaints to tribunal are unlawful.

In the case, which was brought by trade union Unison against the Lord Chancellor, Unison contended that employment tribunal fees imposed by the Lord Chancellor under the Employment Tribunals and the Employment Appeals Tribunal Fees Order 2013 are unlawful under both common and European Union (EU) law because of they impact an individuals access to justice.

Unison, which was supported by the Equality and Human Rights Commission and the Independent Workers Union of Great Britain in the claim, also argued that the fees also amounted to unlawful discrimination against women and other protected groups because the higher fees imposed for discrimination cases could deter employees taking their grievances to tribunal on the grounds of affordability.

Employment tribunal fees were first proposed by the government in January 2011. The fees were designed to transfer the cost burden from general taxpayers to those submitting to the Employment Tribunal or Employment Appeals Tribunal, incentivise earlier settlements, and discourage unreasonable behaviour, for example, the pursuing of weak or vexatious claims.

A structure for the fees was published in December 2011, proposing a fee system based on the subject matter of the claim and the number of claimants pursuing the claim. A draft of the Fees Order was put before Parliament in April 2013, with the order coming into force from July 2013.

Fees for the Employment Tribunal, which are paid in two instalments, start at £390 for a single claimant for a type A case and can increase to £1,200 for a type B case. Type B cases would include unfair dismissal claims, equal pay claims, and discrimination claims. Small groups of claimants can be charged between £780 and £2,400, and large groups with over 200 claimants can pay between £2,340 and £7,200 in fees. Employment Appeals Tribunal fees are set at £1,600.

Unison initially issued a claim for judicial review of the Fees Order in June 2013, stating that the order breached the EU principles of effectiveness and equivalence, and were also indirectly discriminatory. The Divisional Court dismissed the claim. In September 2014, a second judicial review was sought, however this was also dismissed. The Court of Appeal also dismissed the case, ruling that the imposition of a fee would not constitute interference with the right of effective access to a tribunal unless it was impossible in practice to access the tribunal due to unaffordable fees. The case was then taken to the Supreme Court.

Lord Reed, who oversaw the hearing, ruled that the tribunal fees were not set at an affordable level for all, and that they are unlawful because of their effect on access to justice.

Reed said: “In order for the fees to be lawful, they have to be set at a level that everyone can afford, taking into account the availability of full or partial remission. The evidence now before the court, considered realistically and as a whole, leads to the conclusion that that requirement is not met.

“The fall in the number of claims has in any event been so sharp, so substantial, and so sustained as to warrant the conclusion that a significant number of people who would otherwise have brought claims have found the fees to be unaffordable.”

Lady Hale ruled on the discrimination component, and concurred with Lord Reed’s decision.

The Supreme Court found the Fees Order to be indirectly discriminatory under the Equality Act 2010. Hale found that the higher fees for type B claims have a disparate impact and put women at a disadvantage because a higher proportion of women make type B than type A claims.

Dominic Raab, justice minister, said: “In setting employment tribunal fees, the government has to consider access to justice, the costs of litigation, and how we fund the tribunals. The Supreme Court recognised the important role fees can play, but ruled that we have not struck the right balance in this case. We will take immediate steps to stop charging fees in employment tribunals and put in place arrangements to refund those who have paid. We will also further consider the detail of the judgment.”

Dave Prentis, general secretary at Unison, said: “The government is not above the law. But when ministers introduced fees they were disregarding laws many centuries old, and showing little concern for employees seeking justice following illegal treatment at work. The government has been acting unlawfully, and has been proved wrong, not just on simple economics, but on constitutional law and basic fairness too.

“It’s a major victory for employees everywhere. Unison took the case on behalf of anyone who’s ever been wronged at work, or who might be in future. We’ll never know how many people missed out because they couldn’t afford the expense of fees. But at last this tax on justice has been lifted.”

Crowley Woodford, employment partner at Ashurst, said: “Tribunal Fees fundamentally changed the employment litigation landscape with a 70% drop in claims. This ground-breaking decision will mean employers will now have to brace themselves for a much more contentious environment as employees are once again free to assert their rights without financial barriers to a judicial remedy.

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“Now that the current fee regime has been so dramatically swept away, the government must take stock. Do they leave well alone or have another go with a new fee regime which will not offend the principle of access to justice? To avoid any new regime meeting the same fate, the fees will have to be set at a level that everyone can afford. Exactly what that means is up in the air. What happens now depends on the government’s appetite for another fight.”

Joe Aiston, senior associate in the employment, pensions, and mobility group at Taylor Wessing, added: “This is a huge decision both legally and politically and one of the strongest examples of the court system being willing to limit the government’s power to legislate. The Supreme Court has upheld Unison’s challenge to the tribunal fees regime on both major strands of the argument; that fees prevent access to justice and the way the fees are structured are discriminatory against women. The Lord Chancellor has also confirmed that fees already paid are to be reimbursed. As well as having a massive effect on tribunal process and claimants’ ability to bring claims, this will also result in a significant hit on the court system’s coffers.”