Employment tribunal fees were introduced in July 2013 by way of the Employment Tribunals and Employment Appeal Tribunal Fees Order. This Order meant that claimants had to pay a fee if they wished to submit a claim in the tribunal and then pay another fee prior to the final hearing of their case, unless they were eligible for remission of the fees due to being on a low income. Prior to 2013, claimants could bring claims in the employment tribunal without paying anything. The introduction of fees led to a dramatic drop in claims, of 70%, in three years.
As a result of an appeal made by the trade union, Unison, the Supreme Court has now unanimously ruled that the introduction of employment tribunal fees was unlawful.
This is an important judgment and is likely to have far reaching implications for all employers, as explained below.
The Supreme Court’s reasoning
The Court concluded that:
- There is a constitutional right of access to justice and the courts; people must in principle have unimpeded access to them. The introduction of tribunal fees has prevented access to justice as the fees imposed were too high and unaffordable. If the fees Order had prevented access to justice, it must be ultra vires.
There was also no evidence that in practice the introduction of fees had met its intended aims of more claims being settled and decreasing the proportion of weak claims being brought – whilst the number of claims had dramatically decreased, fees had not prevented weak or vexatious claims from reaching the tribunal.
- Statutory rights granted by Parliament (such as employment rights in legislation) cannot be reduced in some way by a statutory instrument from a minister (such as the Order introducing tribunal fees).
- The fees Order had imposed unjustified limitations on the ability to enforce EU rights (i.e. those employment rights and claims based on EU law) and therefore the fees were unlawful under EU law.
- The fees were indirectly discriminatory. The fees regime required individuals to pay a higher fee if they wished to bring a claim for Type B claims, which includes discrimination claims. A higher proportion of women bring discrimination claims. The higher fees had therefore put women (and those with other ‘protected characteristics’) at a particular disadvantage
The Court held that the fees imposed were unlawful, and quashed the original Order which had introduced the fees.
What is the immediate impact of this?
With immediate effect, tribunal fees are no longer payable. Claims can be brought in employment tribunals for free. There are also no longer any fees to bring an appeal in the Employment Appeal Tribunal.
What could the further implications of this be?
- All fees paid since 2013 will be refunded by the Lord Chancellor’s department. It has been estimated that the refunds will be in the region of £27million to £32million.
What may be of interest to employers is that where a claim was successful during the period since 2013, quite often the respondent employer would have been ordered to reimburse the Claimant for the fees that they had to pay. On the basis that the Fees Order has been quashed, it is possible that these sums will be repaid by the Lord Chancellor’s department to the employers, although this has not been confirmed. Employers should review any employment tribunal proceedings that were taken against them since 2013 to identify whether they paid any fees which could be reimbursed to them.
- As noted above, tribunal claims dropped by 70% in the three years following the introduction of tribunal fees (Ministry of Justice figures are illustrated in Figure 1, below). Whilst individuals will still need to go through the ACAS Early Conciliation process before they can submit a claim in the tribunal to see whether the matter can be resolved that way, employers need to be aware that there is now no financial deterrent to employees wishing to bring employment tribunal claims and the number of claims is very likely to rise significantly.
Figure 1: Cases sent to employment tribunal
- Most claims must be brought by employees within three months of the date of the act that they are complaining about, for example from the date of a dismissal or the date that it is alleged that discrimination took place. This time limit can be extended for unfair dismissal claims if the employee can show that it was not “reasonably practicable” for them to have brought the claim within the three months. It can also be extended for discrimination claims if it would be “just and equitable” for the employee to have an extension of time.
Will we see individuals who may have had potential claims in the past now try to argue that they should be able to bring claims now, after the usual time limits, because they were deterred from submitting a claim at the time due to the cost of the fees? This may also increase the number of employment tribunal claims that we now see being brought, and add an extra complexity to the proceedings where this point is raised by a claimant.
- Just because this particular fees Order has been quashed, it does not mean that the Government will not attempt to introduce new fees at a later date albeit at a lower level. The Supreme Court did not rule out fees altogether. Fees must simply not be of such a level that there is a real risk that it would effectively prevent people from accessing justice; there needs to be a balance.
However, the Government, who no longer has a majority, may struggle to introduce a new fee regime even for lower fees. Given the very clear effect that fees had on the number of claims being brought, and that it has been held that the fees were discriminatory, are many MPs going to be willing to agree to a new regime whatever their political party? It may be that we do not see fees being reintroduced for some time.
If you would like to find out more about the impact of this issue on your organisation or to discuss any employment law concerns your organisation may have, contact Emma Thomas at ELS on email@example.com or on 0333 013 9606.