Supreme Court Rules Employment Tribunal Fees Unlawful

The Supreme Court has ruled that Employment Tribunal and Employment Appeal Tribunal fees are unlawful as they prevent access to justice and are indirectly discriminatory. 

Speedread

The Supreme Court has ruled that Employment Tribunal and Employment Appeal Tribunal fees are unlawful as they prevent access to justice. The fee regime also indirectly discriminates against women who are disproportionately affected by the higher fees charged for “Type B” claims, which include  discrimination claims.  The Supreme Court has ruled that the legislation which introduced fees was unlawful from the start and the legislation has therefore been quashed.  The Government will now have to refund all of the fees it has received and will no longer be able to charge fees, at least until it introduces a new, fairer regime.   

Facts

In R (Unison) v Lord Chancellor and another, Unison challenged the legality of employment tribunal fees, arguing that the fees were set at such a level and remission criteria so restricted that many claimants would be unable to afford to bring claims.  The fees therefore unjustifiably interfered with the right to access to justice.  Unison also argued that the fees regime indirectly discriminates against women as they bring more discrimination claims and are therefore disproportionately affected by the higher fees charged for discrimination claims.   

Judgment

The High Court and Court of Appeal rejected Unison’s arguments. However, the Supreme Court has upheld Unison’s appeal, ruling that fees are unlawful on both grounds.  

Access to justice

Fees are unlawful if there is a real risk that people will effectively be prevented from having access to justice, or if they make it futile or irrational to bring a claim.  The Supreme Court considered that this was the case as:

• Fees bear no direct relation to the amount sought by the claimant and act as a deterrent to low value claims and claims for non-monetary remedies (which together form the majority of Employment Tribunal claims); 
• Fees have led to a sharp, substantial and sustained fall in the number of claims, with a greater fall in the number of lower value claims and claims in which no financial remedy was sought; 
• Fees were the most frequently cited reason for not submitting a claim; and  
• Fees must be affordable not in a theoretical sense, but in the sense that they can reasonably be afforded. Worked examples indicated that hypothetical claimants would need to restrict expenditure that was ordinary and reasonable for maintaining living standards in order to be able to afford fees.    

The Supreme Court also considered that fees could not be justified as a necessary intrusion on the right to access to justice.  Although the aim of transferring some of the cost burden from taxpayers to users of the system was legitimate, the Government had not shown that the fee regime it introduced was the least intrusive means of achieving that aim.  

Indirect discrimination

The parties accepted that charging higher fees for Type B claims, which include discrimination claims, disproportionately affects women and so the only issue which the Supreme Court had to consider was whether the fee regime could be justified.  The Supreme Court considered it could not.  The Government had not shown that the higher fee charged for Type B claims was more effective in transferring the cost of the service from taxpayers to users.  In addition, in some Type B claims, such as pregnancy dismissal, the higher fee did not correspond to a greater workload placed on the tribunal.   

Implications

The judgment applies to fees in both the Employment Tribunal and the Employment Appeal Tribunal.  The Supreme Court has ruled that the legislation introducing the fees was unlawful from the start and the legislation has therefore been quashed. The Government will now have to repay all Employment Tribunal and Employment Appeal Tribunal Fees received since fees were introduced in July 2013 (reported to be around £32m) and will no longer be able to charge fees, at least until it comes up with a different, fairer regime.  A regime modelled on the one used in the County Court, where the level of fees is linked to the amount claimed, seems the most likely way forward. 

The judgment also throws up other questions, including whether claimants who did not bring claims and who are now out of time for doing so will be able to bring claims out of time on the basis that it is just and equitable to allow them to do so (the test in discrimination cases) or that it was not reasonably practicable for them to bring the claim in time (the test in unfair dismissal and unlawful deductions claims).  Also if a claim was struck out for non-payment of a fee, will it now be possible to appeal that decision out of time?

One thing is certain. Employers can expect the number of employment tribunal claims to increase again.