Employment tribunal fees unlawful

Employment Tribunal fees have been declared unlawful and indirectly discriminatory by the Supreme Court in the case of R (Unison) v Lord Chancellor. Employment Tribunal fees are therefore no longer payable and the government has committed to reimbursing claimants in relation to fees paid since 29 July 2013 when fees were first introduced.

Background

The Employment Tribunals and the Employment Appeals Tribunal Fees Order 2013 (“the Fees Order”) came into force on 29 July 2013. This introduced fees to bring a claim in an Employment Tribunal ranging from £390 to £1200 depending on the type of claim. It was intended to prevent frivolous claims whilst also passing the cost of bringing claims from tax payers onto the users.

The trade union UNISON challenged the lawfulness of the Fees Order by way of judicial review on the basis that it prevented access to justice and was indirectly sex discriminatory. This claim was dismissed in both the High Court and the Court of Appeal and so UNISON appealed to the Supreme Court.

Decision

The Supreme Court unanimously allowed the appeal, finding the Fees Order to be unlawful. The Court agreed with UNISON that the figures, which showed a reduction in Employment Tribunal claims of 66-70%, demonstrated a dramatic and persistent fall in claims brought in Employment Tribunals. They considered several possible reasons for this reduction but fees were most commonly cited as the reason for not submitting a claim. The Court therefore found that the Fees Order prevented access to justice and was unlawful.

In addition, the Fees Order was found to be indirectly discriminatory as a higher proportion of women brought claims attracting the higher fees, mainly discrimination claims. The Court held that setting higher fees for certain claims was not a proportionate means of achieving a legitimate aim as these cases did not always attract a higher workload and the intention of passing the cost onto users instead of taxpayers was not always effective.

The Fees Order was consequently quashed.

Consequences

As a result of this significant decision, claimants will no longer need to pay a fee to issue a claim in an Employment Tribunal. However, it is unlikely that this will last indefinitely and the government is expected to introduce a revised fee regime as soon as they can. This could reinstate fees but at a lower level and potentially introduce a requirement for employers to pay the fees when lodging their ET3 or to reimburse claimant if the claimant’s claim is successful. Nevertheless, it is uncertain exactly what a new fees regime will look like and the government will no doubt take some time consulting on this before it is introduced. In the meantime therefore, an environment of no fees will exist that will very likely result in an increased number of claims being bought by employees.

For those who have already bought claims, the government will reimburse all fees paid since 29 July 2013. This is also expected to include reimbursing employers who have paid fees to have judgments reconsidered or to bring a counterclaim. In total, it is estimated that this will cost the government approximately £32 million. However, it is unclear how such a large scale reimbursement will be achieved in practice. In particular, issues have been raised about fees which an unsuccessful employer was ordered to pay on the claimant’s behalf, as well as fees that employers have reimbursed to claimants through settlement agreements. Unfortunately there is a real possibility that, particularly in the later circumstance, claimants could recover these fees twice.

There is further uncertainty in respect of employees who did not bring a claim because of the fees. It is possible that the tribunals may exercise their discretion to extend the time period for bringing a claim in relation to these cases where it can be shown that the payment of fees was a primary reason for not pursuing a claim. This could result in historic claims emerging.

In the short term, we anticipate that this judgment will have a significant impact on employment law claims.  Due to the general applicability of the Supreme Court’s judgment with regard to access to justice, this decision may also in the long term have ramifications across the UK legal system.

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Kerry Garcia

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