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Supreme Court rules Employment Tribunal Fees are Unlawful

Today (26 July 2017), the Supreme Court has ruled that the Employment Tribunals and the Employment Appeal Tribunals Fees Order 2013 is unlawful, unconstitutional and will be quashed with immediate effect. This serves as a prominent example of the Courts being willing to limit Governmental legislative power.

2013 saw the controversial introduction of Employment Tribunal fees which meant that employees wanting to pursue a case against an employer could be required to pay up to £1,200 in fees out of their own pocket, unless they were eligible for fee remission. The driving force behind the Fees Order was the desire to impose some of the cost burden of running Tribunals onto people using the Tribunals, to encourage early settlement and to dissuade employees from bringing claims at the Employment Tribunal which did not enjoy reasonable prospects of success. Of course, Tribunal fees paid out by employees were always recoverable in the event of a claim being successful at Tribunal, however there has always been concern that the introduction of fees has acted as a deterrent to employees with genuine valid claims against their employer in bringing the claim in the first place.

The issue to be determined by the Supreme Court was whether the Fees Order had the potential to effectively prevent access to justice. In order for the fees to be lawful they had to be set at an affordable level, taking into account the availability of fee remission. The evidence, which included figures that revealed that the number of tribunal claims brought had reduced by as much as 70 per cent since the fees came into force, led to the conclusion that this requirement was not met. Therefore, the Fees Order prevented access to justice and as such was unlawful. Further, the Court held that the Fees Order imposed unjustified limitations on the ability to enforce EU rights and was as such was also unlawful under EU law.

Lord Reed, handing down the Court's ruling stated that the introduction of fees:

"Have resulted in such a substantial and sustained fall in the number of claims being brought that it points to the conclusion that a significant number of people have found the fees unaffordable."

Baroness Hale also held that the Fees Order was indirectly discriminatory under S.19 of the Equality Act 2010 because the fees for bringing 'Type B' claims (which includes discrimination claims) are higher than bringing 'Type A' claims. It was held that as a higher proportion of women bring Type B claims than bring Type A claims, women are placed at a particular disadvantage compared with men.

What does this mean for Employers?

The most predictable and likely outcome of the decision is that the number of claims being brought at the Employment Tribunal will increase given the quashing of the Fees Order with immediate effect. However, it is still not certain that the Fees Regime will be abolished in its entirety it may be that we will see a reduction of fees charges and/or the government will go on to implement a more proportionate and affordable fees regime, however, a reduction in fees would still be likely to contribute to an increase in claims.

It is also likely that those who have brought a claim since July 2013 and have paid the relevant Tribunal fees will have their money refunded. Unison have indicated that this will amount to more than £27m, a cost which will be borne by the Lord Chancellor's Department. This leaves open the possibility that employers who have been ordered to pay Tribunal fees back to a Claimant following the loss of an employment tribunal claim may be able to claim the cost of those fees back too, however whether this will be possible remains to be seen.

Another hypothetical impact of the decision is that this could open the door for Claimants to argue that they were deterred from bringing a legitimate claim at the Tribunal because they could not afford to pay the fees involved at the time. It may be that Tribunals will allow extensions of the basic 3 month time limit to bring a claim at the Employment Tribunal on the basis that (in the case of unfair dismissal claims) it was not reasonably practicable to bring a claim when a Claimant could not afford to do so by a fees regime which has since been declared unlawful, or (in the case of discrimination claims) it could be argued that it is just and equitable to extend time for bringing a claim in light of this decision.

The immediate impact of the decision however, is that it is no longer lawful for Claimant's to be made to pay Tribunal Fees in accordance with the Fees Order in order to bring a claim against their employer. In fact, Employment Tribunals are now refusing to take fee payments where physical Claim Forms are being lodged in hard copy at certain Tribunals.Therefore, it is prudent for employers to prepare themselves for the likelihood of an increase in Employment Tribunal claims being issued against them in the near future.

For more information contact Laura Cieplak in our Housing & Regeneration department via email or phone on 01772 220188. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

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