In a landmark judicial intervention, the Supreme Court has allowed the appeal by Trade Union UNISON against the legality of the current system of employment tribunal fees, holding that the fees regime introduced in 2013 is unlawful.

Prior to the introduction of the Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013 (Fees Order), a claimant could bring and pursue proceedings in an Employment Tribunal (ET) and Employment Appeal Tribunal (EAT) without incurring any fees.

From July 2013, the Fees Order has required an issue fee to be paid when a claim form is presented to an ET and a subsequent hearing fee prior to the hearing of the claim.  The fee has varied, depending upon whether the claim is classified as a “type A” or “type B” claim and on whether the claim is brought by a single claimant or a group.  For a single claimant, the fees total £390 for a “type A” claim and £1200 for a “type B” claim.  It was considered that introduction of fees would help to transfer some of the cost burden from general taxpayers to those that used the system. Further, it was considered that fees would incentive earlier settlements and dis-incentivise weak or vexatious claims.

Following the introduction of the Fees Order in July 2013, Trade Union UNISON, commenced judicial review proceedings. They claimed that the prescribed fees interfered unjustifiably with the right of access to justice under both the common law and EU law, frustrated the operation of Parliamentary legislation granting employment rights and discriminate unlawfully against women and other protected groups.

UNISON was unsuccessful in the High Court and at Court of Appeal, but was granted permission to appeal to the Supreme Court.

In today’s milestone judgment, the appeal was unanimously allowed in the Supreme Court. Lord Reed delivered the leading judgment, in which it was held that the Fees Order is unlawful under both domestic and EU Law, because it has the effect of preventing access to justice. The evidence demonstrated that the effect of the Fees Order had been a dramatic and persistent fall in the number of claims brought in ET’s, namely, a reported 70{ba3215b0bf35eaeb06be458b3396ffbfc50bb9db10c9ff1594dfc3875e90ea48} reduction in the number of cases pursued since the legislation was introduced in 2013.

Lord Reed considered worked examples of the impact of fees on hypothetical claimants, which indicated that in order to pay the required fees, they would have to restrict expenditure that was ordinary and reasonable for maintaining living standards.  Lord Reed concluded that the Fees Order was unlawful because it contravenes the requirement under EU law to provider an effective remedy and it imposes disproportionate limitations on the enforcement of EU employment rights.

In relation to discrimination, Lady Hale issued a judgement in which it was held that the Fees Order is indirectly discriminatory under the Equality Act 2010, because the higher fees for “type B” claims puts women at a particular disadvantage, because a higher proportion of women bring “type B” than bring “type A” claims.

The judgment will have significant implications for employers, and for employment law more generally.

Following the judgment the government announced “We will take immediate steps to stop charging fees in employment tribunals and put in place arrangements to refund those who have paid”.  Therefore with immediate effect, individuals will be able to bring claims before the Employment Tribunal without having to pay a fee.  The introduction of fees led to a 70{ba3215b0bf35eaeb06be458b3396ffbfc50bb9db10c9ff1594dfc3875e90ea48} reduction in claims.  Therefore now that claims can be presented without paying a fee, it could reasonably be assumed that the number of claims will increase.  Therefore employers are now, once again, more likely to be faced with a claim if they have a disgruntled employee.

Secondly, the government had previously made a voluntary commitment to reimburse all fees if it was found they acted unlawfully. Fees have raised about £32m since being introduced.  As outlined above, the Government confirmed, following the judgment, that it would honour this commitment.  We wait to hear from the government as to how this will work in practice.  It is not as simple as refunding the fees paid to the claimant.  If the claimant was successful in tribunal the respondent will have been ordered to reimburse the claimant for the fees that they paid as part of any award.  Therefore the government may need to reimburse the respondent in those cases.  However in these circumstances, what about the claimant – could they be required to repay the amount they received from the respondent in respect of the fees which were paid.

And thirdly, what about those claimants who were deterred from bringing a claim in the first place.  Can they now bring a claim against the government for introducing an unlawful fee regime, or could they even bring an out of time claim to the Employment Tribunal, arguing that the time limit should be extended because they had been prevented from bringing a claim because of the unlawful fee regime.

As is often the case with such an important decision as this one, the decision raises a number of important questions which will only get answered over the coming months.  We shall keep you informed of developments in this area, and hopefully provide answers to some of these questions, as and when they happen.

At Paris Smith, we have extensive experience of guiding employers and employee’s through the Tribunal Process. Please do not hesitate to contact a member of our employment department if you have any questions relating to this article or the implications of it.