The Supreme Court has held that the introduction of fees in the Employment tribunals prevents access to justice and is unlawful. This is a very significant decision in the field of employment law and the enforcement of employment rights. Norton Rose Fulbright’s Amanda Sanders explains.

What’s going on?

The Employment Tribunal and Employment Appeal Tribunal Fees Order 2013 (the Fees Order) was introduced in 2013, meaning that claimants in Employment Tribunals or appellants in the EAT became liable to pay a fee in order to bring and pursue their claim, amounting to up to £1,200 for a tribunal claim and £1,600 in the EAT.

UNISON have fought a four year battle seeking judicial review of the Fees Order. Its challenge was rejected by the High Court and the Court of Appeal. However, the Supreme Court has now held that the Fees order is unlawful and must be quashed.

Why is it important?

One of the most important elements of this case is the consideration by the court of the constitutional right of access to justice. The decision stresses the relationship between courts and parliament: Tribunal claims ensure that legislation made by Parliament and the common law created by the courts are applied and enforced.

To deny access to tribunals would mean that laws were liable to become a “dead letter” and that the work done by Parliament may be rendered nugatory. Unimpeded access to the employment tribunals is of value not only to the litigants, but also to the benefit to the public as a whole.

Can the imposition of fees ever be lawful?

For fees to be lawful they had to be set at a level that everyone could afford, taking into account the availability of remission. The evidence was that there had been a reduction of approximately 70 per cent in the number of tribunal cases, indicating that a significant number of people who would otherwise have brought claims were unable to afford to do so.

employment tribunalsEqually fees should not make it futile or irrational to bring a claim.

This could apply in a low value claim where no sensible person would proceed unless he or she could be virtually certain that the claim would succeed, that the fees would be reimbursed and that the tribunal’s award would be paid in full by the employer. The Court also held that the higher level of fees for type B claims (which included discrimination) was indirectly discriminatory.

One of the primary aims of the Fees Order was to transfer some of the cost burden to users of the tribunal system. In this case, the Court held that it had not been shown that a less onerous fee would have been any less effective in meeting that objective. In addition, there was no evidence that fees at the level in the Fees Order had been justified by other objectives: deterring weak or vexatious claims, or achieving earlier settlements.

As well as being unlawful under UK common law, the Court also held that the Fees Order was contrary to the EU principles of effectiveness and effective judicial protection and the right to a fair hearing under Article 6 of the European Convention on Human Rights.

The Court went on to hold that since it held that the fees imposed by the Fees Order are unaffordable by some people, and that they are so high as to deter those who can afford them from pursuing claims for small amounts and non-monetary claims, the Fees Order imposes disproportionate limitations on the exercise of EU rights.

What happens now?

Whilst the current fee structure has been quashed, it is not clear that this will be the end of fees entirely. As set out in the judgment, it is not that fees themselves are wrong, just that they had been set at a level which no one could reasonably afford. If the level of fees could be shown to be proportionate to achieving the Government’s aims, a different fees regime could be introduced, such as one set at a lower level or requiring a contribution from both parties.

The government will want to consider how it can best achieve its other aims in imposing the fee system. There are various tools already at the tribunals disposal such as better use of the sift regime or imposing deposit orders which could assist in dismissing vexatious or unmeritorious claims at an earlier stage. Promoting the use of ADR could also assist in early conciliation.

The Government has agreed to repay claimants who have paid fees (estimated to be between £27 and £32m). This will not be an easy task as the tribunals will have to review all claims. In some cases, where an employer has lost a case and reimbursed the fees to the claimant, then it will be the employer seeking reimbursement to prevent double recovery for the claimant. In addition it is not clear whether interest will be due to fully reimburse the claimant.

A question also arises as to whether there will now be a rush of claims by employees who were deterred from bringing claims between 2013 and 2017 due to the level of the fee regime. Will it be possible for them to bring any claim ‘out of time’, on the basis that it was not reasonably practicable for them to bring a claim? It may be difficult for claimants to produce hard evidence that the decision to proceed was due to the fees regime.

No advice has yet been given to tribunals as to how they should deal with any such claims, but it is to be expected such actions are likely to be brought.

Amanda Sanders is a senior knowledge lawyer in the employment team at Norton Rose Fulbright

Here’s how the FT originally reported the news

Supreme Court rules job tribunals must be free

By Jane Croft and Gemma Tetlow

Workers will no longer have to pay to bring employment tribunal claims, the UK’s highest court has ruled, saying the government acted unlawfully when it introduced fees in 2013.

The Supreme Court agreed unanim­ously yesterday that fees, introduced by then justice secretary Chris Grayling, should end immediately. The governm­ent will also have to refund £32m to thousands who paid to make claims.

The charges ranged from £390 to £1,200 depending on the case. Before 2013, it was free for workers to bring employment tribunal claims.

Lawyers suggested that new employment tribunal claims could now increase. The Supreme Court concluded the charges prevented access to justice and breached both EU and UK law. Its decision was in response to a legal challenge by the trade union Unison.

“The government has been acting un­lawfully and has been proved wrong, not just on simple economics, but on constitutional law and basic fairness,” said Dave Prentis, general secretary.

The government argued in 2013 the fees should be imposed as users needed to contribute to the costs of the service and to deter unmeritorious claims. It has said it will consider the ruling in full.

Justice minister Dominic Raab said: “The Supreme Court recognised the im­portant role fees can play, but ruled that we have not struck the right balance in this case. We will take immediate steps to stop charging fees and make arran­gements to refund those who’ve paid.”

The fees were payable on all new cases for claims ranging from unfair dismissal and equal pay, to claims of sex, age and racial discrimination.

After fees were introduced in July 2013, the number of claims fell steeply. The justice ministry reported that 88,476 were brought in 2016-17 compared with 191,541 in 2012-13.

“We’ll never know how many missed out because they couldn’t afford the expense of fees,” Mr Prentis said. “But at last this tax on justice has been lifted.”

Lord Reed, handing down the ruling, said the justices concluded the 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”.

The Supreme Court said there was no prohibition on charging court fees but said the law provided for a guarantee of access to courts to ensure justice.

“In order for the courts to perform that role, people must in principle have unimpeded access to them. Without such access, laws are liable to become a dead letter . . . and the democratic election of MPs may become a meaningless charade. That is why the courts do not merely provide a public service like any other,” Lord Reed said.

Law Society president Joe Egan said the decision “was a triumph for access to justice, and a resounding blow against attempts to treat justice as a commodity rather than the right it is”.

Nicholas Robertson from law firm Mayer Brown dubbed it “easily the most significant employment case for many years”.

“This groundbreaking decision will mean employers will have to brace themselves for a more contentious environment as employees are once again free to assert their rights without financial barriers,” said Crowley Woodford, employment partner at Ashurst, and Linda Jones, head of employment law at Pinsent Masons, agreed: “Employers will be expecting more claims but I doubt numbers will go back to the level of cases before 2013.”

It was likely that the government would see how to help tribunals strike out unmeritorious claims or to better fund the conciliation service, she added.

The ruling is “extremely likely” to lead to a rise in the number of cases put to tribunal, said Alan Lewis, a partner at Irwin Mitchell, albeit a “steady trickle”.

Business groups said they believed the charging system was flawed but some, such as the Federation of Small Businesses, said they did not believe in abolishing them altogether.