Important Update: Supreme Court rules employment tribunal fees unlawful

Summary

The Supreme Court has today unanimously ruled that the current employment tribunal fee regime is unlawful under both domestic and EU law because it has the effect of preventing access to justice.

As a result of the ruling, fees for bringing a claim at the employment tribunal have been suspended with immediate effect. The government has issued a statement confirming that it will also take immediate steps to refund fees to those who have previously paid them. It is estimated that this will cost £27 million.

Findings

The Supreme Court judgment is the culmination of a long legal battle brought by the UNISON trade union in 2013 to challenge the legality of tribunal fees. Fees were first introduced in July 2013 and the court heard evidence that since their introduction the number of tribunal claims have fallen by some 70%.

In coming to its decision the court considered Ministry of Justice statistics on the number of presented claims, and also considered some examples of hypothetical claimants. These indicated that in order to meet the fees some claimants would have to restrict expenditure to a level below what is reasonable for maintaining living standards.

The Supreme Court contrasted tribunal fees, where a fixed fee is due irrespective of the size of the compensation sought, with fees payable in the small claims court which are graduated according to the value of the claim.

The judgment held that whilst the stated purpose behind the introduction of fees is a legitimate aim, the government had not shown that the introduction of fees was the least intrusive means of achieving those aims.

The court also ruled that fees were indirectly discriminatory under the Equality Act 2010 because the higher fees due for ‘type B’ claims, including discrimination and equal pay claims, put women at a particular disadvantage. This is because a higher proportion of women bring type B claims.

Comment

This is undoubtedly a significant ruling with huge implications for employers. In response to the ruling, Justice Minister Dominic Rabb has confirmed that the government will take immediate steps to stop charging fees in employment tribunals and put in place arrangements to refund those who have paid.

The government website for making an employment tribunal claim online has been suspended so that it can be updated, and presently states that ‘with immediate effect there are no fees payable for employment tribunal proceedings’.

The abolition of fees is likely to lead to an increase in the number of employment tribunal claims. Claimants who were, until now, uncertain as to their prospects of succeeding at tribunal may now be more inclined to issue a claim as they will have nothing to lose.

It should be remembered that the strict time limits for bringing a claim should prevent an immediate surge in the number of claims being brought. Additionally, the ACAS early conciliation service is unaffected by today’s ruling and claimants will still need to go through early conciliation before they can bring a claim at tribunal.

In the longer term, the government may well bring in primary legislation to introduce a new fee regime. This could involve fees being set at a lower level, being graded according to the claim’s value (as in the County Court) or requiring the employer to pay fees for filing a defence.

For further information please contact Ronnie Tong or your usual contact in the Devonshires Employment and Pensions Team.

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