Employment Tribunal Fees have been declared unlawful – So, what now?

Employment Tribunal Fees have been declared unlawful – So, what now?

Published: 26 July 2017

The Supreme Court has today – perhaps surprisingly - ruled that the current Employment Tribunal fees system is unlawful.  The claim was bought by Unison, who appealed to the Supreme Court, having lost in both the High Court and also the Court of Appeal.  Whilst a humiliation in no uncertain terms for the government, this is a seminal decision on the rule of law.  In addition, it could potentially open a whole slew of “other” issues not least the basic logistics and implications of repayment of several years’ worth of fees to the claimants who were required to pay them…

Under the (obviously now redundant) fee regime which was bought in four years ago, Employment Tribunal fees consisted of an initial issue fee (either £160 or £250) and a subsequent hearing fee (either £230 or £950).  The level of the fee depended on the type of claim, with “type A” claims, including unpaid wages and redundancy claims, attracting the lower fee and “type B” claims, including unfair dismissal and discrimination claims, attracting the higher fee.  The fees for appealing to the EAT were £1,600 (being a £400 issue fee and a £1200 hearing fee).  The Supreme Court found that that this fee regime had a particularly deterrent effect on the bringing of claims, especially for those claims of low monetary value and therefore effectively prevented access to justice.  The Supreme Court also concluded that it was indirectly discriminatory, particularly to women, to charge higher fees for “type B” claims.

What are the implications of this decision?

Employment Tribunal claims bought against employers have seen a long-term reduction of circa 79% since the introduction of fees; the decision may well see the number of such claims start to creep back up, or perhaps there will be an initial deluge….who knows; but what is already fairly clear is that the government will not want the claim level to get back up to what it was previously. 

Although the Employment Tribunal service has now stopped accepting fees (from claimants presenting claims in person, and shortly online too), it is questionable whether Tribunal fees will be abolished completely in the long term.  The Government will likely now issue a consultation paper and seek to bring in a new fee regime – which could consist of lower fees or a fee structure linked to the value of the claim, or perhaps even involve a fee payable by the employer.  The Government may also explore other methods of deterring employment claims and encouraging pre-claim settlement.  The role of ACAS in early conciliation is likely to now be reviewed and may now be even further extended.         

Under the Supreme Court ruling, all ET and EAT fees paid between 2013 and now will need to be refunded.  These refunds will be due to claimants, but also potentially to employers who have been ordered to pay claimants fees by the Tribunal.    

What about those who have been unable to bring a claim in the last four years due to the prohibitory effect of the fee regime?

The (usual) three month time limit for bringing an employment claim is strict.  However, the Employment Tribunal has the discretion to extend time, if a suitable explanation is provided by a claimant and it considers it is “just and equitable” to do so.  Employers may see (particularly discrimination) claims now bought which would ordinarily be way out of time, with claimant’s seeking to rely on the fee barrier as a “just and equitable” reason for not having been able to present their claim in time. 

Further, whilst the Government faces the financial implications of the immediate reimbursement of millions of pounds worth of fees (estimated £32M), it may also find itself vulnerable to claims from people who were denied their chance to bring a (discrimination) claim against their employers.  As Baroness Hale observed, the fees had deterred meritorious (as well as unmeritorious) claims, putting people that bought such claims at a particular disadvantage. She noted in her addendum comment to the Judgment that “deterring discrimination claims is thus in itself discrimination against the people”. 

And what of the future?

The next few months are likely to be tense and uncertain whilst the Government and employers alike await the impact of this historical and surprising judgement, and the Tribunals race to comply with the significant changes it will inevitably bring.   For further updates on this and other noteworthy legal issues….WATCH THIS SPACE.    

For any further guidance or information on this matter or any other employment-related enquiries, please contact Andrea London, Partner and Head of Employment on Andrea@fletcherday.co.uk or call on: 0207 632 1442

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.