Removal of Employment Tribunal fees – how will this affect multinational employers?

Removal of Employment Tribunal fees – how will this affect multinational employers?

Today the UK Supreme Court ruled that the Employment Tribunal fee regime currently in place in the UK is unlawful. In response, the Government has confirmed that, with immediate effect, claimants will no longer be charged to bring employment claims and the process of reimbursing those who have paid fees during the past four years will begin.  Employers with UK operations should also expect an increase in employment claims, as more employees are able to access the tribunal system in the UK.

The unanimous judgment of the Court allows UNISON’s appeal, ruling that the statutory instrument (the ‘Fees Order’) which introduced tribunal fees in 2013 has had the effect of preventing access to justice, is therefore unlawful under both domestic and EU law, and must be quashed.

Since the Fees Order came into force in July 2013, single claimants have been required to pay a fee of either £390 or £1200 in order to bring (respectively) a Type A or a Type B claim in the Employment Tribunal. Full or partial remission or reimbursement was a possibility if the claimant’s disposable capital was below a specified threshold.

The fee regime was introduced with the aim of discouraging weak or vexatious claims, while increasing the likelihood of earlier settlement and, of course, partially shifting tribunal costs from taxpayers to users of the tribunal service. However, these arguments proved controversial and were not accepted by UNISON which immediately applied for judicial review when the Fees Order was passed. The union alleged that the imposition of the fees constituted an unjustifiable interference with the individual’s right to access to justice under both the common law and EU law, that it impeded the exercise of statutory employment rights and, further, that the two-tier fee structure discriminated unlawfully against various protected groups, including women (discrimination claims cost more to bring than some other claims).

UNISON was unsuccessful in the lower courts but was granted permission to appeal to the Supreme Court, where today its appeal was allowed. Lord Reed, with whom the other Supreme Court justices agreed, held that the evidence before the Court established that the fee regime has had the effect of preventing access to justice. In particular, the ‘dramatic and persistent fall’ in the number of claims post-July 2013 was attributable to the fees being unaffordable for significant numbers of people. In the Court’s view, tribunal fees must be reasonably, not merely theoretically affordable and this was not the case when households on low to middle incomes could only afford to pay them by sacrificing ordinary expenditure of the kind required to maintain an acceptable standard of living. Further, the fees prevented access to justice for claimants who may have had sufficient means to pay but whose claims were of a sufficiently low value (in comparison with the level of fees) that it would have been irrational for them to commence proceedings. Nor did the Court consider that this interference with access to justice was justified in furtherance of the fee regime’s intended objectives. The evidence in fact demonstrated that, for example, the proportion of unsuccessful claims has been consistently higher since the introduction of fees and the proportion of cases settling through Acas slightly lower.

Lady Hale addressed the discrimination argument, although this was not determinative of the appeal as the Fees Order had already been found to be unlawful for the reasons above. UNISON argued here that, as a larger proportion of women bring Type B claims (including discrimination claims) than bring Type A claims, the higher fee charged in relation to these claims was indirectly discriminatory against women (and others with protected characteristics) and, further, that this could not be justified as a proportionate means of achieving a legitimate aim. Lady Hale agreed and noted, for example, that there is no correlation between the higher fee charged for Type B claims and the merits of the case.

This decision is an important one, both constitutionally and for individual employees who have brought a claim against their employer in the past four years or who will do so in the future. Thanks must be given to UNISON for pursuing this case to the Supreme Court when each of the lower courts failed to find in its favour. As a result of this persistence, the fee regime will come to an end with immediate effect and those individuals who have paid fees previously will be reimbursed. However, this will prove little consolation for employees who were entitled to bring a claim during that time period, but did not do so because of the fees, and whose claim is now time barred.  Whether they will be able to bring a claim and argue that the time limit should be extended for just and equitable reasons, remains to be seen.

For employers, this could mean an increase in lower or no value claims, which had dropped since 2013, including claims to enforce certain statutory rights (such as to rest breaks), holiday pay and unpaid wages claims.  Employers who may have taken a slightly more relaxed approach to the risks associated with HR issues might need to re-evaluate and re-assess the risks involved, including that they could be facing an increase in claims brought by employees.  Closer management of UK operations and ensuring up-to-date and appropriate policies and procedures are in place, together with employment documentation, will help to mitigate the risks of employing staff in the UK.

Sarah Chilton is a Partner at CM Murray LLP and Jenny Ross is a Trainee Solicitor at Peters & Peters Solicitors LLP, currently on secondment to CM Murray LLP.

Follow her on Twitter @sarahjchilton

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