The Supreme Court in the UK handed down its judgement on 26 July 2017, holding that the introduction of fees in the Employment tribunals prevents access to justice and is unlawful under both domestic and EU law. This is a very significant decision in the field of employment law and the enforcement of employment rights.

Under the Employment Tribunal and Employment Appeal Tribunal Fees Order 2013 (the Fees Order) introduced in 2013, claimants in Employment Tribunals or the EAT became liable to pay a fee in order to bring and pursue their claims, including both an “issue fee” when a claim form is presented to the tribunal and a “hearing fee”. The level of the fee depends on whether the claim is brought by a single claimant or by a group and also depends on the nature of the claim. Fees for a single claimant total £390 for a “type A” claim and £1,200 for a “type B” claim.  In the EAT, fees of £1,600 are payable.  Claimants and appellants can seek remission of fees based on their disposable capital and gross monthly income.

The trade union UNISON sought judicial review of the Fees Order, and the challenge was rejected by the High Court and the Court of Appeal. However, the Supreme Court has held that the Fees order must be quashed so that tribunal and EAT fees cease to be payable under the existing scheme and those fees already paid will be reimbursed by the Government.

The Court considered the UK common law right of access to justice. It held that 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. 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.

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 this requirement had not been met. The dramatic fall in the volume of cases received since the introduction of fees (approximately 70 per cent reduction in the number of cases) showed that that a significant number of people who would otherwise have brought claims were unable to afford to do so. This was the case even taking into account the availability of fee remission, which was far lower than the Government had anticipated.  In addition, fees can prevent access to justice if it was considered futile or irrational to bring a claim.  This could apply where no sensible person would proceed in a low value claim 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.  In practice, many ET claims do not receive full payment from the respondent or seek only modest amounts. The Fees Order effectively prevented access to justice and was unlawful.

The Court did accept that a statutory power could authorise an intrusion upon the right of access to the courts, but such a degree of intrusion must not be greater than is justified by the objectives which the measure is intended to serve. Whilst it could be possible to justify  the Fees Order, for example by showing that higher fees would generate a higher income, transferring a higher proportion of costs to users of the system, 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 through Acas.

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. Although the proper administration of justice may justify imposing a financial restriction under EU law, that restriction must maintain a level of proportionality between the means employed and the legitimate aim sought.  Since the Court had 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 limitations on the exercise of EU rights which are disproportionate, and is unlawful under EU law.

In a separate judgment, Lady Hale held that the Fees Order was indirectly discriminatory under S.19 of the Equality Act 2010. She held that because ‘Type B’ cases (including discrimination claims) attract a higher fee, and a higher proportion of women bring Type B claims than bring Type A claims, women are placed at a particular disadvantage compared with men. There was no evidence that the higher fees for Type B claims could be justified as a proportionate means of achieving the Government’s aims.

The Government must now seek to repay claimants who have paid fees. This will not be an easy task with some employers having already reimbursed fees where the claimant has been successful.

It is also not clear whether fees will disappear entirely. As set out in the judgment, if the level of fees could be shown to be proportionate to achieving the aim, the government could bring in a different fees regime, such as a lower level and contribution from both parties.  The government could also promote the use of ADR or expand the use of the concept of losing party pays (as is the case in other courts).

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 fee regime. It may be possible for them to bring them ‘out of time’, claiming it was not reasonably practicable for them to bring a claim.  No advice has yet been given to tribunals as to how they should deal with any such claims.

 

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