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Ground breaking decision of the Supreme Court: Employment Tribunal fees unlawful

The Supreme Court has today held that the Employment Tribunal fees regime is unlawful under both EU and UK law because it has the effect of preventing access to justice.

Background

Employees benefit from several employment rights, many of which stem from EU law. The majority of these rights can only be enforced in Employment Tribunals or the Employment Appeal Tribunal (EAT). Until 2013 there was no fee payable when bringing an Employment Tribunal claim; however, on 29 July 2013 the Employment Appeal Tribunal Fees Order 2013 (the Fees Order) came into force requiring employees to pay a fee.  The key objectives of the Fees Order were to:

  • Transfer the cost burden of the Tribunals from the taxpayer to users of the Tribunal service.
  • Deter unmeritorious claims.
  • Encourage earlier settlements.

The amount payable varies depending on the type of claim brought and comprises an initial issue fee and a further hearing fee prior to the hearing date. For type A claims (more straightforward claims such as unlawful deduction from wages) the total fees payable are £390 and for type B claims (including unfair dismissal, equal pay and discrimination) the total fee payable is £1200.  There is a notoriously complex remission scheme for Claimants who are unable to afford the fee.

UNISON commenced judicial review proceedings arguing that the fees regime was unlawful as it (1) interferes with access to justice; (2) frustrates the operation of Parliamentary legislation; and (3) discriminates unlawfully against women and other protected groups. UNISON were unsuccessful in the lower courts and lodged a final appeal to the Supreme Court.

The Supreme Court

The Supreme Court has allowed the appeal. The Fees Order prevents access to justice and so must be quashed.  Lord Reed gave the leading judgment and the  key findings are as follows:

  • The constitutional right of access to the Courts is inherent in the rule of law. Bringing a claim before a Court or Tribunal is not simply a private activity and provides a broader social benefit.
  • The Employment Tribunal and EAT fees bear no direct relation to the amount sought and will therefore act as a deterrent to claims for modest amounts or non-monetary remedies. The Supreme Court focused on the evidence of a “dramatic and persistent fall in the number of claims brought in ETs, with a greater fall in the number of lower value claims and claims in which a financial remedy was not sought”. Fees were most frequently cited as the reason for not bringing a claim and hypothetical Claimants would have had to restrict expenditure on reasonable living standards in order to meet the cost of the fees.
  • The Fees Order is unlawful because it contravenes the EU law guarantee of an effective remedy before a Tribunal: it imposes disproportionate limitations on the enforcement of EU employment rights.
  • Lady Hale gave judgment on the argument that the Fees Order was indirectly discriminatory under the Equality Act 2010 because a higher proportion of women bring type B claims than type A claims. Lady Hale found the fees regime was indirectly discriminatory and was not a proportionate means of achieving the aims of the Fees Order.

Comment

Although the headlines may suggest removal of the fees regime in its entirety, this is unlikely to be the case. The focus of the judgment was on the disproportionality between the fees and the remedy sought.  It is likely that the Government will want to consult on a more proportional fees regime.

The Government has previously made a voluntary commitment to reimburse all fees if it is found to have acted unlawfully. The estimated fees raised since July 2013 are £32 million.  The logistical reality of such a repayment is not straightforward.  What about Respondents who have paid the fee as part of a remedy following a Tribunal claim?  Presumably Respondents who have paid the fee as part of a settlement payment will have no claim and Claimants will make a double recovery?

What about many thousands of potential Claimants who were deterred by the cost from issuing proceedings? Could they argue that it was not reasonably practicable to bring a claim because of the unlawful fees or that it would be just and equitable to extend time? Will time be extended to such an extent that claims can be brought under this heading?

Finally, we understand Employment Tribunals are no longer accepting fees in person and the online service has been updated to reflect this position.

We will keep you updated.

For more information please Get in Touch

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Legal news, views, trends and tools for HR Professionals. Stay ahead. Go further