Employment Tribunal Fees declared unlawful on 26th July 2017!

Tribunal Fees declared unlawful

Tribunal Fees declared unlawfulHere we look at How and Why Tribunal Fees were ruled unlawful on 26th July 2017 and what may happen next:

On 26th July 2017, the UK Supreme Court made the momentous decision that the UK’s employment tribunal fee regime (Fees Order 2013), that had been in place since July 2013, was unlawful and discriminatory (in R (on the application of UNISON) v Lord Chancellor 2017).

Over 4 years, Unison, backed by the Equality and Human Rights Commission, challenged the Tribunal Fees, arguing that with tribunal claims falling by 70% during the period, the fees prevented access to justice.

Finally, the Supreme Court agreed and ruled that the current fee regime is unlawful in terms of both domestic and EU law, as the fees were not set at an affordable level and were effectively preventing access to justice, and that they imposed unjustified limitations on the ability to enforce EU rights. They were also indirectly discriminatory against women wanting to make a discrimination claim, as most people who make such a claim are predominantly female (discrimination claims fell by 83% over the same period). Tribunal Fees declared unlawful

Lord Reed of the Supreme Court commented that “Employment Tribunal’s are intended to provide a forum for the enforcement of employment rights by employees and workers, including the low paid, those who have recently lost their jobs, and those who are vulnerable to long term unemployment. They are designed to deal with issues which are often of modest financial value, or of no financial value at all, but are nonetheless of social importance”.

The Courts commented further about:

Affordability: While the Government had argued that individuals on low or middle incomes could reduce ‘non-essential’ spending (e.g. clothing, personal goods, social spending) to pay their tribunal fees, the Court said that individuals must be able to reasonably afford fees; and that if households could only afford them by not spending on ordinary and reasonable expenditure for long periods of time then this was not affordable and was therefore not lawful.

The large fall in the number of lower value claims (e.g. for unpaid wages, unpaid holiday, lower value discrimination claims); here the Court found that the fees made it futile or irrational to bring a claim (e.g. the fee was higher than the amount being claimed). The Court found that if it became futile or irrational to bring a claim then this was an issue about access to justice.
Tribunal Fees declared unlawful
Individuals must be able to enforce their rights:
if an individual could not afford to make a claim, or if making that claim would be futile or irrational, then this made their employment rights meaningless (as employers need to know that there can be a remedy against them if they fail to meet their employment obligations).

So what happens now Tribunal Fees have been declared unlawful?

  • The Justice Department stopped charging fees immediately and changed their website to remove all reference to fees.
  • The decision was an English case but will have an impact on Scotland (although Scotland will be getting the power to manage tribunals soon, and had already said they would remove tribunal fees; they may do something different from England in the future).
  • It is estimated that between £27-32 million in fees had already been paid by individuals, and these fees WILL be repaid to all the individuals involved (the government had previously promised they would repay fees if the system was ever found unlawful). How and when this is going to happen we don’t yet know, as it will be complex (especially where a settlement agreement has been negotiated after fees have been paid). Expect guidance from the Ministry of Justice in due course and confusion….!
  • You can read about the initial phase of the Tribunal Fee Refund Scheme that was launched on 20th October 2017, here.
  • A replacement fee scheme is possible – the judgement found that the existing fee rates and structure were unlawful; it did not find that ANY fee regime would be unlawful. The Government had argued that while fees may have discouraged claims there was no conclusive evidence that they had prevented claims. But the Court said that Tribunal fees did not bear any relation to the value of the claim (unlike court fees for small claims in the Civil Court).. So….. expect Fees Mark 2? And perhaps this time the Government may implement any new fee regime through an Act of Parliament rather than by an Order that can be challenged in Court (which does mean it would need to be debated and approved by Parliament).
  • A big question mark hangs over whether individuals who did not bring claims during the existence of the fee regime (and so who would be generally ‘out of time’ to bring any claim), can now show that the reason they did not bring their claims before was solely because of the fees, and so they should be allowed to bring a claim now. Such claims may succeed if they can show they have evidence that the fee really did prevent them bringing a claim previously (from correspondence with Acas, a laywer etc).…. so Employers needs to be aware of this possibility for individuals/cases they thought were long ‘closed’ and over. Update… and in August 2017 the first case of this type appeared! In Dhami v Tesco Stores Ltd, Dhami had previously bought a discrimination claim against Tesco but when her fee remission application was rejected and she did not pay the Tribunal fee, her case was thrown out. Dhami made a second claim which Tesco argued should be declined but the Tribunal agreed with Dhami and granted her an extension of time (Dhami argued that the rejection of her original claim was now unlawful and the time limit should be extended under the Equality Act to allow her claim). The Tribunal said it was significant that the non-payment of fees was the reason for her original claim not being able to proceed
  • It is very likely that there will be a rise in the number of employment tribunal claims immediately and possibly an emboldened Trade Union movement! So it is important Employers manage any issues/dismissals/discrimination problems in the proper way, using adequate procedures, as you now cannot rely on your instinct that your employee will NOT take you to Tribunal as they cannot afford the fees. (The current ET Procedures already have mechanisms in place, to weed out vexatious claims that have little chance of success; this was one of the Government’s original concerns).
  • In April 2018 it was confirmed that Tribunal claims have risen by 90% since the abolition of the Fee, in figures released by the Ministry of Justice from the last quarter of 2017.
  • Another large question mark, is over the role of Acas and it’s mandatory pre-claim conciliation process going forward. Pre-Claim Conciliation was introduced on 6th May 2014 and means that all individuals intending to make a tribunal claim need to contact Acas first, with a view to Acas conciliating between the parties and coming to an agreement (a settlement etc.) to keep the case from going to Tribunal. However, currently there is no requirement for either party to ‘engage’ meaningfully in the process. For Employers this means they would know they had a potential claim coming because they are contacted by Acas, and could then make a decision as whether to engage in the ‘conciliation’ process and resolve/settle the issue before it reached Tribunal. But, without fees, individuals may simply ask the process to be concluded immediately to gain their Certificate to proceed to a Tribunal case. The general consensus is that Conciliation will continue, but that perhaps there may be some changes to the process. The Supreme Court commented that resolution of cases by settlement or mediation can only work fairly if individuals have the option of proceeding to a tribunal, otherwise the employer will be in a stronger position during any negotiations.

You can read more details about Employment Tribunals and Acas Conciliation here.

Please let me know if you have any questions!Tribunal Fees declared unlawful