Out-Law News 4 min. read

Supreme Court: employment tribunal fees 'prevent access to justice'

The introduction of fees to bring a claim in the UK's employment tribunals in 2013 breached both domestic and EU law, the UK's highest court has ruled.

In a unanimous judgment, the Supreme Court held that charging fees of up to £1,600 to bring a claim restricted access to justice. The fees were also indirectly discriminatory, because the higher fees for bringing more complex claims put women at a particular disadvantage, the court ruled. Women are statistically more likely to bring these claims, for example claims for pregnancy discrimination.

The government would now have to immediately stop charging fees, as well as refunding all fees paid since their introduction, according to employment law expert Linda Jones of Pinsent Masons, the law firm behind Out-Law.com.

"We would now anticipate an increase in employment claims being brought to tribunal," she said. "However, numbers may not rise to pre-2013 levels as there is still in place the early conciliation service through which Acas tries to resolve claims before proceedings are brought."

An increase in claims would also have a "big impact" on the employment tribunal service, which has reduced in size due to the decreased number of claims being brought as a result of the introduction of fees, Jones said.

"The employment tribunal service will currently be unequipped to deal with a steep increase," she said.

"Most businesses understand the importance of individuals having access to justice, and are more concerned about deterring unmeritorious claims. Part of the aim of the fees was to deter claims without merit, but today's ruling states that this hasn't happened. Businesses will now want to know what the government will be doing to help deter unmerited claims - which could include, for example, strengthening the power of the tribunal to strike out claims at an early stage if they are found to have little prospect of success," she said.

Employment tribunal fees were introduced on 29 July 2013, with the stated aims of transferring some of the costs of operating the tribunals from the taxpayer to those that use the service, encouraging earlier settlement and discouraging unmeritorious claims. Since then, parties have been required to pay an upfront fee to raise a claim, followed by a further 'hearing fee' once the case is referred to a tribunal.

Claims are subdivided into the administratively simple 'Type A' claims, with fees of £160 and £230 respectively; and 'Type B' unfair dismissal or discrimination claims, with fees of £250 and £950. Flat fees apply to employment appeal tribunal (EAT) cases. A remission system operated to exempt people on low incomes from having to pay the full fees, while the introduction of the new rules also coincided with a new requirement to attempt to resolve cases by way of free, mandatory conciliation via the government-backed Acas service before a case can proceed to tribunal.

UNISON, the trade union, began a legal challenge against employment tribunal fees in June 2013. Its challenge was dismissed by both the High Court and the Court of Appeal. However, the Supreme Court had the benefit of access to statistics showing a "dramatic and persistent fall" in the number of claims brought in employment tribunals since fees were introduced, including those in the government's own review report, published earlier this year.

"There is … no dispute that the purposes which underlay the making of the fees order are legitimate," said Lord Reed, giving the judgment of the court. "Fees paid by litigants can, in principle, reasonably be considered to be a justifiable way of making resources available for the justice system and so securing access to justice. Measures that deter the bringing of frivolous and vexatious cases can also increase the efficiency of the justice system and overall access to justice."

Lord Reed said that the fall of around 70% in the number of claims since the introduction of fees had been "so sharp, so substantial, and so sustained as to warrant the conclusion that a significant number of people who would otherwise have brought claims have found the fees to be unaffordable". This had happened "notwithstanding" the existence of the remission scheme, which was in any event "of very restricted scope". Even in cases where the fees were not unaffordable, they could still be preventing access to justice by "render[ing] it futile or irrational to bring a claim", the judge said.

"Many claims which can be brought in [employment tribunals] do not seek any financial award: for example, claims to enforce the right to regular work breaks or to written particulars of employment," he said. "Many claims which do seek a financial award are for modest amounts ... If, for example, fees of £390 have to be paid in order to pursue a claim worth £500 (such as the median award in claims for unlawful deductions from wages), no sensible person will pursue the claim unless he can be virtually certain that he will succeed in his claim, that the award will include the reimbursement of the fees, and that the award will be satisfied in full. If those conditions are not met, the fee will in reality prevent the claim from being pursued, whether or not it can be afforded," he said.

The court had not been shown that "less onerous fees, or a more generous system of remission, would have been any less effective in meeting the objective of transferring the cost burden to users". Nor had it been shown that the level of fees set by the government was necessary to achieve its other aims. At the same time, the government had not considered "the public benefits" of enabling individuals to enforce their domestic and EU employment rights via tribunals, he said.

In a separate judgment, with which all the judges agreed, future Supreme Court president Lady Hale considered the discrimination issues raised by the introduction of fees. She found that the higher fees payable for Type B claims in general, and discrimination claims in particular, had the potential to be indirectly discriminatory against women and other individuals with 'protected characteristics' under the Equality Act.

"[C]harging higher fees for Type B claims has not been shown to be a proportionate means of achieving the stated aims of the fee regime," she said.

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