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Employment Fees Ruled Unlawful By Supreme Court

Lawyers Say Judgment Will Have Huge Ramifications

26.07.2017

David Shirt, Press Officer | 0161 838 3094

Unison has won a hugely significant victory in the Supreme Court today against the Government over controversial fees for taking claims to an employment tribunal.

Employment tribunal fees were introduced in 2013 with claimants being required in England and Wales to pay to issue a claim and pay a further fee shortly before the hearing.

These are banded into two groups: Type A claims cost £160 to issue a claim and £230 for the hearing fee (total £390) and Type B claims cost £250 to issue a claim and £950 for the hearing fee (total £1,200).  Many claims attract the higher fees such as the right to claim unfair dismissal and bring a discrimination claim.

The fall in the number of claims following the introduction of employment tribunal fees was immediate and dramatic.  Since fees were introduced there has been a 68% decline in the numbers of claims being issued and this figure has remained fairly static over the last four years.

In 2014, the public service union Unison brought judicial review proceedings against the government challenging the lawfulness of fees.  Its claim was dismissed by the High Court as being “premature” because there was a lack of evidence on the impact of ET fees on claims.

Unison appealed to the Court of Appeal and raised two key arguments:

1:The high level of ET fees prevented individuals or made it excessively difficult for them to access justice.

2: Type B fees indirectly discriminated against individuals with protected characteristics, particularly women.

The Court of Appeal rejected the appeal on all grounds.  It said that the huge decline in the numbers of people bringing ET claims was not enough to show that fees were unlawful.  Unison had relied on hypothetical comparators: the Court said that it needed evidence of real people who had been unable to bring proceedings.

With regard to the arguments about indirect discrimination, the Court said that women, when compared with all claimants issuing Type B claims, were not disproportionally affected.  There was no indirect discrimination and, even if there had been, it could be justified and was therefore not unlawful.

Unison appealed against this decision and the case was heard in March 2017.  The Equality and Human Rights Commission intervened in the proceedings and also raised legal arguments about the discriminatory impact of the fees.

Unison argued that the fees were ‘inefficiently high’ and this had suppressed demand.  It argued that lower value claims were particularly affected and that in many cases the fees exceeded the amounts in dispute.  It also said that many potential claimants were accepting a lesser settlement facilitated by Acas on the basis that a “bad deal is better than no deal”.

The Supreme Court has today unanimously ruled that the Government was acting unlawfully and unconstitutionally when it introduced the fees four years ago.

Unison said the Government will have to refund more than £27 million to the thousands of people charged for taking claims to tribunal since July 2013, when fees were introduced by Chris Grayling, the then Lord Chancellor.

Justice Minister Dominic Raab said: "In setting employment tribunal fees, the Government has to consider access to justice, the costs of litigation, and how we fund the tribunals.

"The Supreme Court recognised the important role fees can play, but ruled that we have not struck the right balance in this case. We will take immediate steps to stop charging fees in employment tribunals and put in place arrangements to refund those who have paid.

"We will also further consider the detail of the judgment."

Expert Opinion
“There will now be huge ramifications for the government, particularly because at the outset of Unison’s challenge, the Lord Chancellor agreed to repay all Employment Tribunal fees if the union was successful. It will take a while for the fee system to unravel and although technically no further fees are payable, in practice, the system has been set up so that claimants cannot actually issue their claim unless they have paid the fee or applied for remission.

“It is also extremely likely to result in an increase in the numbers of Employment Tribunal claims brought – although this might amount to a steady trickle to start with rather than a huge and immediate increase.

“One interesting point is whether employers who have been ordered to repay fees will also be able to recover their money. If the Lord Chancellor repays the claimant, he or she will then have to repay their ex employer. It will be interesting to see how this will be enforced and whether employers will bother to enforce it if the claimant keeps the money.”
Alan Lewis, Partner