Fees in the Employment Tribunals ruled unlawful by Supreme Court

A rise in Employment Tribunal claims, particularly low value claims, is anticipated as Tribunal fees are ruled unlawful.

The Supreme Court has unanimously decided to allow UNISON's appeal against the legality of the Employment Tribunal and Employment Appeal Tribunal fee system. The fees were introduced in 2013 with the aim of transferring part of the cost burden of the Tribunals from tax payers to users of the service, deterring unmeritorious claims and encouraging earlier settlement. Unless the criteria for remission were met, claimants were required to pay a fee on presenting their claim to the Employment Tribunal, and a hearing fee ahead of the claim being heard. For an individual, depending on the type of claim, this meant total fees of £390 (Type A claims – such an unlawful deductions from wages) or £1,200 (Type B claims – unfair dismissal, equal pay, discrimination etc.). Fees in the Employment Appeal Tribunal were £1,600.

The Supreme Court has ruled that the fees are unlawful under both domestic and EU law because they have the effect of preventing access to justice and the aims of the fee system do not justify this. The reduction in the number of claims by approximately 70% since the introduction of the fees was attributable to the fees being unaffordable for significant numbers of potential claimants. The system was also found to be indirectly discriminatory because the higher fees for Type B claims put women at a particular disadvantage because a higher proportion of women bring Type B claims, rather than Type A claims. The higher fees charges were not found to be a proportionate means of achieving the stated aims of the fee system. Meritorious, as well as unmeritorious claims might be deterred by the higher fees and no correlation was found between the higher fee and the merits of the case or incentives to settle.

Since the fees were unlawful at the time they were introduced, the Supreme Court has ruled that they must be quashed. The Government will need to refund millions of pounds worth of fees paid by Claimants since the fees were introduced in 2013. It is not yet clear how this will work in respect of those cases where the Respondent was ordered to reimburse fees to the Claimant.

With immediate effect fees cease to be payable for new claims. Potential claimants who did not bring a claim because of the fees and whose claim is now time barred may seek to bring claims arguing that it would be just and equitable for the tribunal to extend the time limits.

For employers, this could mean an increase in employment claims in particular those which are low value including working time rights like holiday pay and unpaid wages claims.

Employers should therefore evaluate the risks associated with HR issues, including the potential of low value claims. Having well drafted documentation and policies is important, and following appropriate procedures will also help to reduce employers' risks.

For more information or advice please contact Jane Amphlett or Sam Murray-Hinde, partners in the employment team.

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About Howard Kennedy

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