Employment Tribunal Fees Declared Unlawful

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Employment Tribunal Fees Declared Unlawful

So, where are we now?

If you know me, you will know that I was fully in favour of the introduction of Employment Tribunal fees in July 2013 and hoped to see a system that would weed out claims with no merits brought at no cost by sometimes unscrupulous Claimants – at times assisted by equally unscrupulous claims handlers. 

However, you will also know that it very quickly became apparent that the Employment Tribunal fees were too high and had gone far beyond causing an unscrupulous Claimant to pause before commencing a claim and had instead prevented access to justice for a high volume of would be Claimants who were left with no means of standing up for their rights. 

For a period of three months in 2015, I recorded details of all individuals who contacted me to discuss a potential claim in the Employment Tribunals and found that the vast majority appeared, at first glance, to have genuine grounds for a claim but felt unable to pay the Employment Tribunal fees. ACAS published its own research in 2015, consistent with mine, which showed that more than two thirds of people who were unsuccessful at resolving their dispute through conciliation did not go on to issue a claim because they could not afford the fees. 

I submitted my data to the Justice Committee's Inquiry on Courts and Tribunals Fees and Charges in August 2015 and, in November 2015, I was one of ten experts invited to the Houses of Parliament to give additional evidence to the Committee in person. 

For the most part, the other experts and I were consistent in expressing our concerns that the fees were too high and created a barrier to justice. A number of my peers sought removal of the fees in their entirety, whereas I favoured a greatly reduced fee. The Justice Committee’s report recommended a substantial reduction to the level of the fees and I was hopeful of a move towards a more balanced system. However, after many months of waiting, on 31 January 2017 the Ministry of Justice rejected the Justice Committee’s recommendations and Employment Tribunal fees looked set to continue. 

Not so. UNISON have fought tirelessly to challenge the Employment Tribunal fees. They brought claims in the High Court, which were rejected and appealed to the Court of Appeal. In a surprising judgment, the Court of Appeal held that although there was evidence of a dramatic and sustained decline in the volume of claims being brought in the Employment Tribunal (the decline has been approximately 70% when comparing pre July 2013 to post July 2013) this did not in itself mean that would be Claimants could not afford the fees and were therefore denied access to justice. UNISON appealed to the Supreme Court which, on 26 July 2017, four years after the introduction of Employment Tribunal fees and after almost four years of legal proceedings by UNISON, issued a unanimous judgment declaring the current system of Employment Tribunal fees to be unlawful. 

This, for me, is welcome news.

The Supreme Court’s judgment includes the following principal points:

  • Access to the courts is fundamental to maintaining the rule of law. The courts cannot ensure that laws are followed if people are prevented from accessing the courts to enforce those laws. Further, access to the courts is not merely a private benefit to the individual Claimant because a judgment in one case may create case law that can be relied on by others and therefore has a wider social and legal benefit.
  • The “sharp, substantial and sustained” fall in the volume of Employment Tribunal claims is indicative that a number of would be Claimants found the Employment Tribunal fees to be unaffordable. In most cases, claims are brought due to circumstances rather than choice (e.g. the Claimant finds themselves unfairly dismissed or the victim of discrimination) and so the drop in claims is indicative of more than a mere change in consumer behaviour.
  • Even where a would be Claimant could afford the Employment Tribunal fees, it may be irrational for them to bring their claim where the fees are disproportionate to the value of their claim. For example, the fees for pursuing a non-payment of wages claim would total £390 and so a person owed £500 would be unlikely to pursue their claim. The Council of Employment Judges and the Presidents of the Employment Tribunals gave evidence that there had been a greater than 70% fall in lower value claims such as claims for unpaid wages.
  • Employment Tribunal statistics show that there are proportionately more unsuccessful claims now than there were before the introduction of Employment Tribunal fees, which indicates that the goal of deterring claims with no merits has not been successful. If it had, the proportion of successful claims would have increased.
  • The Supreme Court did not accept the Lord Chancellor’s argument that low to middle income households could afford the Employment Tribunal fees if they sacrificed all spending on clothing, personal goods and services, social and cultural participation, and alcohol over a period of time. (Depending on the household, the period of time may well be longer than then three month statutory time limit for bringing most claims). The Supreme Court held that if households can only afford the fees by sacrificing the ordinary and reasonable expenditure required to maintain an acceptable standard of living then the fees cannot be regarded as affordable.

So, now what?

The Employment Tribunals have already stopped taking fees. Any person wishing to bring a claim in the Employment Tribunals over coming weeks and months will not be charged a fee for doing so. 

We may see a flurry of claims coming in from staff who have been dismissed or discriminated against in the last three months or suffered a breach of contract or failure to pay redundancy pay in the last six months. We may also see Claimants seeking permission to bring older claims that should be out of time on the basis that they were not financially able to bring their claims earlier. 

In the longer term, it seems likely the Employment Tribunal fees will be reintroduced but this should be at a substantially reduced rate. I am hopeful that we will see fees that require a Claimant to invest a small stake in their claim, but ensure access to justice by limiting fees so that that stake is proportionate to both the Claimant’s means and the value of their claim. 

Justice Minister, Dominic Raab, has announced that fees collected since July 2013 will be reimbursed. It is not clear how this will work, particularly in cases where the Claimant’s claim was successful and so their fees were reimbursed by the Respondent. 

If you’re concerned that you may be facing a claim as we go through this changing period, please let me know and we can carry out a risk assessment and look at your options.

All the best, Kate

Kate Booth, Employment Law Partner

Posted Monday 7th of August 2017

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