The Supreme Court has upheld UNISON's appeal against the lawfulness of employment tribunal fees which were introduced in 2013.
The Supreme Court found that the fee structure not only prevented access to justice but was also discriminatory. This article looks at the judgment and considers what next for fees.
Before 2013 the employment tribunal service was free to use, apart from any legal fees incurred by either party. In 2013 the government introduced a fee structure with total fees of £390 payable for a less complex (unlawful deduction from wages and similar) Type A claim and £1,200 for a Type B (such as unfair dismissal and discrimination) claim. The aim of the government was to transfer the cost of the tribunal system to those that used it, to incentivise parties to settle disputes and to deter claims with little or no merit. The level of fees is dependent on the complexity of the claim, which the Supreme Court noted was different to the county court system where fees increase with the value of the claim. It also noted that tribunal fees, particularly for a Type B claim, are significantly higher than the county court fees when the value of compensation awarded is taken into account.
A remission scheme was introduced for those who cannot afford the fees. That takes into account the claimant and partner's disposable capital as well as their income. No remission is given to claimants with more than £3,000 in disposable capital or income in excess of £1,705 per month. The Supreme Court noted that no account is taken of any temporary increase in disposable capital, so if a claimant was made redundant and received a redundancy payment of more than £3,000 they would be liable to pay fees, at least in respect of the issue fee.
The Supreme Court considered that the fees were unlawful and so must be scrapped.
The decision was based on evidence presented that the fee system had the effect of denying many employees access to justice. The evidence given to the Supreme Court showed that there had been a persistent and dramatic decline in the number of employment tribunal claims brought. The evidence showed a decrease of between 66 - 70% since fees were introduced. This was particularly noticeable in respect of lower value claims, and the fact that the employment tribunal claims are based on complexity and not value was highlighted. The Supreme Court also noted that not all employment tribunal claims result in a financial award, for example, a claimant can bring a claim asking for a declaration of contractual terms.
The Supreme Court worked through a number of examples and took note that a couple earning the National Living Wage would generally exceed the level of income for remission, although may be eligible for partial remission on the hearing fee for a Type B claim. The Judges concluded that the fees were unaffordable unless claimants reduced spending which was 'ordinary and reasonable for maintaining living standards' and that it was unreasonable for claimants to reduce necessary spending.
The Supreme Court also looked at claimants' ability to recover fees. It accepted that in the majority of cases in which a claimant was successful, the respondent employer was ordered to pay the fees as part of the compensation awarded. However, evidence showed that only 53% of claimants were paid all or any of their compensation before they were forced to take enforcement action which again incurs fees. Of those claimants who chose to enforce through the courts, 49% were paid in full, 16% in part and 35% received no money at all.
Finally it was decided that the fee system was discriminatory against women. The evidence showed that more women than men were likely to bring a Type B claim given that sex and maternity/pregnancy discrimination claims are both Type B. UNISON presented evidence to show that 54% of Type B claims are brought by women. Therefore, the effect of the higher fee put women at a disadvantage when compared to men. Lady Hale considered that this was not capable of justification i.e. it was not a proportionate means of achieving a legitimate aim.
What next for fees?
Firstly the tribunal system faces the daunting task of ensuring no more fees are paid which will involve substantial changes to the claim processing system. It also has to repay the £27 million in fees that have been paid since 2013. This is complicated by the fact that many respondents will have paid the successful claimant's fees as part of the compensation package.
Fees are now scrapped and will not be payable on any claims made going forward. However, it is likely that the government will now review the fee system and introduce a new system taking into account the points raised in the judgment. It could choose to link fees to the value of the claim, reduce fees or force respondents to pay fees when they file a response to a claim.
One question which will need to be answered is whether any claimant can successfully argue that it was not reasonably practicable for them to present a claim where they were prevented or put off from doing so because of the fees that they would incur. If successful, that would open up a whole new can of worms and potentially leave respondents having to defend claims dating as far back as 2013.
This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.