26 July 2017

In 2013 the Government introduced a Fees Order which required the relevant party to pay a fee in order to proceed with their claim or appeal in the Employment Tribunal or Employment Appeal Tribunal. The aim of the new system was to try and balance the cost of the system to the users of it, to deter unmeritorious claims and to encourage settlement.

The Fees Order requires an issue fee to be paid when a claim form is presented to the Tribunal, and a hearing fee before the Hearing. The amounts depend on whether the claim is brought by a single claimant or a group, and whether the claim is classified as “type A” or “type B”. Type A claims are specified, and generally require little or no pre-hearing work and very short hearings. All other claims are type B, including unfair dismissal, equal pay and discrimination claims. For a single claimant, the fees total £390 for a type A claim and £1200 for a type B claim. In the Employment Appeal Tribunal fees are also payable in two stages, but without distinction between different types of appeal, or between single and group appellants. The Fees Order also makes provision for the full or partial remission of fees if a Claimant’s disposable capital, together with their partner’s, is below a specified amount (in most cases, £3,000). A fee may also be remitted if there are exceptional circumstances. A claim or appeal must be rejected unless it is accompanied by a fee or a remission application.

It had been argued that the Fees Order was not a lawful exercise of the Government’s statutory powers because the fees interfere unjustifiably with the right of access to justice under both the common law and European law, that they frustrate the operation of Parliamentary legislation granting employment rights, and discriminate unlawfully against women and other protected groups. Those arguments had been rejected in lower courts. However, today the Supreme Court unanimously upheld the appeal

In short the Fees Order has been held to be unlawful under both domestic and European law because it has the effect of preventing access to justice. Since it had that effect as soon as it was made, it was therefore unlawful.

The Supreme Court said that the constitutional right of access to the courts is inherent in the rule of law: it is needed to ensure that the laws created by Parliament and the courts are applied and enforced. Tribunals are more than merely the providers of a service which is only of value to those who bring claims before them. Under domestic law, the Fees Order is unlawful if there is a real risk that persons will effectively be prevented from having access to justice, or if the degree of intrusion into access to justice is greater than is justified by the purposes of the Fees Order. The Court decided that the prescribed fees bear no direct relation to the amount sought and amounted to a deterrent to claims for modest amounts or non-monetary remedies. The Court noted the evidence before it showed that the effect of the Fees Order was a dramatic and persistent fall in the number of claims brought, with a greater fall in the number of lower value claims and claims in which a financial remedy was not sought. Fees were the most frequently cited reason for not submitting a claim.

Looking at matters in the round the Court found that the fees cannot be regarded as affordable. Even if they were, they would prevent access to justice if they render it futile or irrational to bring a claim, for example where in claims for modest or no financial awards no sensible Claimant will bring a claim unless he can be virtually certain he will succeed, that the award will include recovery of fees, and that the award will be satisfied in full.

The Fees Order was also found to be indirectly discriminatory under the Equality Act 2010 because the higher fees for type B claims put women at a particular disadvantage, because a higher proportion of women bring type B than bring type A claims. The charging of higher fees was not a proportionate means of achieving the stated aims of the Fees Order. It had not been shown to be more effective at transferring the cost of the service from taxpayers to users, and in some type B cases (such as pregnancy dismissal) the higher fee did not correspond to a greater workload placed on the Tribunal. Further, meritorious as well as unmeritorious claims might be deterred by the higher price, and there was no correlation between the higher fee and the merits of the case or incentives to settle.

This is a judgment with massive ramifications. What is to happen to those who have paid fees to date? What about those who were deterred from bringing claims – can they now do so? How will the system work going forward? All these issues, and more, will require to be determined. This will be a complex matter that will have a major impact upon Tribunals and Tribunal users including Claimants and Respondents. Contact the BTO Employment Team if you wish to explore any of the above issues. We can help!

The judgement can be read here: https://www.supremecourt.uk/cases/uksc-2015-0233.html

Contact: David Hoey, Partner dho@bto.co.uk  T: 0141 221 8012