Newsflash: tribunal fees unlawful – enormous impact

 

This development will have a seismic impact on the world of Employment Tribunal claims and employers’ employment law risks.

What do we already know?

We updated you in our June 2016 Newsflash Tribunal fees – another decision coming… that the Supreme Court was due to hear the appeal by UNISON against the Court of Appeal’s decision that Tribunal fees would continue.

The Court of Appeal decision not to declare the Tribunal fee regime unlawful is discussed in more detail in our September 2015 Newsflash Tribunal fees – decision time. It was not an easy decision for the Court of Appeal to make and it was “troubled” by the sharp decline in Tribunal cases thought attributable to the affordability of fees. However, the Court of Appeal held that UNISON’s appeal could not succeed because there was no evidence before the Court of the actual affordability of the fees in the financial circumstances of (typical) individuals and therefore on which it could form any reliable view about the frequency of such cases.

What’s new?

In an extremely important and historic decision – and arguably the most important employment law decision in our lifetime – the Supreme Court has allowed UNISON’s appeal against the Employment Tribunal fees rules.
The Supreme Court has ruled that Tribunal fees are unlawful and have struck them down, not just with immediate effect but also back-dated to their inception in July 2013.

The Supreme Court’s reasons for this decision include:

• Employment Tribunal claims are important for society as a whole, not just the individuals involved.
• Tribunal fees prevent access to justice (as evidenced by the sharp and sustained drop in the number of Tribunal claims and the hypothetical examples presented in evidence by Unison of how fees impacted on claimants in low to middle incomes).
• The Tribunal fees regime amounts to an unjustified limitation on the ability to enforce EU rights (i.e. those claims based on EU law), and are therefore unlawful under EU law.
• Tribunal fees do not appear to have improved the proportion of cases which have settled through ACAS.
• Tribunal fees are not justified as a necessary intrusion on the right of access to courts. (The Government had not produced evidence to show why the fees had been set at the level they had, and had falsely assumed that the higher the fee, the higher the revenue. This does not take into account that no revenue is generated if no claim is brought).
• The Government failed to show that fees met the other objectives for their introduction, such as deterring weak claims.
• Tribunal fees are indirectly discriminatory by charging higher fees for type ‘B’ claims (which include discrimination claims) than type ‘A’ claims.

Far-reaching impact of this decision

As of today, fees cease to be payable for claims in the Tribunals and in any appeals to the EAT.

Furthermore, all Tribunal fees paid in the past must be reimbursed by the Lord Chancellor’s Department. According to UNISON’s press release this will that the Government will need to reimburse approximately £27 million in fees.

This reimbursement will carry with it several problems. Claimants who have brought successful claims will have had an Order that the respondent employer needs to pay those fees as part of the award. This will mean that presumably the Government will need to trawl back through every single Tribunal judgment over the past 4 years. It presumably also means that a losing employer who has effectively reimbursed an employee for their fees should be able to claim that fee back. The question of whether claimants or respondents can claim interest will also need to be decided.

If that task seems daunting, it is relatively straightforward and minor compared to the potential for ‘historical’ claims that could now be brought by employees, going back to April 2013. If an (ex) employee can argue that they would have brought a claim but were put off by an unlawful ET fees regime then a Tribunal may be required to extend the time for such a claim to be commenced. Tribunals could be about to be deluged by new and backdated claims, which will be a massive challenge for employers, employment lawyers and the Tribunal service (which has undergone major cuts in its Employment Judges and admin staff as their work has declined in the last 4 years).

The Supreme Court judgment does not mean however that we won’t ever see any Tribunal fees again. What we do know is that there are no fees until further notice (we will of course keep you updated on this important subject) and given the clear message in the judgment if Tribunal fees are introduced again they are likely to be set at a much lower level than they were at up until this morning.

There is a lot to digest from this historic decision and we will do some more detailed analysis as the dust starts to settle in our next newsletter, and indeed in future newsletters

In any event it’s all change and please do contact Luke Menzies or any member of the team on 0117 325 0526 if you would like advice on what this means for you.