3 August 2017

Employment Tribunal Fees are Unlawful

Unison’s long running judicial review challenge over the Government’s introduction of tribunal fees was heard on 26 July 2017 by the Supreme Court.  The Supreme Court ruled that tribunal fees are unlawful and will be quashed.

The Supreme Court accepted the purpose behind charging fees was legitimate; fees paid by litigants can be a justifiable way of making resources available for the justice system and so securing access to justice.  However, the Supreme Court held that the Lord Chancellor cannot impose whatever fees he chooses in order to achieve this purpose.

The Supreme Court noted a contrast between the level of fees in the tribunal, and the small claims court where it is much cheaper to bring a claim for a small sum of money.  The Supreme Court held that in order for fees to be lawful, they need to be set at a level that everyone can afford, and the evidence before it led the Supreme Court to conclude that this had not been met.  They cited the substantial drop in claims as evidence of this and held that tribunal fees effectively prevent access to justice.

What does this mean?

The Supreme Court made it clear that all fees paid between 2013 (when the fees regime was introduced) will have to be refunded by the Lord Chancellor’s Department.  The Lord Chancellor’s Department quickly agreed to do so. This is not a straightforward exercise as in many successful claims the employer would have been ordered to pay the fees.

With the introduction of fees, some employers made commercial and tactical decisions about how closely they followed a procedure when dismissing and whether or not to enter into settlement negotiations if an employee contacted ACAS as part of the pre-claim conciliation process.  Some of these tactical decisions will fall by the wayside, as there is now a greater likelihood that employees who are dissatisfied will bring tribunal proceedings.

Following the judgment, there has been some discussion about the possibility of tribunal claims being commenced in respect of matters which are out of time, with individuals claiming that it was not practicable to lodge a claim in time as they were deterred from lodging a claim by the unlawful fees regime.  It is too early to say how tribunals will handle applications to extend time on this basis, but it is expected that there will be a number of test cases on this point.

Although tribunal fees have been held to be unlawful, it is unlikely that the fees regime will be abolished entirely.  It is likely that the Government will issue a consultation paper on a new fees regime, with the possibility of fees at a lower level and/or involving a fee payable by the employer when the employer lodges its ET3.  We will update you with any developments on this.

If there is anything we can do to assist on tribunal claims or any aspect of employment law, please contact Tina Maxey at tina.maxey@hayes-storr.com or on 01328 863231.

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