HM Insights

Employment Tribunal fees ruled unlawful – employees now don't have to pay fees to make a claim

With the dust settling after the Supreme Court decision ruling employment tribunal fees as unlawful, our specialists take a closer look at the decision and the implications for employees and employers.

Employment Law Tribunal Fees Banned Abolished Lawyer Scotland

The Supreme Court's ruling

Described by Dave Prentis, the general secretary of Unison, as "the biggest victory in a court in British employment history" but by the Institute of Directors as "opening the door to a spike in malicious or vexatious claims", the unanimous decision of the seven judges in the Supreme Court was a resounding rejection of the fees that had been in place in the employment tribunals since 2013. These issue and hearing fees of up to £1200 payable by claimants (with certain, limited, exceptions) have led to a statistical reduction of approximately 70% in employment tribunal claims.

Although there has been in place a remissions regime which can reduce or remove the requirement to pay fees and it has been the practice of the employment tribunal to order the respondent to pay a successful claimant's fees, this was not judged sufficient to mitigate the detrimental impact that the introduction of the fees have had on access to justice.

Rather, a pointed judgement by Lord Reed made reference to the Magna Carta which expressed the right of access to courts as a central tenet of English law.

The fees fettered this right of access, and, in light of the deterrent effect they had on potential claimants, it could not be said that they had been set at an appropriate rate. With no guarantee of success, individuals might have to pay more in fees than their claim was worth. This could not be seen as proportionate and was therefore contrary to both domestic and EU law, given it imposed disproportionate restrictions on the exercise of EU derived rights.

Lady Hale went on to consider the indirect discrimination argument, in that discrimination claims were categorised as part of the higher fee regime and a higher proportion of women bring discrimination claims. It therefore followed that women were placed at a particular disadvantage compared with men and this could not be justified by the Government.

In short, this was a decision where the Supreme Court reminded the Government that it was there to hold the Government to account, and it did so in dramatic fashion.

Implications of the tribunal fees decision – the task of paying back

The decision means that tribunal fees cannot now be charged and have been ruled unlawful for their entire period of existence. The immediate implications for prospective claimants and respondents are relatively straightforward – no fees will be charged for either issuing claims or for access to a hearing. We will have to await the statistics in due course to see if this restores tribunal claims to their previous numbers.

It is, though, less straightforward for the Government. It's been left with a severe headache regarding one of its flagship "business friendly" policies and the tribunal system has been left with a number of practical problems.

Although it appears that the online system is back up and running (after some maintenance to remove references to fees), that deals with only new claims. There is the minor matter of the estimated £27 - £32 million pounds of fees charged during the period of operation, which will require to be refunded.

This will be no small operation. Some refunds may be straightforward, but what about when an insurance company has paid fees on behalf a claimant, which is not uncommon. The tribunal will not necessarily have a record of this and who to refund. What about if a claim has been successful and the respondent has paid the equivalent of the fees to the claimant? Will all judgements have to be sifted through to ascertain this? A further complication is if the award has not been honoured by the respondent – again, the tribunal may have no record of this.

We've been told by the tribunals that full details of the refund scheme will be announced "in due course". For a system affected, like many others, by public sector budget cuts, the administration of this scheme – together with the likely parallel increase in claims - will no doubt prove challenging to manage.

For employers in Scotland, the SNP Government had previously stated that it was committed to removal of employment tribunal fees, given the devolution of the tribunal system. As such, it is difficult to see any adapted fees regime being re-imposed in Scotland. There remains a chance it could be considered in England and Wales, but with Brexit looming large on the horizon, it is likely that it is not at the top of the agenda.

Get in touch

We will keep you updated as to ongoing developments, but if you want to discuss how this judgment impact you or your business, please contact one of the employment team.