Supreme Court rules Employment Tribunal fee regime unlawful

The Supreme Court has today handed down a unanimous judgement declaring the Employment Tribunal fees regime introduced in July 2013 unlawful on the grounds that it restricts access to justice, contrary to both common law and European Union legal principles.

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The trade union UNISON began judicial review proceedings in 2013 to challenge new government regulations introducing fees in the employment tribunal system on the “user pays” principle.  For the most part fees are payable by the claimant and although a remission scheme was put in place for those without the means to pay the result was a dramatic and lasting drop in the number of claims lodged in the employment tribunals the employment tribunals.

The Supreme Court has now accepted arguments that were rejected by three lower courts, namely that the fee regime breaches both European Union and ancient common law principles which require that individuals are afforded effective access to justice. Although the Court accepted that the government’s aims in introducing fees were legitimate, fees had to be set at a level which was affordable to all (taking account of remission schemes).  On the evidence the Supreme Court decided this was not the case.

What happens next?

·         The Orders that imposed the employment tribunal fee regime are quashed with immediate effect, meaning that for the moment no fees can be charged by the employment tribunal service

·         It is open to the government to introduce new legislation regarding fees, although bearing in mind the Supreme Court decision it is likely that it would only do so by Act of Parliament, rather than relying on secondary legislation as it did in 2013

·         In July 2013 the then Lord Chancellor gave an undertaking that if the judicial review of the fee regime was ultimately successful then all fees paid would be reimbursed.  After almost four years in operation and many thousands of employment tribunal claims this is likely to take some considerable time to unravel

·         Some commentators have suggested the possibility of legal action against the government for compensation by individuals who were put off making claims. Although this cannot be ruled out, there would be a number of significant hurdles, including proving that it was indeed the fee regime that prevented a claim being brought and assessing the odds that any such claim would have succeeded in any event.

Can we expect claims in the employment tribunal to rise to pre-2013 levels?

In the short term there is very likely to be a rise in employment tribunal claims, however since evidence suggests that the fee regime has primarily been a barrier to low value claims of just a few hundred pounds for e.g. deductions from wages, it is possible that many of these claims will be dealt with via the process of mandatory Acas pre-claim conciliation which was introduced shortly after the fee regime.  Given the costs of defending a claim employers will have an economic incentive to try and settle small claims without proceedings starting, particularly if, as some commentators suggest, the government seeks to shift the fee burden in the employment tribunals from employees to employers rather than employees going forward.

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This news item is not intended as a comprehensive summary of the subject matter and does not constitute legal advice. Parties are advised to obtain professional advice addressing individual facts and circumstances before acting on this information.

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