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Supreme Court decides that Employment Tribunal Fees are unlawful

UK Pound coins sitting on a Ten Pound Note Print publication

09/08/2017

In a landmark decision, the Supreme Court has ruled that Employment Tribunal fees are an unlawful barrier to access to justice. Claimants will no longer have to pay any court fees to bring or pursue Employment Tribunal claims or appeals to the Employment Appeal Tribunal. In addition, any fees paid since 1 July 2013 will be reimbursed. This decision comes as a surprise to many, after the original challenge to the fees was rejected at each earlier stage of the court process, including by the Court of Appeal.

What fees were payable?

Since July 2013, fees have been payable to bring claims in the Employment Tribunal and appeals to the Employment Appeal Tribunal. The level of the fees payable by Claimants ranged from £390 for simple claims (such as claims for unpaid wages) to £1200 for more complex claims (including unfair dismissal and discrimination complaints). Additional fees could also be payable by either party during the Tribunal process, including fees for reconsideration of judgments and for judicial mediation. The fee to appeal any Tribunal decision to the Employment Appeal Tribunal was £1600. If a claim or appeal was successful, the losing party would normally be ordered to pay any fees paid by the winning party as part of an award.

The Tribunals did operate a fee remission system for individuals on low incomes, however the process of applying for a fee remission was complex and the majority of former employees did not qualify for remission.

What did the Supreme Court decide?

The Supreme Court decided on 26 July 2017 that Tribunal fees amount to an unlawful barrier to access to justice. The Supreme Court noted that the introduction of fees in 2013 caused a “dramatic and persistent” fall of around 70% in the number of tribunal claims brought. The drop in claims was even more pronounced in low value claims because the Tribunal’s fees were disproportionate to the losses claimed.

The ruling means that:

  • claimants will no longer have to pay to issue a claim or to have their claim heard by a Tribunal; and
  • claims can now be brought for free and any fees paid since 2013 will be reimbursed.

The government’s Justice Minister stated: “We will take immediate steps to stop charging fees in employment tribunals and put in place arrangements to refund those who have paid.” However, the administrative process for reimbursing the £32 million in fees paid since 2013 has not yet been announced.

What does this mean for employers?

The removal of Tribunal fees is likely to lead to an increase in the number of claims brought because claimants will no longer have to pay a Tribunal fee to issue a claim. Whilst few believe that the number of claims proceeding to tribunal will return to pre-2013 levels, employers should be aware they could face a rise in claims in the coming months. We are likely to see greater numbers of claims that are low financial value, where the fees payable were disproportionate to the amount at stake.

There is also a risk that claimants could argue that the fees had ‘prevented’ them from bringing claims within the normal Tribunal time limits. We may see cases where the Tribunal may give claimants more leeway on time limits, if they can provide evidence of extremely difficult financial circumstances. The obvious problem for employers is that they may be prejudiced if they have to deal claims which relate to facts which took place some time ago, particularly if key witnesses are no longer available to provide evidence.

The Tribunal system’s resources have been reduced since 2013, due to the drop in claims and any significant increase in claims is likely to lead to delays in processing and handling claims.

The silver lining is that we envisage that any tribunal fees that have been paid by employers should also be reimbursed (e.g. fees for judicial mediation). The details for how this will happen have not yet been announced, please refer to our website at www.walkermorris.co.uk for the latest updates.

Is the decision final?

The government has stated that it accepts the Supreme Court’s ruling and will make arrangements to refund the £32 million of fees that have already been paid. However, the Supreme Court’s decision does not mean that any future tribunal fees would be unlawful.

The government could in future seek to introduce an amended Tribunal fees regime, provided that it takes account of the Supreme Court’s concerns regarding access to justice. The Supreme Court said in its judgment that: “In order for the fees to be lawful, they have to be set at a level that everyone can afford…”.

What should employers do now?

If you have paid any Tribunal fees in relation to claims, we recommend that you ensure that you have your records ready for when the refund arrangements are announced.

If you have any questions about this article please contact David Smedley or Andrew Rayment.

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