Supreme Court quashes employment tribunal fees regime

In what must surely be one of the most momentous employment law decisions of all time, the Supreme Court has this morning upheld Unison’s long running judicial review application and ruled that the employment tribunal fees regime is unlawful. 

The Supreme Court held that the statutory order which introduced the fee system was not a lawful exercise of the Lord Chancellor’s statutory powers, because the requirement to pay tribunal fees unjustifiably interferes with access to justice, frustrates the enforcement of employment rights, and discriminates unlawfully. 

The Supreme Court noted that the proven impact of the fee regime being introduced has been a dramatic and persistent fall in the number of employment tribunal claims, with lower value claims and claims for non-financial remedies falling the greatest.

Access to justice

On the access to justice point, the Supreme Court held that to be lawful any fees must be reasonably affordable for those on low or middle incomes. The level that the fees are currently set at means that claimants need to restrict their ordinary and reasonable living expenses (such as their housing, heating and food costs) to be able to afford to bring a claim; it is not reasonable to expect them to do so. Further, because the level of the fees bears no correlation to the value of the claim, this acts as a deterrent to claims for modest amounts or non-monetary remedies.

Disproportionate impact and discrimination

The Supreme Court held that, although the Lord Chancellor did have legitimate aims in introducing tribunal fees, the fee regime was not a proportionate means of achieving those aims. The fee regime imposes disproportionate limitations on the enforcement of EU employment rights (such as working time restrictions).

The Supreme Court also held that the fee regime is indirectly discriminatory against women, because more women than men bring ‘Type B’ claims for which the highest fees are payable. The charging of higher fees for these claims was not a proportionate means of achieving the Lord Chancellor’s stated legitimate aims, because the higher fees acted as a deterrent to meritorious claims.

What does this mean in practice?

• The employment tribunal fees regime is unlawful and quashed with immediate effect
• No further tribunal fees will be payable in respect of new or pending claims
• The Lord Chancellor gave a binding legal promise to refund any tribunal fees paid previously and this reimbursement process should now begin
• We await the Government’s response to this decision, however, any attempt to pass an act of parliament to re-introduce tribunal fees may prove tricky given they are reliant on the DUP for a very slender majority and opposition parties are fairly unanimous in wanting reform or abolition of tribunal fees
• The number of claims will undoubtedly increase (although claims had dropped by around 70% and it may take some time for them to return to their former levels)
• Employers will possibly be more cautious in their handling of employment disputes – it will no longer be safe to assume that an employee will be unable to afford to bring a tribunal claim (a view that had encouraged a robust approach amongst many employers over recent years).