In a landmark and momentous decision that was handed down on 26 July 2017, the Supreme Court, in the case of R (Unison) v Lord Chancellor (2017), unanimously found that fees imposed under the Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013 (‘Fees Order’), in respect of proceedings at the Employment Tribunal (‘ET’) and at the Employment Appeal Tribunal (‘EAT’), prevent access to justice and is unlawful.
The immediate effect of this decision is that fees cease to be payable in the ET and appeals to the EAT and fees paid in the past, amounting to £32 million, must be reimbursed by the Government.
Background
Fees were first imposed in the ET and the EAT by the Coalition Government in July 2013. The principal purposes of the Fees Order were to: (1) transfer some of the costs burden of operating ETs and the EAT to those who use the system; (2) incentivising earlier settlement of claims; and (3) disincentivising the bringing of weak or vexatious claims.
As an example, there was a Type B issue fee of £250 at the ET for bringing an unfair dismissal and/or a discrimination claim and a further fee of £950 for setting the matter down for a hearing. Therefore, the ET fees alone could be up to £1,200 for a claimant. In the EAT, fees of £1,600 were payable, again in two stages. Claimants and appellants could seek remission of fees if their disposable capital and gross monthly income were both less than specified amounts.
Notwithstanding the remission scheme, which had only marginal success, four years after the introduction of the Fees Order it was clear that there had been a significant and sustained reduction in claims being brought at both the ET and the EAT. Whilst the reduction is not wholly attributable to the Fees Order – the Acas Early Conciliation Scheme is also likely to have had an effect – the statistics are stark, there being a reduction of over 70% of claims being brought since the introduction of fees.
Political response
At the recent General Election in June 2017, there was some cross-party support for the abolition of the Fees Order. Labour, the Liberal Democrats, the Greens and the SNP all pledged that fees should be scrapped. The Conservatives mentioned nothing in their manifesto about fees, but the Government has admitted that the fall in claims was greater than was originally envisaged when the Fees Order was implemented. The Government’s voting partner, the DUP, was also silent on fees as the Fees Order did not apply to Northern Ireland.
Unison’s challenge to the Fees Order
The public service trade union, Unison, sought judicial review of the Fees Order on the ground that it unlawfully prevented or restricted access to justice. Unison sought to establish that the Fees Order was unlawful on one or both of two conditions: (1) there was a real risk that persons will effectively be prevented from having access to justice; and/or (2) the degree of intrusion is greater than is justified by the objectives which the measure is intended to serve. The Supreme Court decided in favour of Unison with both conditions being met in its favour.
Firstly, the evidence before the Supreme Court led to the conclusion that the fees were not set at a level that everyone could afford, even taking into consideration the availability of the remission scheme. The fall in the number of claims was so stark and sustained to enable the Supreme Court to conclude that a significant number of people would otherwise have brought claims, but did not as they found the fees to be unaffordable. It was decided that fees can prevent access to justice not only where they are unaffordable, but also where they render it futile or irrational to bring a claim, since many ET claims do not seek any financial award or seek only modest amounts.
Secondly, whilst the objective of transferring some of the cost burden to users had been achieved to some extent, it had not followed that fees which intruded to a lesser extent upon the right of access to justice would have been any less effective. Moreover, it had not been shown by the Government that less onerous fees, or a more generous system of remission, would have been any less effective in meeting the objective of transferring the cost burden to users. Further, in setting the fees the Government had failed to consider the public benefits flowing from the enforcement of rights which Parliament had conferred.
The decision of the Supreme Court was principally decided on domestic common law principles thus making it ‘Brexit-proof’. However, in addition, the Supreme Court found that the Fees Order breached the European Union’s (‘EU’) principles of effectiveness and effective judicial protection, imposing disproportionate restrictions for the purposes of EU law. Therefore, the decision under EU law chimed with that of domestic common law principles. In essence, the imposition of the Fees Order was unlawful both under domestic law and under EU law.
What’s next?
As previously stated, the immediate effect of this decision is that fees cease to be payable in the ET and appeals to the EAT and fees paid in the past, amounting to £32 million, must be reimbursed by the Government. It is highly likely that the number of claims in the ET and the EAT will increase, without the barrier of fees, particularly at a time of economic uncertainty. However, numbers may not increase to pre-July 2013 levels as the Acas Early Conciliation Scheme which, statistically speaking has had some success in resolving disputes, will remain in place.
In theory, the Government could, of course, come up with another system with perhaps greater emphasis on costs being met by employers rather than employees. However, such a suggestion appears unlikely for some time given the legal reasoning of the Supreme Court, the practical difficulties and priorities of the minority Government, and relative cross-party support for the abolition of fees. A new Fees Order would also likely threaten a fresh legal challenge.
Aside from the above, there remain a number of unanswered questions following this decision:
- It is currently unclear how claimants that have paid fees since July 2013 will recover their fees. Will users need to apply or will the Government process funds automatically?
- What about employers ordered to pay costs to winning claimants to reimburse them for the fees they were unlawfully required to pay? Will the employer be refunded by the Government? Or will employers have to ask for refunds from claimants once those claimants have been given their refunds?
- What about claimants who paid the fee, but then settled their claims? If they get a refund will the employers who settled be able to recover for that part of the settlement representing the fee? Will they recover it from the claimant or the Government?
- Will potential claimants who were deemed to have been unlawfully denied access to justice be able to sue the Government for the losses caused by their inability to bring a claim? Will they be able to submit late applications to the Employment Tribunal? How will Tribunals treat those applications?
- In view of the likely increase in the number of claims, will additional resources including financial, be needed to be transferred to the already over-burdened Tribunal Service and/or Acas early Conciliation Scheme?
Simply put, and aside from the extant practical questions arising, the Supreme Court in its judgment determined that where access to justice is blocked, society loses out. It again shows that an independent judiciary will, in specified circumstances, intervene to challenge decisions of the executive and defend the principles of the common law. In the employment context, where barriers are erected to enforcing workers’ rights, such rights are effectively worthless, and where employers know that claimants are unable or unwilling to bring claims, the whole system of employment protection is undermined.
For further information contact Andrew Masters, Partner & Head of Employment, on 01227 763939 or email asm@furleypage.co.uk
