UK Supreme Court Rules Employment Tribunal Fee Regime Unlawful

by McDermott Will & Emery

McDermott Will & Emery

In Depth

In a significant judgment delivered on 26 July 2017, the UK Supreme Court found that the employment tribunal fees regime introduced in 2013 is unlawful and quashed it with immediate effect.

The Court concluded that the level of fees was unaffordable to a significant number of claimants who would otherwise have brought claims, and was therefore effectively preventing access to justice.

The judgment increases the likelihood of employment claims being brought in the future and is of significance to all organisations employing staff in the United Kingdom.

Recap: The UK Employment Tribunal Fees Regime

Employment tribunals are the only forum in which many employment-related claims, such as the right to protection from unfair dismissal, can be litigated in the United Kingdom. Historically, claimants could bring proceedings before an employment tribunal without paying any fee.

A fees regime was introduced on 29 July 2013. The UK Government stated that this was primarily driven by a desire to transfer some of the cost burden for the tribunal system from taxpayers to tribunal users. It was also anticipated that fees would prompt earlier settlements and disincentivise weak or vexatious claims.

Most notably, the regime required employment tribunal claimants to pay fees of up to £1,200 in order to bring a claim, comprising an “issue” fee of £250 on filing their claim form and a “hearing” fee of £950 shortly before the final hearing. The exact level of fees payable has varied, depending on the number of claimants and complexity of the particular claim, subject to a remissions system based on certain affordability tests.

What Did The Supreme Court’s Judgment Relate to?

Following what it claimed to be a dramatic decrease in the number of employment tribunal claims being brought as a consequence of fees, the trade union UNISON sought a judicial review of the regime, arguing that fees unjustifiably interfered with the right of access to justice.

The High Court and Court of Appeal had previously dismissed UNISON’s challenge on the basis of a lack of evidence.

UNISON, supported by the Equality and Human Rights Commission and the Independent Workers Union of Great Britain, appealed to the Supreme Court.

What Did The Supreme Court Find?

The Court found in UNISON’s favour and upheld the appeal, finding that the current employment tribunal fees regime is unlawful on the basis that it effectively prevents access to justice.

In order for the fees regime to have been lawful, the fees would need to have been set at an affordable level. Based on the evidence now available, the Court considered the fall in the number of employment tribunal claims to have been “so sharp, so substantial and so sustained” for it to conclude that this was not the case. It found that a significant number of claimants who would otherwise have brought claims have found the fees to be unaffordable.

What Happens Now?

The immediate consequence of the decision is that employment tribunal fees cease to be payable under the current regime. Employment tribunal claims can again now be brought without any fee being payable by the claimant, as was the position pre-July 2013.

It is also anticipated that any fees paid under the regime over the past four years will be reimbursed by the UK Government. Given that successful claimants will, in many cases, have already recovered any tribunal fees they paid from the respondent employer, this may not be a straightforward process.

In the medium term, it is possible that the UK Government will seek to introduce a replacement fees regime in due course, but this is likely to take some time and be subject to prior consultation.

UK employers should therefore continue to watch this space and be alive to the potentially increased risk of employment claims being brought in the meantime.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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