ET fees unlawful – Supreme Court rules in favour of UNISON and access to justice

The Supreme Court has today handed down a landmark decision in the judicial review brought by UNISON, ruling that Employment Tribunal (ET) fees are unlawful.  An order was made introducing fees to bring claims in the ET and Employment Appeal Tribunal (EAT) back in 2013 (Fees Order).

For most claims in the ET, claimants have, since 2013, been required to pay an issue fee (of up to £250) and a hearing fee (of up to £950) in order to take a case to hearing. Depending on an individual being eligible, fees may be waived in full or in part.  UNISON has always asserted that the level of fees were set at such a high level that some claimants were essentially denied access to justice because they could not afford to pay, and that this was in breach of the EU legal principle of effectiveness. They also claimed that the fees were indirectly discriminatory against women.

Taking into account that the purpose of ETs is to provide a forum for the enforcement of employment rights by employees and workers, including the low paid, those who have recently lost their jobs, and those who are vulnerable to long term unemployment, and also to deal with issues of modest financial value, or of no financial value at all – the Supreme Court made the following key findings:

Right of access to courts

The constitutional right of access to the courts is inherent in the rule of law, ensuring that the laws created by Parliament and the courts are applied and enforced.  The Fees Order would therefore be unlawful if there was a real risk that persons would effectively be prevented from having access to justice, or if the degree of intrusion into access to justice were greater than is justified by the purposes of the Fees Order.  The Court unanimously ruled that the Fees Order unlawfully obstructed this access.

A dramatic and persistent fall in ET claims

The prescribed ET and EAT fees bore no direct relation to the amount sought and could therefore be expected to act as a deterrent to claims for modest amounts or non-monetary remedies.  The evidence before the Court showed that the effect of the Fees Order was a dramatic and persistent fall in the number of claims brought in ETs, with a greater fall in the number of lower value claims and claims in which a financial remedy was not sought. Fees were the most frequently cited reason for not submitting a claim.

Foregoing an acceptable standard of living

Worked examples of the impact of fees on hypothetical claimants before the Court indicated that, in order to meet the fees, they would have to restrict expenditure that was ordinary and reasonable for maintaining living standards.  The Court considered that fees must be affordable not in a theoretical sense but in the sense that they can reasonably be afforded.  Where households on low to middle incomes can only afford fees by forgoing an acceptable standard of living, the fees cannot be regarded as affordable.

Futile or irrational to bring a claim

Even where fees are affordable, they prevent access to justice where they render it futile or irrational to bring a claim; for example, in claims for modest or no financial awards, no sensible claimant will bring a claim unless he can be virtually certain he will succeed, that the award will include recovery of fees, and that the award will be satisfied in full.

No guarantee of an effective remedy

The Fees Order was also found to be unlawful in contravening the EU law guarantee of an effective remedy before a tribunal by imposing disproportionate limitations on the enforcement of EU employment rights.

Indirectly discrimination

The Fees Order was held as being indirectly discriminatory under the Equality Act 2010.  The higher fees charged for ‘type B’ claims – which included unfair dismissal and discrimination claims, put women at a particular disadvantage, since a higher proportion of women brought these type B claims than the lower value ‘type A’ claims, which include wages and breach of contract claims. In particular the Court noted that meritorious as well as unmeritorious claims might be deterred by the higher price, and there was no correlation between the higher fee and the merits of the case or incentives to settle.

A “victory for everyone in work”?

Today’s decision is perhaps unexpected –  it comes in the context of 2 recent government or government-backed reviews – neither of which called for an abolition or reduction of fees. In January 2017, the government published its long awaited Review of the Introduction of Fees in the Employment Tribunals, which found that, whilst many people had chosen not to bring claims to Tribunals, there was “nothing to suggest they have been prevented from doing so”.  Save for some minor changes to the remission scheme, the fees regime was given a clean bill of health.

Just last week, in his Review of Modern Working Practices, whilst Matthew Taylor stated that “there can be no doubt” that fees have resulted in a “significant reduction in the number of cases brought“, he stated that it was “with regret” that the report noted that the government would not move to abolish these fees and so, it seems for this reason, no such recommendation was made.

UNISON’s press release has called today’s decision “a victory for everyone in work“, stating that “from today, anyone who has been treated illegally or unfairly at work will no longer have to pay to take their employer to court.” The immediate effect of the judgment is indeed that fees are no longer payable for claims being brought in the ET and appeals to the EAT and all fees which were paid in the past must be reimbursed, with Unison estimating that the government will have to refund “more than £27 million to the thousands of people charged for taking claims to tribunals since July 2013”. Organising the repayment of ET and EAT fees will be an enormous task.

A point of caution – will the doors now be opened for claimants to look back?

It will also be interesting to see whether employees who were deterred by the fees from bringing their claims in the ET in the first place, and who have not entered into a binding settlement agreement, may now be able to argue that it was ‘not reasonably practicable’ to bring their claim within the usual time limits. This raises the question, will ETs allow claimants to use this argument to bring historical claims employers thought were long since put to bed?  The story may not have ended yet.