All Change at the Employment Tribunal: Supreme Court rules that Employment Tribunal Fees are unlawful

The Supreme Court has today ruled that Employment Tribunal Fees are unlawful and that the legislation introducing them will be quashed. Employment Tribunal Fees were introduced back in 2013 and quickly led to a reduction in employment Tribunal claims of somewhere between 66 and 70%. The appeal was brought by the Trade Union Unison who, with the backing of the Equality & Human Rights Commission, had brought Judicial Review proceedings on the basis that the fees regime was unlawful because of its effects on access to justice. Today they have won their appeal.

In the judgment Lord Reed considered the factual background to the fees in detail. Lord Reed emphasized the constitutional right of access to justice, as inherent in the rule of law. He said that the statutory rights granted to employees by Parliament could not be undermined by a statutory instrument brought in by a Minister. Lord Reed opined that the protection of employment rights was important for society as a whole and not just for the individual concerned. His judgment even referred to the principle enshrined in Chapter 40 of the Magna Carta of 1215, which provides for the right of access to the courts.

As well as finding that the fees regime effectively prevents access to justice and is unlawful, the Supreme Court also found that it imposed unjustified limitations on the ability to enforce EU rights and was unlawful in that regard too.

Further to the main Judgment, the Supreme Court also gave a further judgment, handed down by Baroness Hale, that the statutory instrument responsible for the fees, was also indirectly discriminatory, on the basis that fees for Type B claims (including discrimination claims) were higher than those for Type A claims (which apply to the more straight forward claims and not to discrimination claims).

What now?

The Government’s response remains to be seen. The fees regime may not be abolished entirely. The Government may look to consult on a new system, with perhaps reduced levels of fees and also the possibility of the employer having to pay some sort of fee too. Whatever happens, the ruling is likely to be an administrative nightmare for the Tribunal Service, including the need to alter the process and administration of Employment Claims. There is also the administrative spectre that, in accordance with the judgment, all fees paid since 2013, will need to be refunded. This is likely to be particularly problematic, given that some fees will have been recovered by employees from employers, where employees were successful either in court or in out of court settlements. Lastly, it is also conceivable that employees who were potential claimants but who felt in some way deterred from bringing claims because of the (unlawful) fees regime may, potentially look to bring their claims late, on the basis that it was not “reasonably practicable” and / or “just and equitable” for them to bring their claims in time. This could lead to a period of uncertainty and further litigation.

Whilst employees, trade unions and other employment rights’ organisations are likely to be delighted by the decision, it is likely to cause a headache for Employment Tribunals, who will need to navigate the impact of the judgment and the administrative challenges which is raises. It will also be interesting to see what the Prime Minister, Theresa May, will do in response to this groundbreaking judgment, particularly in light of her previous pledge on workers’ rights made earlier this year.