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Supreme Court rules Employment Tribunal fees are illegal

In a landmark decision for the employment sector, the Supreme Court has allowed an appeal by Unison, holding that the fees regime introduced in 2013 is unlawful.

In 2013, the then Lord Chancellor Chris Grayling argued that Employment Tribunal fees should be imposed to deter unmeritorious claims, and because users needed to make a contribution to the costs of the court service. Unison, the UK’s largest trade union, disagreed with the proposal as they felt that the fees acted as a deterrent, preventing employees from bringing a claim.

Claim fees for unpaid wages, redundancy pay and breach of contract were set at £160 plus an additional £230 for a hearing fee. For other claims, such as unfair dismissal, equal pay, discrimination and whistle blowing, the claim fee was set at £250 plus £950 for the hearing.

Since the introduction of fees, claims in the Employment Tribunal have declined substantially. Figures from the Ministry of Justice show the number of claims in 2016/17 were down almost 70% from the figure pre-fees.

The unanimous Supreme Court decision today represents the end of a four year legal challenge from Unison. The judgment upheld arguments that Tribunal fees prevented access to justice and were discriminatory against women and other protected groups.

Within the main judgment, the Supreme Court considered other Court fees and identified that it was much cheaper for an individual to bring a claim in the small claims Court than in an Employment Tribunal. Lord Reed commented on the discrepancy, stating that a claim in the Employment Tribunal would impact society as a whole, rather than only benefiting one individual. Baroness Hale also commented on fee discrepancies and found that it was indirectly discriminatory to charge higher fees for one type of employment claim when compared to others. Under the current fee structure it is more expensive to make a claim for discrimination than for unlawful deductions from wages.

Unison announced the decision as “a major victory for employees everywhere”, but there is no doubt that employers will be concerned about an increase in employees bringing claims.

What happens next?

  • The Government will now stop charging fees and has to repay any fees already paid, a bill which will run to an estimated £27m. Repaying fees will be a difficult undertaking, given that many of the fees for claims in which the Claimant was successful, or which settled before a hearing, will have been paid by the Respondent.
  • The Government may look to introduce an alternative fee system which may shift the costs on to employers.
  • Claimants may look to bring claims out of time, arguing they were deterred from making a claim because of unaffordable fees.

This topic will be discussed further at the Employment Law Update seminar in Newcastle on 19 September 2017. Please click here for further details.

If you require further information on this article or any other area of employment law, please contact Jamie Gamble.