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On 27 and 28 March 2017, the Supreme Court heard the appeal of R (Unison) v Lord Chancellor & Another in which it considered whether the order imposing fees in the employment tribunal and Employment Appeal Tribunal is indirectly discriminatory and whether it breaches the EU principle of effectiveness.

Background

Since 29 July 2013, unless they are entitled to a remission on account of limited means, fees are payable by a claimant or appellant bringing a claim in the employment tribunal or an appeal in the Employment Appeal Tribunal (“EAT”). A fee is payable initially on commencement of the claim or submission of the appeal and again in advance of a final hearing. Claims are divided into type A and type B; broadly speaking, type A claims (for example, statutory redundancy payments, unlawful deductions from wages and breach of contract) are those which the Lord Chancellor regards as typically the more straightforward and accordingly the fees related to such claims are lower than those for type B claims (which include discrimination, unfair dismissal and whistleblowing claims). Prior to 29 July 2013 the employment tribunal service had been free to users.

In July 2013 the trade union Unison commenced judicial review proceedings in the High Court (“Unison 1”) in which it challenged the Lord Chancellor’s decision to make The Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013 (SI 2013/1893) (the “Fees Order”). A central ground of this challenge was that the fees were set at such a level and the remission criteria was so restricted that many claimants would be unable to afford to bring a claim in the tribunals. The Equality and Human Rights Commission ultimately intervened in support of the challenge. The claim was dismissed in February 2014. A principal reason for its failure was that the court believed that it was premature – essentially it was being asked to reach a decision on the impact of the Fees Order on the basis of predictions rather than evidence of its effect in practice.

Unison issued further proceedings in October 2014 (“Unison 2”) and although the grounds of challenge overlapped with its earlier challenge in Unison 1, it was by this time able to rely on evidence based on statistics relating to the number of employment tribunal claims and appeals in the period of more than a year since fees were introduced. The second challenge was dismissed in October 2014 by the High Court, but permission was given for the decisions in both Unison 1 and Unison 2 to come before the Court of Appeal.

Arguments before the Court of Appeal

In broad terms, Unison argued before the Court of Appeal that:

  • the Fees Order breached the principle of EU law that persons who claim their rights under EU law have been breached should have access to an effective remedy for that breach. This principle is commonly known as the “effectiveness principle”;
  • the regime was indirectly discriminatory as it disadvantaged those claimants with protected characteristics under the Equality Act 2010 (“EqA”); and
  • the Lord Chancellor had failed to satisfy the public sector equality duty, in brief requiring that a public authority must, in the exercise of its functions, have due regard to the need to eliminate discrimination, harassment, victimisation and any other conduct that is prohibited by or under the EqA.

The Court of Appeal’s judgment

The Court of Appeal dismissed the appeal with Lord Justice Underhill giving the leading judgment.

Unison’s case was that the regime under the Fees Order – the combination of the level of fees and the criteria for remission – is such that many claimants are unable to afford to bring claims in the tribunals. In practice, this means they are denied effective access to justice rendering the Fees Order in breach of the “effectiveness principle” and therefore unlawful.

The Court of Appeal noted that it was clear from the comparison between the number of claims brought in the tribunals before and after the introduction of fees that the Fees Order had had the effect of deterring a significant number of potential claimants. Whilst the Court acknowledged that this was troubling, the decline did not, by itself, evidence or constitute a breach of the effectiveness principle; it was inevitable that potential claimants would be more willing to embark on litigation when it was free than when payment had to be made up front with no certainty regarding its recovery. It was also well established that the charging of court fees is not, in itself, objectionable.

Whilst it seemed unlikely that such a large decline could be accounted for entirely by cases of “won’t pay” and that it must also reflect at least some cases of “inability to pay”, this was insufficient in itself to conclude that the principle of effectiveness had been breached. Evidence of the actual affordability of the fees in the financial circumstances of typical individuals was necessary in order to reach a reliable conclusion that the fees payable under the Fees Order would indeed be realistically unaffordable in some cases. Insufficiency of the evidence in this regard, coupled with the fact that the Lord Chancellor retained discretion in exceptional circumstances to grant remission for those claimants who did not meet the remission criteria, meant that the arguments around affordability were not successful.

It was also Unison’s case that the Fees Order is indirectly discriminatory against persons of each of the protected categories recognised under EU and domestic law. For simplicity during arguments it focused on gender as the protected characteristic in question. Its arguments were threefold:

  • firstly, that as a greater proportion of women brought type B claims than type A claims, they were indirectly discriminated against by the higher fee charged for type B claims. The Court of Appeal dismissed this argument finding that it was not indirectly discriminatory to charge more for type B claims as the higher charges were objectively justified given the greater demand that more complex cases placed on tribunal resources;
  • secondly, more women brought discrimination claims than men and therefore were disadvantaged by the fees imposed on bringing discrimination claims. The Court of Appeal considered that again the argument was that the Fees Order imposed higher fees on type B claims, which included discrimination claims. However it noted that type B claims did not simply relate to discrimination complaints and no gender disproportion was alleged as regards type B claimants as a whole and accordingly it found no indirect discrimination; and
  • thirdly, that the proportion of type B claimants that were women was higher than the proportion of women in the workforce. The Court of Appeal found that the statistics did not support this contention and therefore no discrimination had been established.

Finally, when considering whether the Lord Chancellor had complied with the public sector equality duty under section 149 of the EqA when introducing the Fees Order, the Court of Appeal considered that the equality impact assessment carried out at the relevant time was adequate to meet that duty.

The issues before the Supreme Court

The issues before the Supreme Court (Lord Neuberger, Lady Hale, Lord Mance, Lord Kerr, Lord Wilson, Lord Reed, Lord Hughes) are whether the Fees Order breached the “effectiveness principle”, and whether it was indirectly discriminatory, the alleged failure to satisfy the public sector equality duty having been dropped.

Since the Court of Appeal decision the Ministry of Justice has published its long awaited review of the introduction of employment tribunal fees. This incorporates a consultation and proposals for reform of the existing remission scheme under which qualifying claimants can receive help with paying the fees required to bring a claim.

For more details of this, please click here.