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On 26 July 2017 the UK Supreme Court unanimously allowed UNISON’s appeal in judicial review proceedings considering the legality of fees in the employment tribunal system.

Background

Until the enactment of the Employment Tribunals and Employment Appeal Tribunal Fees Order 2013, SI 2013/1893, claimants were able to bring proceedings in an employment tribunal and appeal to the Employment Appeal Tribunal without paying any fees.

The Fees Order introduced fees (i) to issue a claim form with an employment tribunal; (ii) to lodge an appeal with the EAT; (iii) for the hearing of a claim; and (iv) for the making of various kinds of application. Prior to this Supreme Court ruling, a claim or appeal would be rejected or dismissed unless it was accompanied by a fee or remission application.

 The Government’s primary aim for introducing the Fees Order was transferring some of the cost burden of the employment tribunal and EAT system from general taxpayers to users of the system. Its secondary aims were deterring unmeritorious or vexatious claims and encouraging earlier settlement.

 The amounts of the issue fee and hearing fee varied depending on whether the claim was brought by a single claimant or a group and also the type of claim brought, with over 60 types of claim being defined as ‘type A’, with all other claims being ‘type B’. The type B category, which comprised claims for unfair dismissal, equal pay and discrimination attracted higher fees under the Fees Order.

UNISON’s appeal to the Supreme Court was born out of judicial review proceedings it initiated against the enactment of the Fees Order for (i) interfering unjustifiably with the right of access to justice under (a) common law and (b) EU law, (ii) for frustrating the operation of Parliamentary legislation granting employment rights; and (iii) for discriminating unlawfully against women and other protected groups.

Supreme Court Judgment

 The Supreme Court unanimously allowed the appeal.

  1. First, it declared the Fees Order unlawful for effectively preventing access to justice under domestic law.
    • Importantly, the Court held that in order for the fees to be lawful, they have to be set at a level that everyone can afford, taking into account the availability of full or partial remission. Only ‘a real risk’, rather than ‘conclusive evidence’ of persons being prevented from having access to justice needed to be proven, and the sharp, substantial and sustained fall in the number of claims warranted the conclusion that a significant number of people who would otherwise have brought claims have found the fees to be unaffordable. It specified that fees must be affordable in the sense that they can reasonably be afforded and that this entails individuals being able to afford them without foregoing an acceptable standard of living. In considering whether the statutory remission scheme could deflect the Court from its conclusion, the Court determined that it could not, noting that the scheme was of very restricted scope and the effects of the Fees Order had occurred notwithstanding the existence of that scheme.
    • The Court added that even if fees are affordable, they may still prevent access to justice if they render it futile or irrational to bring a claim. This may include scenarios where there is an excessive fee in comparison to the amount or award at stake, which has the effect of preventing a sensible person, with no guarantee of fee reimbursement and success, from pursuing a claim.
    • Looking at whether the Fees Order could be justified as a necessary intrusion on the right of access to justice, the Court concluded that it had not been shown that less onerous fees, or a more generous system of remission, would have been any less effective in meeting the primary objective of transferring the cost burden of the ET and EAT systems to users. Nor had fees at the level set in the Fees Order been shown to be necessary to achieve the Government’s secondary aims of incentivising earlier settlement and disincentivising the pursuit of weak or vexatious claims. As such, the Fees Order was not justified.
    • In light of the conclusion that the Fees Order was unlawful on the basis that it effectively prevented access to justice, the Court dealt with the other issues arising in the appeal “very briefly”.
  2. Next, the Court considered whether the Fees Order cut down statutory rights, which it is unlawful for subordinate legislation to do, and held that in so far as the Fees Order had the practical effect of making it unaffordable for persons to exercise rights conferred on them by Parliament, or of rendering the bringing of claims to enforce such rights a futile or irrational exercise, it must be regarded as rendering those rights nugatory.
  3. In addition, given the Court’s conclusions that the fees imposed by the Fees Order were in practice unaffordable for some people and that they were so high as in practice to prevent even those who could afford them from pursuing claims for small sums and non-monetary claims, the Fees Order was declared unlawful on the grounds that it contravenes EU law guarantees of an effective remedy before a tribunal, because it imposes disproportionate limitations on the enforcement of EU employment rights.
  4. Finally, the higher fees imposed by the Fees Order to pursue type B claims, which tend to centre around issues such as discrimination, unfair dismissal and equal pay, were deemed to be indirectly discriminatory under the Equality Act 2010 because they put women, who bring a higher proportion of such claims, at a disadvantage. It had not been shown that the higher fee charged for type B claims was more effective in transferring the cost of the service from taxpayers to users and charging higher fees for type B claims had not been shown to be a proportionate means of achieving the stated aims of the fees regime.

Comment

Following the publication of the Supreme Court’s judgment, the Government’s Justice Minister, Dominic Raab, was quick to announce that fee collection would be halted immediately and that the Government would embark on a process of reimbursing all fees paid since 2013. Despite a figure in the region of £30-35 million being quoted, specific details surrounding the rebate remain unclear.

Although the Supreme Court acknowledged that there is no prohibition on charging court fees per se, the justices maintained the law provides for a constitutional right of access to the courts to ensure justice, and the tribunal fees impeded this access. The judgment also highlights the effective role of EU employment law protections at a national level.

Having failed in its balancing act to ensure proper access to justice and finding the right funding mechanism, whilst preventing spurious claims putting a strain on the tribunal system, it will be interesting to see what steps the Government decides to take next. It seems likely that a new fee system will be devised, however such system will need to set fees at an affordable level, incorporate a sufficiently effective remission system and ensure that any disparity in fee levels is not indirectly discriminatory.

Whatever the Government’s plans, in the immediate term employment tribunals are likely to feel the strain of an increase in cases brought before them; nonetheless, commentators expect a steady rise rather than a deluge.