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Employment Tribunal Fees are considered unlawful

The recent decision by the Supreme Court that Employment Tribunal Fees are unlawful will likely cause many employers to wonder how this ruling affects them.

Our associate, Julie Dawson of JD Employment Solutions Ltd, produced the following article in response to the announcement.

Employment Tribunals and the Employment Appeal Tribunals Fees Order 2013

Following the introduction of the above order, there has been debate around whether it was fair or right to charge fees for claimants at employment tribunals. That said, many employers were generally thankful because it was more likely to put off a potentially malicious case or a claim that had little prospect of success, and even for legitimate claims, it meant that a disgruntled employee was less likely to make a claim against them.

In addition, there is no doubt that the reduction in the number of claims has also alleviated the burden on our tribunal courts who, prior to this legislation, were finding themselves sinking deeper into a backlog of claims and slow turnarounds.

Unison, the union that represents public services employees in both private and public organisations, the voluntary sector and the utilities, have, on the other hand, relentlessly argued on behalf of its members that the requirement to have to pay to have a claim heard, as well as there being 2 levels of fees chargeable, was unlawful and discriminatory.

And evidence has shown that imposing fees has had an even greater impact on the number of claims made because since the legislation, the number of actual claims have reduced by 79%. This tends to suggest that the fees are indeed creating a huge barrier for many employees who might otherwise have made a claim against their employer.

Today’s Judgement

Following this morning’s announcement we now know that the Supreme Court agrees with Unison.

In the main judgment, the Supreme Court highlighted their concern regarding the difference between the level of fees chargeable in the tribunal courts versus the small claims court, where it is very much cheaper to bring a claim for a small sum of money, and incidentally where employees for some claims have a longer limitation period in which to submit their claim than the three months applicable to tribunals.

Lord Reed stated that employment tribunal cases are important for society as a whole, not just the individuals involved. He also said that if the requirement to pay a fee remained, it would indeed prevent access to justice.

Baroness Hale gave a separate, short judgment on the indirect discrimination aspects of the fees regime. She concluded that it was indirectly discriminatory to charge higher fees for type ‘B’ claims than type ‘A’ claims (see below)

• Type A Claims (ie unpaid wages, redundancy, holidays, notice) £160 + £230 = £ 390

• Type B Claims (ie unfair dismissal, discrimination, whistleblowing, equal pay) £250 + £950 = £1,200

So, the Supreme Court held that the Fees Order DOES effectively prevent access to justice and that it imposed unjustified limitations on the ability to enforce EU rights (ie those claims based on EU law), and was thus unlawful under EU law. (What no one knows at present is whether this may be further impacted by Brexit!)

What might be on the horizon?

An update today from Daniel Barnett, a well-regarded and eminent barrister based in London, states that he believes it is unlikely the fees regime will be abolished entirely although it will naturally have to change. He believes that the Government is likely to issue a consultation paper and perhaps work towards fees at a lower level. So if employers are asked for their input/contribution to the consultation, this may be your opportunity to voice your opinion.

What is noteworthy is the fact that he also suggests there may be a requirement for the employer to have to pay a fee when they lodge a response to a claim (known as an ET3). This I suspect won’t sit comfortably with most employers and perhaps more so with the small to medium sized employers who need to defend claims that at worst they view as malicious, but at best consider a weak case with little prospects of success. Perhaps the consultation will be an opportunity to debate the consideration of formalising more clearly the ability for an employer or employee to reclaim their fees if they win their case? Whilst this is currently not unheard of in the courts, it is generally quite rare for courts to award costs against employees on behalf of a successful employer.

What is really interesting though is that the Supreme Court stated that all fees paid between 2013 and now, will have to be refunded by the Lord Chancellor’s Department. This will be a huge task and a heavy financial burden on the Government. And I presume consideration will have to be given to making allowances or adjustments for those claims where the Respondent (employers) were ordered to pay the Claimant’s fees, or, albeit in very few cases, vice versa.

And what about the questions raised by Daniel Barnet ie

• ‘what about all those people who chose not to bring a claim because of the fees’

and in respect of those cases.

• ‘is it just and equitable to extend the time for bringing a claim?’

Lots of questions to come out of the finding and no doubt we will learn more as time passes and as soon as I hear anything I will let my clients know.

Note: This article is intended to provide information only and should not be taken to constitute legal advice. Before taking any action please speak with a qualified advisor. If you would like pragmatic and commercial advice on any matter, please contact Julie Dawson. Visit www.jdemploymentsolutions.co.uk for more info.

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