The Supreme Court has decided that the employment tribunal fees system, which was introduced in July 2013, is illegal under both UK and EU law.  This is because it has the effect of preventing access to justice.

Since July 2013, there has been a dramatic fall in the number of employment tribunal claims (a long-term reduction of almost 70%). A significant number of individuals who contacted ACAS said they did not bring a claim because they could not afford the fee or because the fee equalled the money they were owed. The Court said it did not require conclusive evidence that tribunal fees have prevented people from bringing claims – it is enough if there is a real risk that this is the case. The Court held that there was.

The Court further held that since the system was unlawful from the outset, all employment tribunal fees which have been paid since July 2013 must be reimbursed to the claimants who paid them.

 Another challenge brought by UNISON was that the higher fee payable for Type B claims (unfair dismissal, discrimination, whistleblowing, equal pay) was indirectly discriminatory against women and other protected groups. Although it was not necessary for the Court to rule on this point - given that it had already ruled that the fee system was unlawful from the outset – it made clear that the higher fee for Type B claims was not justified.

The ruling raises a number of questions:

  • How much will the Government have to reimburse? Although figures of around £27 million are being quoted in the press, these do not take into account the remission scheme (which limits the amount poorest claimants have to pay). It is actually the case that, as of June 2016, approximately £14 million had been collected in tribunal fees. This amount will have increased since then, perhaps to almost £20 million. The reimbursement process will be complex and lengthy. The government will need to find the claimants and repay the amounts (presumably with interest to ensure they are put in the position they would have been had they never paid the fee).
  • Will there be a flood of cases arguing for an extension of time on claims which would have been brought if the tribunal fee system had not been in place?Some claimants might successfully seek an equitable extension of time on this basis if they can show, by reference to contemporaneous evidence – eg communications with ACAS or their lawyer - that the fee really did prevent them from bringing the claim. Given the need for hard evidence, it is unlikely that there will be a flood of cases. 
  • Will a future government look to reintroduce a tribunal fee system? The Court did not outlaw the introduction of a tribunal fee charging system on principle. It may be unattractive for the current government to do so, but a future government could introduce a fair tribunal fee structure. For a fee system to be lawful, it must not have the effect of preventing access to justice. The fees must be affordable, and not in a theoretical sense but in a real sense. If people on lower incomes have to sacrifice their usual, reasonable expenditure to pay the fee, this would not be affordable. Careful scrutiny would be required on this point and the points the Court made about the impact of a two tier structure. Any new system would also need to take account of the fact that sometimes (eg where the claim is for a modest amount) a fee could make it irrational to bring a claim, and thereby effectively prevent access to justice.