Volume of future claims
ET administrative processes
Refunds of historic fees
Out of time claims
Future fees and related arrangements
In August 2017 the Supreme Court ruled that employment tribunal (ET) fees are unlawful (for further details please see "Employment tribunal fees ruled unlawful by Supreme Court"). The case has significant constitutional and political implications, but also raises a number of thorny practical issues, some of which are explored in this update.
The introduction of fees in July 2013 led to a sustained fall of up to 70% in the number of claims. Their abolition by the Supreme Court may therefore lead to an equally dramatic increase in the number of claims.
This is particularly true while access to the ET remains free. Although the government may introduce a new fees regime, there is at present a window of opportunity during which ET claims can be brought without any fee at all. This means that employers are likely to face an increased number of ET claims, especially lower-value claims that employees may have previously been deterred from bringing.
Such an increase in claims is likely to place the Advisory, Conciliation and Arbitration Service (Acas) under great strain in undertaking mandatory early conciliation. This procedure was brought in after the introduction of fees, and requires that all potential claimants contact Acas before bringing an ET claim.
A rise in claims would also increase pressure on the already strained ET system, which has faced major cuts in light of the drop in claims and general public sector austerity measures. This is likely to cause frustrating delays for users of the ET, but may add urgency to the government's efforts to improve the efficiency of the court and tribunal system.
The abolition of fees necessitates amendments to ET documents and processes. Her Majesty's Courts and Tribunals Service has already begun looking at the issue, and has admitted that there will be delays in processing claims currently being initiated.
Following the Supreme Court's judgment, the government immediately stated that it would refund fees paid by past claimants and would announce details of its scheme in due course. This scheme will need to address some potentially tricky problems.
There is likely to be a central record of all fees paid by ET claimants, but it is not a simple case of repaying those fees to those claimants. Where a claimant won the case, the losing employer would usually be ordered to pay the value of the ET fees to the claimant as part of a costs award. If all fees are simply paid back to claimants, there will be double recovery in situations where the employer has already been ordered to make that payment. However, the ET cannot simply check its records and refund those fees to the employer instead, as many employers do not actually pay the amounts ordered. It seems likely that any fair refunds system will need to have a mechanism for obtaining information from both parties in order to assess where a refund is due.
There is also a question about what should happen if an employer reflected a fee that had already been paid under a settlement agreement. If that fee will now be refunded by the ET, can the settlement agreement be reopened? Such settlements are usually final and confidential, there is unlikely to be any wording in the agreement that would allow the employer to reclaim the amount paid.
The Employment Tribunals Rules of Procedure 2013 also contain rules related to fees and will need to be amended by legislation. In the meantime, they will need to be read in line with the Supreme Court's judgment.
The Supreme Court found that the fall in claims was probably caused by the introduction of an unlawful fees regime. Employees who would have brought a claim, but who were deterred by the fee, might now seek to bring claims out of time. They might reasonably argue that the unlawful fees regime meant that they could not bring their claim because of the financial hardship it would have caused them.
Whether ETs will allow this will depend on the type of claim and the claimant's circumstances. With an unfair dismissal claim, the issue would be whether it was not reasonably practicable to bring a claim within the time limit on account of the fees regime, which is generally a strict test. However, in a discrimination case the test would be more flexible: whether it is now just and equitable to extend time to bring the claim.
Existing claimants may also seek to amend or reinstate parts of claims to cover matters that they had chosen not to pursue because of the higher fees that were payable. Some claimants may also have withdrawn their claims before a hearing due to the higher level of fee payable at that stage (for unfair dismissal, the issue fee was £250, whereas the fee for a hearing was £950). Again, those claimants may try to reopen the case on the basis that the unlawful fees system had led them to withdraw.
There is likely to be a lot of litigation over these issues, involving not only employers but also possibly the government for losses caused by its unlawful policy. Bringing a claim directly against the government might be the only practical option for some individuals if, for example, their former employer has now been liquidated but was solvent when a claim could originally have been brought.
Future fees and related arrangements
While the Supreme Court ruled that the fee structure introduced in 2013 was unlawful, it did not rule out the possibility of the government devising a lawful structure. Indeed, Lady Hale's judgment on the discriminatory effect of fees expressly notes: "the Lord Chancellor will no doubt wish to avoid any potentially unlawful discrimination in any replacement Order." However, the current political environment could make the reintroduction of fees challenging. Depending on future caseloads, the government might consider amending the deposit order or costs order regimes as an alternative way to achieve its legitimate policy objective of discouraging unmerited claims.
For further information on this topic please contact David Hopper at Lewis Silkin by telephone (+44 20 7074 8000) or email ([email protected]). The Lewis Silkin website can be accessed at www.lewissilkinemployment.com.