In a ground breaking judgment the Supreme Court in R (on the application of Unison) v Lord Chancellor has ruled that tribunal fees are unlawful and should be quashed. In a costly decision for the government, all previous fees that have been issued will now be reimbursed. Estimates in the media suggest the repayment costs will reach £32 million.

Although both the High Court and the Court of Appeal found against Unison, the Supreme Court yesterday ruled that the Fees Order was unlawful both under both domestic and EU law, because it prevents access to justice.

This decision has been widely welcomed, not only by trade unions and employee lobbies. There had been a 70% reduction in tribunal claims following the introduction of fees.

Background

In July 2013 two levels of tribunal fees were introduced by the Government, £390 for a Type A claim (unlawful deductions of wages) and £1200 for a Type B claim (unfair dismissal and discrimination). The primary reason for the fees had been to pass the burden of costs to the users of the court service. Additional reasons were deterring unmeritorious claims and encouraging earlier settlements. Operating alongside the fee regime was a remissions system whereby those on low income would not be required to pay the fee.

Legal arguments

In a bold decision the Supreme Court ruled that tribunal fees were unlawful for three reasons:

  • these hindered the common law right of access to justice,
  • these were in breach of EU rights, and
  • for Type B claims, fees indirectly discriminated against those who shared protected characteristics which was not justified.

1. Common law

The court considered that fees breached the constitutional right of access to the courts, which is inherent in the rule of law. “In order for the courts to perform that role, people must in principle have unimpeded access to them.” Access to justice was not simply a benefit to the individual claimants, but also necessary to establish wider legal principles.

They were particularly concerned that households on low to middle incomes would only be able to afford fees by giving up an acceptable standard of living, and because of this fees could not be said to be affordable. In addition the remissions system was not effective. Even a couple living on the national minimum wage would not qualify for remission under Type A claims.

The Supreme Court also considered the situation where it would be futile to bring a claim. The Supreme Court explored the practicality of a person raising a Type A claim for £500, when they would require to pay £390 in fees. In their view no sensible person would bring such a claim.

In reaching this conclusion the Supreme Court considered evidence from various reports into fees including a consultation paper published by the Ministry of Justice in January 2017, 'Review of the introduction of fees in the Employment Tribunals: Consultation on proposals for reform' and the impact of fees on different hypothetical claimants.

2. EU Law

The Supreme Court found that fees breached the principle of effectiveness. Article 47 of the Charter of Fundamental Rights of the EU states that everyone .. “has the right to an effective remedy before a tribunal.” This right may allow the imposition of financial costs but only where proportionate. The Supreme Court ruled that the Fees Order was disproportionate because they are unaffordable by some people and so high as to prevent people who can afford them pursuing smaller value claims.

3. Indirect discrimination

Unison argued that the higher fees payable for type B claims are indirectly discriminatory against women (and others with a protected characteristic).

Lady Hale, (with whom the other judges agreed) in a separate judgment rejected the government’s argument that fees were a proportionate means of achieving a legitimate aim.

What’s next?

This case applies with immediate effect. Claimants will no longer be required to pay fees to bring a claim before the employment tribunal or the EAT. This will inevitably result in an increase in claims coming through the system. There may also be additional claims from claimants who were deterred because of the fees, or arguing they should be granted an extension in the time limits.

The practicalities around the reimbursement of fees are unknown at this stage. For instance, we do not yet know:

  • How will both claimants and respondents recover fees already paid? Will they have to apply within a certain period or will the tribunal service contact the parties? Will reimbursement extend to things like judicial mediation and its £600 fee?
  • How will settled claims be dealt with? If an employer has reimbursed the claimant’s fees under a settlement agreement/Cot3, will there be an opportunity for the employer to recover the fees directly? Or will the fees be reimbursed directly to the claimant, possibly leading to double recovery?

We expect further guidance to be issued.