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Few could have failed to notice the recent sensational decision of the Supreme Court which declared that Employment Tribunal fees are unlawful. 

 

The essential basis of the decision was that fees effectively prevented access to justice. The Court completely rejected the Government’s premise that access to the tribunal is only of value to Claimants; in fact it is essential to the rule of law, to justice and indeed democracy. Without such access laws are liable to become “a dead letter.” In short, if there is no effective access to the courts, the whole system of employment protection is fundamentally undermined.

Crucially however, the Supreme Court did not say that a fee based system was unlawful in principle. The Court accepted that the objectives behind the system (transferring the cost burden to users, incentivising earlier settlement and deterring weak claims) were legitimate but, in light of evidence of the dramatic fall in the number of Tribunal claims, it was apparent that the level at which fees had been set effectively constituted a barrier to justice. This rendered fees unlawful under both UK and EU law as well as indirectly discriminatory against women.

The immediate effect is that Tribunal fees are no longer payable and those previously paid must be reimbursed. The Justice Minister, Domini Rabb has indicated that the Government accepts the ruling and will begin the process of paying back what has been estimated as around £32million pounds paid since their introduction. It is not however clear how this will work in relation to those who have received reimbursement either through a Tribunal award or through a settlement. If Claimants could recover in such scenarios they would clearly receive a windfall.

Employers may, in such circumstances, have a good claim for reimbursement apart from the fees they have been required to pay directly. Account will also need to be taken of claims which may have been struck out on the grounds of non-payment of fees. Dead claims may therefore be revived.

In addition, the possibility also arises of claims being brought late on the basis that the Claimants were deterred by the fee regime. While strict time limits apply to Tribunal claims these can allowed in late if, in the case of discrimination claims, it is shown to be “just and equitable to do so”. The test for late unfair dismissal claims is the stricter one of showing that it was “not reasonably practicable” to lodge it on time but, given the Supreme Court’s view that the fee regime effectively constituted a barrier, then late claims may well be accepted.

In the longer term it remains open for the Government to consider implementing an alternative fee based system which is more affordable. However, given its current predicament, without a majority and mired in Brexit negotiations, it seems unlikely that there will be the bandwidth to deal with this. In any event the Scottish Government’s commitment to abolish fees on the planned devolution of the Tribunal system must effectively rule out any revival of a fee regime in Scotland.

Looking further ahead the big issue will be whether the death of Tribunal fees will herald a resurgence in claims. The immediate challenge may be a lack of Tribunal capacity to deal with such a development but for employers the more fundamental issue will be whether the decision resets the dynamics of the employment relationship. If employment law is no longer a “dead letter” then the risks of employers getting it wrong become all the more real again.

Eric Gilligan, Partner 

 

Chambers UK 2018

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