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Employment Tribunal Fees held as unlawful by the Supreme Court

Posted by Gunes Saybak on September 06, 2017

R (on the application of UNISON) (Appellant) v Lord Chancellor (Respondent) [2017] UKSC 51

This instant appeal concerned whether fees imposed by the Lord Chancellor, in respect of proceedings in the Employment Tribunals (“ETs”) and the Employment Appeal Tribunal (“EAT”), were unlawful due to the direct impact on access to justice.

Brief Background

Before the Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013 (“the Fees Order”) came into force on 29/07/13, Claimants could bring and pursue proceedings in both courts without having to paying a fee.

The purposes of the Fees Order was to transfer some of the cost burden of operating ET’s and the EAT to those who use the system, incentivising earlier settlement of claims and deterring the bringing of weak or vexatious claims.

The Fees Order prescribed a number of fees which would vary dependant on factors such as the type of claim being brought and whether it was brought by a single claimant or a group.

A single Claimant would be required to pay a total of £390 for a “type A” claim (claims which generally took little or no pre-hearing work and usually would require approximately one hour to resolve at hearing in the ET) and £1,200 for a “type B” claim (claims which generally required more judicial case management, more pre-hearings and longer final hearings). Fees of £1,600 would be payable again in two stages in the EAT.

Both Claimants and Appellants could, however, seek remission of the fees if they could demonstrate that their disposal capital and gross monthly income were both less than the specified amounts.

Under the rules of procedure of the ET and the EAT, a claim would either be rejected or struck out unless it is accompanied by an issue fee or a remission application.

Appellant’s Grounds of Appeal

This instant appeal followed proceedings for judicial review in which UNISON (the Appellant) argued that the making of the Fees Order was not a lawful exercise of the Lord Chancellor’s statutory powers.

It was argued that the prescribed fees “interfered unjustifiably with the right to access to justice both under the common law and EU law, frustrated the operation of Parliamentary legislation granting employment rights, and discriminated unlawfully against women and other protected groups”.

Permission was granted to appeal on all grounds of challenge. The Court of Appeal subsequently gave permission for an oral hearing.

Judgment of the Court of Appeal

UNISON’s case was that the combination of the level of prescribed fees and the criteria for remission was such that many Claimants were unable to afford bringing claims in both the ET’s and the EAT. This essentially meant that they were being denied effective access to justice rendering the Fees Order in breach of the “effectiveness principle” and therefore unlawful.

It was argued by Unison that the Fees Order was also indirectly discriminatory. The arguments focused on gender and its arguments were threefold:

  • A greater proportion of females brought type B claims than type A claims, and as a result they were indirectly discriminated against by the higher fee charged for type B claims. The Court of Appeal dismissed this argument and held that it was not indirectly discriminatory to charge more for type B claims as the charges were justified given the greater demand that more complex cases placed on tribunal resources;
  • More females brought discrimination claims than males and were therefore disadvantaged by the fees imposed on bringing discrimination claims. The Court of Appeal dismissed this argument and found no indirect discrimination; and
  • That the proportion of type B Claimants that were females were higher than the proportion of females in the workforce. The Court of Appeal found that the statistics did not support this contention and therefore no discrimination had been established.

The Court of Appeal found that it was clear from the comparison between the number of claims brought in the tribunals before and after the introduction of fees that the Fees Order had had the effect of deterring a significant number of potential Claimants. Whilst this was acknowledged as being troubling, it was found that the decline did not, by itself, evidence or constitute a breach of the effectiveness principle – potential Claimants would be more willing to embark on litigation when it was free than when payment had to be made up front with the uncertainty regarding its recovery. It was also well established that the charging of court fees is not unacceptable.

In view of the above the appeal was dismissed and an appeal was made to the Supreme Court on the same grounds.

Decision of the Supreme Court

The Supreme Court held that tribunal fees must be affordable not only in a theoretical sense, but also additionally in the sense that they could reasonably be afforded. Where households on low to middle incomes could only afford fees by sacrificing an acceptable standard of living, the fees could not be regarded as affordable.

Even where fees were affordable, they prevented access to justice where they rendered it fruitless or irrational to bring a claim. For example where in claims for modest or no financial awards, no sensible claimant would bring a claim unless he could be virtually certain he would succeed, that the award would include recovery of fees, and that the award would be satisfied in full.

Further, although the stated purposes of the Fees Order were legitimate aims, it was not demonstrated to the Supreme Court that the Fees Order was the least intrusive means of achieving those aims.

As a result of the above, the Fees Order was also held to be unlawful as it breached the EU law guarantee of an effective remedy before a tribunal in that it imposed disproportionate limitations on the enforcement of EU employment rights.

Moreover, the Fees Order was held to be indirectly discriminatory as the higher fees for type B claims put females at a particular disadvantage, as a higher proportion of women bring type B than bring type A claims. The charging of higher fees was not a proportionate means of achieving the stated aims of the Fees Order. It had not been shown to be more effective at transferring the cost of the service from taxpayers to users, and in some type B cases (such as pregnancy dismissal) the higher fee did not correspond to a greater workload placed on the tribunal. Further, meritorious as well as unmeritorious claims could be deterred by the higher price, and there was no correlation between the higher fee and the merits of the case or incentives to settle.

For the reasons above, the Supreme Court unanimously allowed the appeal.