Farewell to ET fees, but what next?

For the last four years, an employee wanting to take a case to an employment tribunal has had to pay a fee of up to £1,200. For many lower paid employees – or where relatively little money was
at stake – this fee may have been a deterrent to starting action.

But in July 2017 the Supreme Court ruled that the fees were contrary to the common law right of access to justice – and the Ministry of Justice has since dropped them.

This may encourage more employees to bring claims – the number had dropped by two thirds after fees were introduced – and could mean employees who had chosen not to go to an employment
tribunal over the last four years will now try to bring cases, even if they fall outside the statutory time limits (which are within three months minus a day of dismissal in most cases). It is likely that employment tribunals will have to make decisions about these ‘out of time’ claims on a case by case basis: applicants may need to offer a convincing account of how the fees deterred them making a claim earlier.

For NHS organisations, this may mean a rush of new cases filed over the next few months and potentially some claims from further back. These old claims – if accepted to be heard by tribunals – may be challenging to defend as staff involved may have moved on and memories may have decayed. Good written records of processes followed may be particularly important.

Abolition of fees

In July 2013 tribunal fees were introduced by a fees order made by the then Lord Chancellor. Essentially the Government wanted to raise money and decided to shift part of the cost of the tribunal system from the taxpayers to tribunal users. Furthermore, it was deemed that the fee regime would encourage more settlements and deter weak or vexatious claims.

The fees were paid in two parts; an issue fee which was paid when a claim was filed at the tribunal, and a hearing fee if the case proceeded to a full hearing. For the purpose of calculating the correct fee claims were placed into two types. Type A for was for simpler claims such as claims for unlawful deductions from wages. Type B was for every other type of claim including unfair dismissal claims and discrimination claims. There was a fee to issue a claim (£160 for type A, £250 for type B) and a fee if matters proceeded to a full hearing (£230 for type A, £950 for type B).

Claimants could obtain a reduction or wavier of the fee under the remission system where they satisfied a disposable capital test and a gross monthly income test.

Following the introduction there was a very significant decline (68 per cent) in the number of cases received. However, this reduction may be in part due to introduction of mandatory ACAS early conciliation. From 5 May 2014 all prospective claimants have been required to go through ACAS early conciliation before being able to initiate proceedings in the employment tribunal.

Soon after the introduction of fees a number of legal challenges were launched most notably by UNISON. They brought two judicial review claims. The second claim was rejected by the lower courts but then succeeded at the Supreme Court in July 2017.

UNISON’s argument that the system of tribunal fees was contrary to the common law right of access to justice was accepted by the Supreme Court which held that the government’s approach to the fees regime had been fundamentally flawed from the start. The government had failed to understand that the right of access to the courts is not just a service to be provided to “users” but a right which is inherent in the rule of law and which benefits not just the individual claimant but society as a whole.

Lord Reed noted a contrast between the level of fees in the tribunal, and the small claims court. He emphasised the importance of the rule of law, and that specific statutory rights granted by Parliament may not be reduced by statutory instrument from a minister. He concluded that fees “…have resulted in such a substantial and sustained fall in the number of claims being brought that it points to the conclusion that a significant number of people have found the fees unaffordable”.

Baroness Hale held that it was indirectly discriminatory to charge higher fees for type B claims (which included discrimination claims) than type A claims and found the fee regime to be contrary to the Equality Act 2010 as it disproportionately affected women.

The Ministry of Justice took immediate steps to stop charging fees in employment tribunals as a result of the Supreme Court’s judgment, and confirmed that it would put in place arrangements to refund those who had paid fees. The government will have to refund millions of pounds to the thousands of people charged for taking claims to tribunals since the introduction of the fee regime.

At the time of writing we have no information about the refund system. It is not yet clear whether claimants will need to apply for refunds or whether the tribunal itself will proactively repay fees
paid.

The Supreme Court left open the possibility of the government reintroducing fees on a fairer basis but we would not expect this to happen in the short to medium term.

Summary

• the judgment of the Supreme Court that employment tribunal fees were unlawful will have significant implications for employers including NHS organisations
• there will be an increase in claims but no one knows at the moment how large the increase will be
• employees who were unable to bring claims because they could not pay the fees are likely to bring claims now in the hope that the tribunals will extend the statutory time limits.