August 8, 2017

Tribunal Fees Removed in New Landmark Ruling

The government has lost a landmark ruling on tribunal fees, putting employers at risk of a rise in malicious or vexatious claims as employees regain “access to justice”.

Employers face what some commentators are calling ‘a massive surge’ in employment tribunals as a result of the Supreme Court decision in UNISON v The Lord Chancellor [2017], with the Supreme Court ruling that the government’s decision to make employees pay to bring tribunal claims against an existing or former employer was illegal.

Whether such an outcome occurs – or if it does, when – are very much open to debate, but there are a number of questions that arise from this judgement:

  1. When should we expect to see the ‘flood’ of new cases from this ‘burst dam’ (if it happens at all)? Immediately? 6-12 months? Two years?
  2. Will we see an increase in historic (ordinarily) out of time cases brought because employees were denied justice due to the (un)affordability of the unlawful fee regime?
  3. How will Acas handle a ‘flood’ of demand for the Early Conciliation Service, especially when it is already considered (in some quarters) to be under-resourced?
  4. With Britain’s most senior Judge Lord Neuberger requesting more clarity from the Government about how UK law will be developed after Brexit, will previous ECJ rulings be interpreted for these claims?

Employment tribunal fees were introduced by the coalition government in July 2013. Charges started at £160 for issuing a claim for lost wages or breach of contract and increased if the case was heard in a tribunal.

More serious claims, including unfair dismissal, came with a fee of £250 plus a hearing fee of £950. This meant total charges came to £1,200, with appeals against decisions costing a further combined sum of £1,600.

The government said at the time that this was good for the administration of justice and British businesses because it would prevent vexatious claims without any merit cluttering the tribunal system.

What led to the removal of tribunal fees?

Since the introduction of fees the trade union movement – led principally by the TUC and Unison – has challenged the decision, claiming that it denied access to justice and discriminated against female workers on the basis they are unlikely to meet the payment of fees due to their (more likely) part-time working status.

Initially Unison brought a challenge through a series of judicial reviews (i.e. contesting the legitimacy of the government to bring in such legislation), which resulted in the status quo being maintained, in part due to a lack of supporting evidence.

However, a recent report from the government showed a 70% drop in tribunal claims after the fees were introduced in July 2013.

And when the matter went to the Supreme Court, the Court agreed with Unison and decided the imposition of fees did discriminate against women and – furthermore – breached both UK and EU legislation on access to justice.

Prior to the introduction of fees a number of employers’ organisations and businesses (including Moorepay), in principle agreed that fees might be a good thing, but the amount imposed by the government was thought to be too high; a matter the Supreme Court commented on.

It is open to the government to reconsider its position and possibly reduce the fees, but they have already accepted the Court’s Judgement declaring that they will abolish fees and repay any money paid from July 2013 to present, at an estimated cost of £27-32m.

What next for employment tribunals?

While descriptions of ‘a dam bursting’ are clearly hyperbole, employers should anticipate a higher chance of claims being made against them and act accordingly.

We will be investigating this ruling and the questions it throws up, and reporting back with our assessment of the likely outcomes for employers in due course.


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About the author

Francis Scoon

Francis has over 20 years’ experience of Employment Law and HR related issues gained in both large public and private organisations. As well as representing SMEs, Francis has worked in the Employment Department of a large regional law firm, advising preparing and representing cases on behalf of claimants. Before joining Moorepay, Francis was a Senior Advocate where, in addition to maintaining a caseload of employment tribunal cases covering all aspects of employment law, he managed a team of advocates and an administrator.