The Supreme Court has, this morning, ruled that The Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013 SI 2013/1893 ('Fees Order') is unlawful under both domestic and EU law because it has the effect of preventing access to justice. Consequently, the Supreme Court has ruled that the Fees Order must be rescinded with immediate effect. All fees paid between 2013 and today's date will have to be refunded, at an estimated cost of £27 million.

Background to the Fees Order

On 29 June 2013, the Government introduced the Fees Order to require payment of a fee to bring a claim in the Employment Tribunal (ET) or the Employment Appeal Tribunal (EAT).

The Fees Order requires an issue fee to be paid when a claim form is presented to an ET, and a hearing fee prior to the hearing of the claim. The amounts depend on whether the claim is brought by a single claimant or a group, and whether the claim is classified as “type A” (generally require little work and have short hearings) or “type B” (includes unfair dismissal, equal pay and discrimination claims). For a single claimant, the fees total £390 for a type A claim and £1200 for a type B claim.

The Fees Order also makes provision for the full or partial remission of fees if a claimant’s disposable capital, together with their partner’s, is below a specified amount (in most cases, £3,000). A claim or appeal must be rejected unless it is accompanied by a fee or a remission application.

The stated aims of the Fees Order are to transfer part of the cost burden of the tribunals from taxpayers to users of their services, to deter unmeritorious claims, and to encourage earlier settlement.

Application for judicial review of the Fees Order

Shortly after the Fees Order was introduced, the trade union firm, UNISON, instigated proceedings for judicial review, arguing that the making of the Fees Order was not a lawful exercise of the Lord Chancellor’s statutory powers and that the prescribed fees interfere unjustifiably with the right of access to justice under both the common law and EU law, frustrate the operation of Parliamentary legislation granting employment rights and discriminate unlawfully against women and other protected groups.
However, UNISON were unsuccessful in their arguments before both the High Court and the Court of Appeal. Despite evidence showing a sharp decline in the number of employment claims being brought after imposition of the Fees Order, both courts found that there was insufficient evidence that claimants had been deterred from bringing claims purely because of the introduction of fees.

Supreme Court decision

Now, in today's landmark judgment, the Supreme Court (Court) has found that the Fees Order was unlawful. A fuller note discussing the Court's reasoning and the consequences of this decision will follow, but a short summary of the key points are set out below.

1. The constitutional right of access to the courts is inherent in the rule of law. If there is a real risk that people will effectively be prevented from having access to justice, or if there is a disproportionate degree of intrusion into access to justice than can be justified by the purposes of the Fees Order, then the Fees Order is unlawful.
2. Unlike court fees for small claims in the civil courts which are related to the value of the claim, ET and EAT fees bear no direct relation to the amount sought. Consequently, the Court found that the fees were a deterrent to claims for small amounts or non-monetary remedies, which was not remedied by allowing them to be recovered as costs if the claim was successful (because the right to have access to justice is not restricted to the ability to bring successful claims). The Court noted that the effect of the Fees Order was a dramatic and persistent fall in the number of ET claims (especially lower value claims and claims seeking a non-financial remedy), and that fees were the most common reason for not submitting a claim.
3. Regarding access to justice, the Court looked at the impact upon behaviour in the real world and whether the fees can reasonably be afforded, finding that this was not the case for households on low to middle incomes. Even where fees were affordable, the Court found that there were some claims which were not financially sensible to bring, given that success could never be guaranteed. The Court also found that, although the reasons for the Fees Order constituted legitimate aims, the Fees Order was not necessarily the least intrusive means of achieving these aims and that the Fees Order unlawfully contravened the EU law guarantee of an effective remedy before a tribunal by imposing disproportionate limitations on the enforcement of EU employment rights.
4. Finally, the Court found that the Fees Order is indirectly discriminatory under the Equality Act 2010 because the higher fees for type B claims put women at a particular disadvantage (because a higher proportion of women bring type B than bring type A claims) and that charging higher fees was not a proportionate means of achieving the stated aims of the Fees Order.

What happens now?

Apart from the immediate revocation of the Fees Order and the Lord Chancellor's undertaking to repay any fees paid between 2013 and today's date, next steps are currently unclear.

In the short to medium term, the Government is likely to consult again about a new fees regime, perhaps with fees at a lower level or requiring employers to pay a fee when they lodge their ET3.

Following today's decision, we expect that the Employment Tribunals Service will now be looking at how to rewrite the employment tribunal rules of procedure and how to reconfigure the online system to remove all mention of fees and the remission regime: a busy summer lies ahead.

A fuller note discussing the Court's reasoning and the consequences of this decision when we know more will follow. In the meantime, a copy of the Supreme Court's judgment can be found here.