What next for Employment Tribunal fees?

On Wednesday, the Supreme Court issued its judgment in the case of R (on the application of UNISON) v Lord Chancellor [2017] UKSC 51. The court unanimously held that the Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013 was unlawful under common law and EU law because it infringed access to justice, and that the fees regime was indirectly discriminatory to women. The regime was held to be unlawful from the outset, so the fees paid under it must be repaid. The employment tribunals have already stopped charging issue fees and some regional tribunals have begun issuing notices that pending hearing fees will no longer be payable.

UNISON began their challenge to the fees regime very soon after its introduction in 2013. After losing in the High Court and the Court of Appeal, few employment lawyers expected them to succeed. In explaining the long-standing importance of access to justice in the English legal system, Lord Reed cited Magna Carta and legal authorities from the 17th and 18th centuries. It would be difficult to over-state how emphatically the judgement linked access to the courts with the rule of law, and how scathing a defeat it represents for the Lord Chancellor. Access to justice and the rule of law are fundamental bulwarks against tyranny. For those reasons, the judgment should be welcomed. However, it gives rise to many questions and concerns.

Will there be an increase in the number of claims?
Many employers will be concerned that the abolition of fees will cause an increase in unmeritorious employment tribunal litigation. After the fees were introduced, there was a dramatic drop in the number of claims (somewhere between 66% and 70%). People will be able to bring claims that they could not afford to bring while the fees regime was in operation, so there will certainly be an increase. However, it is unlikely that claims will spike to anything like the same degree that they dropped after fees were introduced. Relying on statistics showing that the number of unsuccessful claims has been consistently higher since the introduction of fees, the Supreme Court roundly rejected the idea that the fees regime had succeeded in deterring unmeritorious claims. Vexatious litigants doggedly pursuing hopeless claims will remain a problem, and tribunals are being encouraged to make use of the tools already available to them, like sifting claims for merits at an early stage and imposing deposit orders on claims that do not appear to have reasonable prospects of success.

Can claimants now pursue claims that they did not bring because of the fees regime?
Most claims at the employment tribunal must be issued within three months, less one day, of the alleged unlawful activity. Therefore, a significant number of claims that people elected not to pursue because of the fees regime are now, on the face of it, out of time. There will surely be attempts to bring claims whose ordinary limitation period expired while the fees regime was in force, relying on the argument that it was only reasonably practicable to bring the claim after the fees regime was quashed. If the tribunals accept that the ordinary time limit can be extended in this way, then yes, claimants will be able to pursue claims that they did not bring because of the fees regime, provided they get their claims in quickly. However, if the time limit can be extended this way, I suspect that the number of claims brought under it will be limited. The potential claimant will not be able to commence proceedings if they entered a settlement agreement or resolved the dispute via ACAS, even if the quashing of the fees regime now makes them feel that they settled for less than they should have. Further, in my experience, most potential claimants mentally move on from the dispute when they decide not to litigate it. To those people, wading back into the dispute by bringing a claim will not be an attractive prospect.

How will the fees be refunded?
The employment tribunals are going to be stretched to their administrative capacity. The online claim form appears already to be in the process of being reworked to remove the requirement to pay fees, and the tribunals will need to confirm to all claimants that pending hearing fees are no longer payable. Only after all that is sorted can they even begin to address the issue of refunding the fees paid under the regime. The process will not be as straightforward as refunding the fees to everyone who paid them. In many successful claims, respondents were ordered to pay the claimant’s fees as part of the damages order, and many cases settled by ACAS will have included payment of the claimant’s fees by the respondent. Will the fees be refunded to the respondent in those cases? Will those who believe they are entitled to a refund have to make an application? How will the tribunal resource this? How much will it cost? For now, we simply don’t have answers to these questions.

What will the government do next?
Most of the commentators assume that the government will introduce an alternative fee structure to replace the regime that has been quashed. I am not so sure. The judgment is clear that the fees order overstepped the authority that parliament had granted the Secretary of State in primary legislation. Put simply, this means that if the government wants to implement a new fees regime that is safe from legal challenge, they must do so via an act of Parliament. Firstly, there are some rather pressing issues to do with the European Union that are taking up quite a lot of Parliament’s time and energy and it is hard to see how this issue will take priority over those. Secondly, even with the DUP, the government have only a tiny majority. Getting anything through parliament would be a challenge but this is a very contentious issue. The Labour Party, the Liberal Democrats, the SNP, Plaid Cymru and the Green Party will all oppose new employment tribunal fees. Employment tribunal fees were never introduced in Northern Ireland, so it is hard to see how the Conservative Party can rely on the DUP on this issue. I suspect that it will be a few years before the government attempts to introduce a new fee regime and that they will consult widely before doing so. A careful consultation may even persuade them to reform the tribunal system in other ways instead.

By Mark McWilliams

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