Full rollout of refund scheme for Employment Tribunal fees

published on January 22, 2018

Employment Tribunal fees have been abolished with retrospective effect and the refund system has now been rolled out in full. A total of up to £32,000,000 is to be paid back to claimants and respondents who paid fees from July 2013.

• Background

• Unison's challenge

• Grounds of appeal

• The judgment

• The result

• What does this mean for employers?

• Could fees be reintroduced?

Background

On 29 July 2013 the Government introduced a fee structure for claimants wanting to bring claims in Employment Tribunals in England, Wales and Scotland, and to appeal decisions in the Employment Appeals Tribunal. Claims were divided into two types of claim: "type A" for claims such as unlawful deductions from wages and redundancy payments and "type B" for more complex claims such as unfair dismissal and discrimination. The rationale for the introduction of the fees was so as to ensure that people using the Tribunals contributed to the cost of running the system where they could afford to do so, rather than the full cost being met by the taxpayer, and to encourage people to look for alternatives, such as mediation, before going to an Employment Tribunal.

Under the structure, separate fees were charged at the "issue" and "hearing" stage of a claim: £160 and £230 respectively for "type A" claims, and £250 and £950 respectively for "type B" claims.

Unison's challenge

Following the introduction of the fees, Unison, the public sector trade union, challenged the lawfulness of the regime by way of judicial review, a case now referred to as "Unison 1". The claim, which was heard by the High Court, was initially dismissed in a judgment handed down on 7 February 2014. One of the key reasons for the dismissal of the claim was the fact that the High Court believed the claim to be premature due to the lack of evidence available as to the impact of the fees.

Further proceedings were filed by Unison on 23 September 2014 ("Unison 2") in which Unison were now able to rely on evidence as to the impact of the fees. However, the claims in Unison 2 were also dismissed. Permission to appeal the decisions in both Unison 1 and Unison 2 was, however, granted and the claims were heard jointly before the Court of Appeal. The Court of Appeal dismissed the appeals in August 2015. Although the Court of Appeal was struck by the dramatic decline in the volume of claims being brought in the Tribunals, it agreed with the High Court that the figures on their own were insufficient to establish that claimants were unable to pay the fees and therefore were unable to have effective access to justice.

Unison then appealed to the Supreme Court which heard the case in March 2017.

Grounds of appeal

Unison's appeal was based on the following grounds of challenge:

• The effect of the Fees Order on access to justice. This argument centred primarily on the concept of access to justice as a constitutional right enshrined in a common law, and arguments were also presented based on EU law and the European Convention on Human Rights. Unison's argument was that claimants could not afford to bring claims and were therefore being denied access to justice. It argued that, as a result, the fees were unlawful. Unison relied principally on the significant decline in the number of claims (around 66 to 70%) that had been brought since the fees were introduced.

• Indirect discrimination. Unison's case was that the imposition of a higher level of fees for type B was discriminatory against claimants with "protected characteristics", e.g. age, race and disability or, in the alternative, that charging higher fees for discrimination claims was indirectly discriminatory against women who brought the majority of such claims and others with protected characteristics who also brought them.
• The fees were ultra vires. Unison also argued that the fees frustrated the operation of Parliamentary legislation granting employment rights.

The judgment

On 26 July 2017 the Supreme Court unanimously allowed the appeal, declaring that the Fees Order had effectively prevented access to justice. It was noted that this was of fundamental importance in maintaining the rule of law and the right can be traced back to chapter 40 of the Magna Carta which states: "We will sell to no man, we will not deny or defer to any man either Justice or Right". Such words are not a prohibition on the charging of court fees but they are a guarantee of access to courts which administer justice promptly and fairly.

In a separate speech, the discrimination aspects of Unison's appeal were dealt with. It was noted that given the finding that the Fees Order was unlawful both at common law and EU law, it was unnecessary to reach a final conclusion on the discrimination issues. Nevertheless, Lady Hale of the Supreme Court set out her view that the Fees Order was indirectly discriminatory on the basis that type B cases including discrimination claims attract a higher fee and as a higher proportion of women bring type B claims than bring type A claims, women are placed at particular disadvantage compared with men.

On whether the higher fee for type B cases could be justified, the correct question was whether charging higher fees for type B claims was consistent with the aims of the Fees Order as a whole. The method chosen must be a proportionate means of achieving the relevant aim which in this case was transferring the cost burden from the taxpayer to users. It had not been shown that the higher fees for type B claims had been more effective in transferring the cost of the Tribunal service from taxpayers to users and accordingly, the higher fees could not be justified as a proportionate means of achieving the legitimate aim of the fees regime.

The Supreme Court also decided that the Fees Order imposed disproportionate limitations on the exercise of EU-derived rights and was therefore contrary to EU law. 

The result

As of 26 July 2017, Employment Tribunal and Employment Appeal Tribunal fees ceased to be payable.  The Government is now in the process of reimbursing all fees paid since 29 July 2013, a total of up to £32 million. The reimbursement scheme has, since November 2017, been rolled out in full. The scheme is open to both claimants and respondents who paid a fee and representatives and sponsors who paid a fee on behalf of the party to a claim and who have not been reimbursed. Eligible parties can apply online or by post.

What does this mean for employers?

Employees should expect to see an initial rise in the number of Employment Tribunal claims and will need to be aware that there may be a possibility that claimants might be able to bring historic claims where they were previously put off by the fees if they can demonstrate that it was "not reasonably practicable" for the claim to have been presented in time or, for discrimination claims, that it is "just and equitable" to extend the time limit for presentation of the claim.

With regards to the claims that were rejected or dismissed for the non-payment of a fee, such claimants may likely be able to reinstate those claims. Her Majesty's Courts and Tribunal service is in the process of writing to all affected parties whose claims were rejected for the non-payment of issue and hearing fees asking whether they wish their claim to be reinstated. The current estimate is that there are approximately 7,500 such cases.

Could fees be reintroduced?

In short, yes. The Supreme Court's decision in Unison analysed the lawfulness of the fees regime under the Fees Order. While that particular regime was unlawful, a different regime (one that, say, charged significantly less) might not be. Nevertheless, there are currently no indications that the Government is seeking to introduce a replacement fees regime.