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Fees for Employment Tribunal claims - now ruled unlawful

The system of fees for bringing employment tribunal claims was ruled unlawful by the Supreme Court on 26th July 2017. Fees are not payable for claims brought now, and fees paid in the past should be repaid.

Following the Supreme Court's ruling (below) in July 2017, the employment tribunal fee regime which has been in place since 2013 is unlawful, and has been since it was introduced. The decision is based primarily on UK constitutional law: that the rule of law requires people to have access to the courts unless Parliament has clearly said otherwise. For the old rules on fees, see Archive below.

Submitting a tribunal claim now

Claims can now be submitted without fees. www.gov.uk/employment-tribunals/make-a-claim

Initially after the judgment, online claims were not possible while the system was updated, so claims (without fees) had to be submitted by post or in person. However online claims too can now be made without paying a fee.

Repayment of fees

Employment tribunal fees paid in the past should be repaid. The government is expected to announce details of a refund scheme in September 2017 (Daniel Barnett email 17/8/17). There will be the question of what happens if the tribunal ordered the employer to reimburse the fee to the claimant, including if the tribunal ordered this but the employer failed to pay; or perhaps if fees were reflected in an amount paid by the employer under a settlement agreement.

Past claims rejected, or never brought due to fees

Claimants may now be seeking to reinstate claims which were dismissed for non-payment of fees.

Also there is the question whether an employment tribunal will allow late submission of a claim (outside the three month time limit) if the claimant was deterred by the fees from making a claim in time. It has been suggested (in July) that anyone previously unable to bring a claim because of fees but who wants to pursue it should issue a claim without further delay: Supreme Court rules that Employment Tribunal fees are unlawful - practical implications for Tribunal Claimants and employers (link to freemanssolicitors.net).

There are case management orders relating to the consequences of the Supreme Court decision on fees for Engand & Wales and Scotland.

If the tribunal will not allow a late claim, could a claimant sue the government for damages for having brought in unlawful regulations which deterred her from claiming in time?

Fees in future?

The Supreme Court's ruling is that the fee regime established in 2013 is unlawful, not that any employment tribunal fees will be unlawful.

The government might therefore pass regulations (or more likely issue a consultation on proposed regulations) to introduce a new system of fees which are more proportionate and affordable, and which do not have such a deterent effect on people enforcing their legal rights. However this seems unlikely for the time being, with the government busy on Brexit and the risk of further judicial review proceedings to challenge any new regulations.

Alternatively at some stage the government could propose an Act of Parliament, to be passed by Parliament, setting up or authorising a new fee regime. This might itself contain initial fee levels, and/or (legally possible if not necessarily politically) give express authorisation to override UK constitutional principles when regulations set fee levels. However such legislation would be politically contentious. It is therefore unlikely to happen at present when the government does not have a majority in Parliament. In any event it would probably not happen until after Brexit, when the fees could no longer be challenged under EU law (though the Supreme Court's decision was based first and foremost on domestic UK law).

Supreme Court ruling

R (Unison) v Lord Chancellor (link to bailii.org), Supreme Court, 2017
The Supreme Court unanimously ruled that the employment tribunal fee regime in place since 2013 is unlawful. Significantly in view of Brexit, the court based its decision first and foremost on UK constitutional law rather than European law. It stressed the importance of the rule of law. Inherent in that is a UK constitutional right of access to the courts. 'Without such access, laws are liable to become a dead letter, the work done by Parliament may be rendered nugatory, and the democratic election of Members of Parliament may become a meaningless charade'. The Supreme Court made clear that access to tribunals and other courts provides a service to society in general rather than just to individual claimants: for example resolving unclear issues of law, and society being aware that there is a remedy if legal rights are breached.

Accordingly, in the absence of clear authority in the relevant Act of Parliament, the Lord Chancellor cannot impose fees if there is a real risk that persons will effectively be prevented from having access to justice, and the degree of intrusion must not be greater than is justified by the objectives which the measure is intended to serve. The court held that the current fee regime did not meet either of these tests. The court pointed for example to the long-term reduction of around 66-70% in claims accepted by tribunals. It said fees must be reasonably affordable, not just affordable in a theoretical sense. Also, rather than the fees deterring unmeritorious claims as intended there was now a larger proportion of unsuccessful claims; the fees had not encouraged settlement of claims as was intended, indeed they could deter employers from settling as employers waited to see whether the claimant would pay the fees; and it was elementary econonics that maximising the fees was not the way to maximise government revenue from them, given their deterent effect.

As regards enforcement of UK employment law which is underpinned by EU law rights (including most of UK discrimination law as it applies to employment) the fee regime was also in breach the EU law principle of effectiveness - namely that the procedural requirements for domestic actions must not be 'liable to render practically impossible or excessively difficult' the exercise of rights conferred by EU law.

Lord Reed's judgment which which all the judges agreed dealt with the issues above. A shorter judgment by Lady Hale, with which the judges also agreed, held that the fee regime was also unlawful as being indirect discrimination.

Link: Comment: Brutal and elegant - tribunal judgment will resonate for years, by Paul Rogerson, 26/7/17

Archive: the old fees system which was ruled unlawful in July 2017

The fees system (no longer applicable)

Fees were payable for taking a claim to an employment tribunal, unless one is entitled to 'remission'.

There were two levels of fee, depending on whether it is a Type A or Type B claim. Equality Act claims (and unfair dismissal claims) were Type B, which is the higher fee rate. For these the claimant had to pay:

There were some ways in which a fee may not be payable, or may be refunded:

There were also other fees for various types of application, and a fee (payable by the employer) for mediation by the judiciary. There were special rules for claims brought by more than one person, such as equal pay claims.

Official guidance on fees (no longer applicable)

Other guidance (may be no longer applicable)

Fall in Tribunal claims

The number of employment tribunal claims has fallen dramatically since the introduction of fees in 2013. In the year to June 2013, employment tribunals received on average just under 13,500 single cases (ie cases brought by one person) per quarter. From October 2013, after fees were introduced, the number of single cases has averaged around 4,400 per quarter. Source: House of Commons library Briefing Paper, November 2016.

Fee remission (no longer applicable)

Fees could be waived or reduced for some people on benefits or low incomes.

From October 2013 the household's disposable capital (savings etc) was relevant, as well as income.

You needed to pass both the capital and the income test (unless there are 'exceptional circumstances', see below). As regards capital, to get full remission on a fee of less than £1000 (normally any employment tribunal fee will be less than this amount), a single person with no children needed disposable capital below £3000. However if the claimant or their partner is aged 61 or over, there was a higher limit of £16,000. Some types of capital were disregarded, for example one's main or only home.

The claimant also needed to qualify from the point of view of the household's income:

You didn't need to send evidence of income unless asked for it. However if you were claiming on the basis of a benefit you had only recently started receiving (for example, in the last few days), the Department for Work and Pensions might not be able to confirm your eligibility when asked by the tribunal so you should provide a letter from the Jobcentre Plus. Also it was worth getting together documents to prove your savings and income in case the tribunal asks for them.

Even though not entitled to remission under the normal rules, you might be entitled to relief if there are 'exceptional circumstances'. Possible examples are given from page 28 in Court and Tribunal fees - Do I have to pay them, EX160A (on justice.gov.uk).

It was possible to appeal against a refusal to allow remission.

The rules were in the Schedule to The Courts and Tribunals Fee Remissions Order 2013, SI 2013/2302.

Repayment by employer if claim is successful?

If the claimant was wholly or partly successful in their tribunal claim, the tribunal had power to order the employer to reimburse the fee to the claimant. The tribunal had a discretion whether to do this, but the intention was that the tribunal will normally order repayment if the claim is successful. The guidance in T435 says 'The general position is that, if you are successful, the respondent will be ordered to reimburse you, but the tribunal has no power to order reimbursment of fees paid if you lose your case' (Employment tribunal fees for individuals, T435 (on justice.gov.uk)). For an example of a 2016 decision on repayment of Employment Appeal Tribunal fees, see Coletti v Borealis Driver Services, from paragraph 7, where the EAT awarded repayment of £1,800 out of £2,400 fees paid, to reflect the fact that not all the claimant's appeals were successful.

Where a settlement agreement is reached, that agreement would deal with the fee.

Even where the tribunal ordered the employer to pay compensation and to repay the fee, the claimant bore the risk that the employer will not pay up. Employers often did not pay out compensation awarded, and an employer who does not pay the compensation owing will doubtless also not repay the claimant's fees. See Remedies: Enforcement: will I actually receive the compensation? which links to some research on non-payment of compensation awards published in November 2013. Also Unison says: "research commissioned by the MOJ in 2009 found that of those awarded compensation by the Employment Tribunal, 39% had received nothing from the employer 42 days after judgment. One year after judgment 31% had still been paid nothing" (Date set for justice over tribunal fees (link to www.unison.org.uk)).

Further links on tribunal fees:

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Last updated 15th September, 2017