Employment Tribunal fees unlawful: fees no longer payable, all fees paid previously repayable to claimants

by Nick Humphreys & Alex Brooks

A seven-person Supreme Court has ruled that Employment Tribunal fees prevent access to justice and are unlawful, with the immediate consequence that, as of today:

  • Fees are no longer payable for claims in the Employment Tribunal (“ET”) or for appeals to the Employment Appeal Tribunal (“EAT”); and
  • All ET and EAT fees that have been paid in the past must be reimbursed by the Lord Chancellor’s Department.

Background to the appeal

Employees have been granted a number of statutory rights by Parliament, many of which have their roots in EU law. The majority of these rights can only be enforced before the ET and the EAT. Until 29 July 2013, a claimant could bring proceedings in the ET, or an appeal against an ET decision in the EAT, without needing to pay any Tribunal fees.

The Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013 (“Fees Order”) established that Tribunal fees must be paid in order to 1) bring proceedings; and 2) to proceed to a full hearing.

Dependent on the nature of the claim being made (e.g. discrimination or unlawful deductions from wages), these fees could range from £390 to £1,200 for a single claimant (with fees for claims such as discrimination falling at the top end of the range). The stated purpose of the Fees Order was to transfer the cost of the Tribunal service from the taxpayer generally to its direct users, as well as to limit the number of purely vexatious, “nuisance” claims that did not have any legal merit.

There was a limited possibility for a means-tested full or partial remission of fees; however, this has been applied in only a very small handful of claims. Any claim or appeal had to be rejected if it was not accompanied by a fee or a remission application.

Following the introduction of ET and EAT fees on 29 July 2013, the number of claims accepted by the ET has fallen by approximately 70%, compared with the number of claims accepted by the ET prior to the introduction of fees.

The appeal to the Supreme Court, which was brought against the Lord Chancellor by union UNISON, essentially argued the Fees Order was unlawful for the following reasons:

  • It unjustifiably interfered with the fundamental right of access to justice, which is enshrined in EU law and UK case law;
  • It unjustifiably limited the effectiveness of employment rights legislation; and
  • It unlawfully discriminated against women and other protected groups.

The Supreme Court’s Judgment

All seven Supreme Court Justices agreed with UNISON’s arguments and the appeal was allowed in full, with Lord Reed giving the lead judgment on issues 1 and 2 above, and Lady Hale giving the lead judgment on issue 3.

The Fees Order was found to be unlawful under both domestic and EU law, because it has the effect of preventing access to justice (which is a fundamental right under domestic and EU law). Since the Fees Order has had that effect from the moment that it was made, it has therefore always been unlawful and must be overturned with retrospective effect.

The Supreme Court compared ET and EAT fees to fees payable in the civil courts for small claims; whilst, in the civil courts, fee amounts are related to the value of the claim brought, ET and EAT fees bear no relation whatsoever to the value of the claim. Accordingly, Tribunal fees are the most frequently-cited reason for claimants choosing not to bring a claim in the ET, since the huge majority of pre-Fees Order claims were in respect of compensation sums of less than £5,000, even in the case of discrimination claims (for which compensation is uncapped).

The Supreme Court also found that the Fees Order is indirectly discriminatory, contrary to the Equality Act 2010, since it put women and other protected groups at a particular disadvantage. This is because a higher proportion of protected groups (particularly women) bring discrimination claims (which require the payment of higher fees) than bring the other, cheaper types of claim.

In conclusion, the Supreme Court found that the charging of fees, and in particular the charging of higher fees for certain types of claim (such as discrimination), was not a proportionate means of achieving the stated aim of transferring the cost of the Tribunal service from taxpayers to users. It also found that meritorious as well as unmeritorious claims may be deterred from bringing claims as a result of the fees charged, and there was no correlation between the payment of fees and the merits of the case or incentives to settle claims.

As a result of the finding that the Fees Order has always been unlawful, the Lord Chancellor’s Department has provided an undertaking to reimburse all ET and EAT fees that have been paid since the Fees Order came into force on 29 July 2013.

Comment

In the short term, the following questions remain unanswered and will be of significant interest to all claimants, appellants and potential claimants from the past 4 years:

How, and to whom precisely, must applications for reimbursements of fees paid during the past 4 years be made, and how will the Lord Chancellor’s Department deal with the influx of applications for reimbursement that are likely to be made during the coming weeks and months? It is estimated that some £32 million in fees shall be repayable to claimants and appellants; accordingly, this is likely to be an administrative nightmare for the Lord Chancellor’s Department in the wake of the significant egg that has been delivered to its face by the Supreme Court.
What effect will this judgment have for potential claimants from the past 4 years that decided not to bring a Tribunal claim that might have been successful, since they did not want to or could not afford to pay Tribunal fees, and for whom the time limit for bringing a claim has now expired? One possibility is that a claim may be brought against the Lord Chancellor’s Department; however, this seems unlikely given that the merits of any individual claim would require the participation of the relevant employer. Alternatively, and perhaps more likely, is that the Tribunal could be asked to exercise its discretion to extend the time limit for bringing a claim, on the grounds that it is just and equitable to do so in light of the fact that the Supreme Court has found that the Fees Order should never have been brought into force; accordingly, but for the existence of the Fees Order, their claim would have been presented in time.
What is clear is that the Supreme Court’s judgment is only the beginning of the story. Claimants that have previously brought a claim in the ET, and appellants that have previously brought an appeal in the EAT, shall now need to apply (in an as-yet undetermined form) for reimbursement of all fees paid. Additionally, there now appears to be scope for a significant number of potential claimants from the past 4 years to apply for their claims to be accepted by the ET on the grounds that the time limits that apply to their respective claims should be extended.

Another point to consider is that the Tribunal system has been significantly geared down due to the fall in claims following the introduction of the Fees Order, with staff not being replaced due to the significant reduction in their work. Given the potential for a flurry of claims to be issued now, the Tribunal system, which is already stretched in places, may well reach breaking point under the strain of an acute increase in work.

If you have any queries about this article, or if you would like to discuss any of the issues raised in it, please contact Nick Humphreys or Alex Brooks, whose details appear below.

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About the contributors

  • Nick Humphreys Partner

    Nick has acted for numerous multi-national, publically listed corporations as well as public and third sector clients. His clients include travel sector clients, industrial conglomerates, hotels, media organisations, marine businesses and charities

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  • Alex Brooks Solicitor

    Alex advises on the full range of contentious and non-contentious employment law and HR issues and acts for both employers and individuals on employment tribunal claims involving unfair dismissal, discrimination, breach of contract and whistleblowing

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