Supreme Court declares Employment Tribunal fees unlawful


01 August 2017

The decision of the Supreme Court on the 26th July 2017 in R (ex parte Unison) v Lord Chancellor [2017] UKSC 51 marks the very welcome end (at least at the moment) of fees in Employment Tribunals, declaring the Fees Order which introduced the fees “unlawful under both domestic and EU law because it has the effect of preventing access to justice” and also discriminatory; it was therefore “unlawful ab initio” (because all lawyers love a bit of Latin and “unlawful from the outset” wouldn’t have the same ring).

The Effect of Fees

The judgment includes a comprehensive rubbishing of the thinking behind the introduction of the Fees, pointing out that it had reduced the number of claims by between 66 and 70%, a “fall in the number of claims [which] has in any event been so sharp, so substantial, and so sustained as to warrant the conclusion that a significant number of people who would otherwise have brought claims have found the fees to be unaffordable”.

Key Objectives

The Court found that the Fees had also failed to meet the key objectives for their introduction, i.e.

  • to transfer the cost of the process from the taxpayer to the people who “used” the Tribunals (or caused it to be used) – the intention was to recover a third of the cost of the “service” whereas fees contributed less than 20% of the cost.
  • to reduce the number of unmeritorious claims – in fact the number of successful claims went down and the number of unsuccessful ones went up.
  • encourage early settlement – again it reduced the number of early settlements as employers often waited to see if the employee could afford to issue a claim or pay the hearing fee before making any offer.

Naked Litigation

The Supreme Court pointed out the “users” of Tribunals are usually there by circumstances rather than choice (e.g. they have been, or believe they have been, unfairly dismissed or discriminated against) and found that the Fee arrangements ignored “elementary economics and common sense” because it underestimated the “price elasticity of demand”. The Court was not persuaded by the Lord Chancellor’s argument that “if the households [of potential claimants with low- to middle-income] sacrifice all spending on clothing, personal goods and services, social and cultural participation, and alcohol, the necessary savings can be made to enable the fees to be paid” (para 94), i.e. if you want to claim unfair dismissal, you and your kids should go without clothes, friends and drink!

Fee Remission

The Court was also unimpressed by the provisions relating to the remission of fees either generally under Article 17 of Schedule 3 to the Fees Order or under Article 16, which allows the Lord Chancellor to give discretionary fee remission in exceptional circumstances. The original impact assessment in May 2012 predicted that 24% of claimants would get full remission and a further 53% would get remission of part of the fees (up to £950); in fact, only 29% of claimants (rather than the predicted 77%) were granted full or partial remission and, in the first year of the Fee regime, out of 86,130 claims only 31 discretionary remissions (or 0.03%) were granted!

ET not a Money Tree

The Judgment includes a fascinating insight into the realities of Employment Tribunal cases:

  • “in 2012/13, 34% of successful race discrimination claims resulted in awards of less than £3,000 and 52% resulted in awards of less than £5,000. The corresponding figures for religious discrimination claims, and claims of unfair dismissal, were similar.” (para 30)
  • “the median award in successful claims for unlawful deductions from wages in 2013 was £900, and that 25% of successful claimants were awarded less than £500” (para 31)
  • “only 53% of claimants who were successful before the ET were paid even part of the award prior to taking enforcement action …. Even after enforcement action, only 49% of claimants were paid in full, with a further 16% being paid in part, and 35% receiving no money at all.” (para 36)

Caveat Litigator

The case also provides a useful health warning to all litigants:

“it is necessary to bear in mind that it is generally difficult to predict with confidence that a claim will succeed. That is so for a number of reasons. One is that estimating prospects of success is not an exact science, especially before proceedings have been initiated. Depending on the nature of the case, initial estimates can often change during the course of proceedings as new information comes to light.” (para 28)

An End to Court Fees?

Sadly, the Supreme Court considered the fees in the County Court (which many people believe is discouraging individuals from issuing claims) and found that they were “designed in a way which is likely to have a less deterrent effect on the bringing of small claims” (para 20) so it seems that they are lawful.

Lawyers of the World Unite (or possibly in Unison?)

However, from a personal point of view, the Unison case is remarkable for what seems to me a resounding and unanimous “Up Yours!” to the politicians, bureaucrats and bean-counters who are presently in charge of so many aspects of the Court and legal system. Consider the following passionate extracts from the judgment of Lord Reed (which was adopted by the entire Court); I make no apology for the length of the quotations:

“The constitutional right of access to the courts is inherent in the rule of law. The importance of the rule of law is not always understood. Indications of a lack of understanding include the assumption that the administration of justice is merely a public service like any other, that courts and tribunals are providers of services to the “users” who appear before them, and that the provision of those services is of value only to the users themselves and to those who are remunerated for their participation in the proceedings. The extent to which that viewpoint has gained currency in recent times is apparent from the consultation papers and reports discussed earlier.” (para 66)

“At the heart of the concept of the rule of law is the idea that society is governed by law. … Courts exist in order to ensure that the laws made by Parliament, and the common law created by the courts themselves, are applied and enforced. That role includes ensuring that the executive branch of government carries out its functions in accordance with the law. In order for the courts to perform that role, people must in principle have unimpeded access to them. 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.” (para 68)

“Every day in the courts and tribunals of this country, the names of people who brought cases in the past live on as shorthand for the legal rules and principles which their cases established. Their cases form the basis of the advice given to those whose cases are now before the courts, or who need to be advised as to the basis on which their claim might fairly be settled, or who need to be advised that their case is hopeless. The written case lodged on behalf of the Lord Chancellor in this appeal itself cites over 60 cases, each of which bears the name of the individual involved, and each of which is relied on as establishing a legal proposition. The Lord Chancellor’s own use of these materials refutes the idea that taxpayers derive no benefit from the cases brought by other people.” (para 70)

“But the value to society of the right of access to the courts is not confined to cases in which the courts decide questions of general importance. People and businesses need to know, on the one hand, that they will be able to enforce their rights if they have to do so, and, on the other hand, that if they fail to meet their obligations, there is likely to be a remedy against them. It is that knowledge which underpins everyday economic and social relations. That is so, notwithstanding that judicial enforcement of the law is not usually necessary, and notwithstanding that the resolution of disputes by other methods is often desirable. (para 71)

“When Parliament passes laws creating employment rights, for example, it does so not merely in order to confer benefits on individual employees, but because it has decided that it is in the public interest that those rights should be given effect. It does not envisage that every case of a breach of those rights will result in a claim before an ET. But the possibility of claims being brought by employees whose rights are infringed must exist, if employment relationships are to be based on respect for those rights.” (para 72).

Stirring stuff, isn’t it? It makes me proud to be a lawyer!

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