News | Government reminded of rule of law in Supreme Court decision quashing tribunal fees

Employment tribunal fees had made access to justice unaffordable, justices say

26 July 2017

Employment tribunal fees introduced in July 2013 by way of statutory instrument have been ruled unlawful by the Supreme Court in a decision taking the government back to basic principles about the rule of law and access to justice.

“For the fees to be lawful, they have to be set at a level that everyone can afford, taking into account the availability of full or partial remission,” the court said. “The evidence now before the court, considered realistically and as a whole, leads to the conclusion that that requirement is not met.”

The fees were brought in during Chris Grayling’s tenure as justice secretary, as part of a wider drive to reduce the financial burden of the justice system for taxpayers. Shifting some of the cost on to applicants – now referred to as ‘users’ – the fees were also intended to encourage early settlement and discourage unmeritorious claims.

In practice, they led to an “undisputed and precipitated drop” of nearly 70 per cent in the number of cases brought in the following 18 months, prompting further concerns over access to justice as the government unveiled plans for fee hikes across the board.

Just last month, a review of workplace laws by RSA chief executive Matthew Taylor highlighted the impact of the fees on the effective enforcement of employment rights. In his report, Taylor made several proposals to improve access to justice, including the removal of fees for the first permission hearing.

The Supreme Court said the question was whether, despite the early conciliation procedure and the remission scheme, the new rules had acted as a brake on access to justice. That question should be decided “according to the likely impact of the fees on behaviour in the real world”.

“Fees must therefore be affordable not in a theoretical sense, but in the sense that they can reasonably be afforded. Where households on low to middle incomes can only afford fees by sacrificing the ordinary and reasonable expenditure required to maintain what would generally be regarded as an acceptable standard of living, the fees cannot be regarded as affordable.”

The court had “a fundamental problem” with the assumption that the right of access to courts could lawfully be made subject to such impositions. Further, the justices warned that unaffordability was not the only obstacle to individuals bringing claims. “They can equally have that effect if they render it futile or irrational to bring a claim.”

This was especially true of applicants seeking to bring lower value claims, unless they had virtual certainty that their claim would succeed and that their fee would be refunded. “If those conditions are not met, the fee will in reality prevent the claim from being pursued, whether or not it can be afforded,” the court said. “In practice, however, success can rarely be guaranteed.”

The case started in June 2013, when trade union Unison brought a judicial review of the statutory instrument. At that stage the application was based on a breach of the EU principle of effectiveness. The High Court dismissed the application as premature.

A second claim brought in September 2014 was also dismissed. For the principle of effectiveness to be breached, there would have to be evidence that prospective litigants were “clearly unable to pay [the fees]”.

Appeals were dismissed. The imposition of a fee, the Court of Appeal said, would not constitute an interference with the right of effective access to a tribunal under EU law unless it made it “impossible in practice to access the tribunal”.

The argument shifted in the Supreme Court, with Unison relying not on EU law but on English common law. Going as far back as the Magna Carta, Lord Reed said in what is bound to become a seminal judgment, that “People must in principle have unimpeded access to [the courts]. Without such access, laws are liable to become a dead letter.”

Four years after it lodged the first application, Unison was in celebratory mood. “The government is not above the law,” said Unison general secretary Dave Prentis. “But when ministers introduced fees they were disregarding laws many centuries old, and showing little concern for employees seeking justice following illegal treatment at work.”

Most commentators have applauded the ruling as a positive outcome for employees deterred from bringing claims (the examples given by Lord Reed are a remarkable illustration of how the rules impacted not just the most vulnerable but middle income families too). But the ruling will also be of particular interest to workers on casual contracts.

“Perhaps the greatest impact will be for so-called gig economy workers – the Uber drivers, CitySprint couriers etc. – who work on flexible, casual and intermittent bases, many of whom are workers but, as we have seen from recent tribunal judgments, have been denied holiday pay or not been paid the national minimum wage,” said Clare Gilroy-Scott, employment law partner at Goodman Derrick.

“For these workers, who do not have guaranteed work or protection from unfair dismissal, bringing claims was risky enough, without the further barrier of a tribunal fee which may have exceeded the value of their actual claim,” she said.

But some also warn of practical challenges in giving effect to the ruling, starting with the process required to implement the government’s decision to refund about £32m in unlawful fees.

A rise in employment tribunal claims could also put pressure on a creaking system. “The employment tribunals are already under strain following a reduction in judicial resources, with long claims being listed well into 2018 in some regions.  As claims go back up, this will need to be addressed by the government,” said Trowers & Hamlins’ head of employment Emma Burrows.

The question now for the government is whether it should seek to pass primary legislation to re-introduce fees that would need to meet the affordability requirement. Considering how little ET fees brought in and in light of the coalition’s slim majority, this may not be a priority.

This story was first published on Solicitors Journal on 22 July 2017 and is reproduced by kind permission

 

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