Removal of Employment Tribunal Fees – Background and Rationale

Posted on: July 27th, 2017

The background to the decision.

Employment Tribunal fees were introduced in 2013 in two bands. For “type A” claims, like unlawful deduction of wages, employees were required to pay total fees of £390. For “type B” claims like unfair dismissal and discrimination, the fees were up to £1,200. The Government justified this policy change on the basis fees were needed to reduce vexatious claims, encourage settlement and pass the burden of costs for the Employment Tribunal system on the users.

From the press reports it may feel that this decision came slightly out of the blue, however, this decision actually followed a 4 year court battle bought by Unison, which has challenged the introduction of fees from the start. Unison argued that the fees restricted access to justice and were also discriminatory, as the higher fees for discrimination claims affected more women than men.

Unison’s challenge had failed in all the lower courts due to a lack of evidence that fees were reducing access to justice, with the High Court believing the claim was premature. Support from the Equal Opportunities Commission and other interested parties, coupled with new statistical evidence and examples resulted in their recent slightly unexpected success in the Supreme Court on Wednesday.

What was the rationale for the decision?

The Supreme Court went right back to the constitutional rights set out in British case law, and the judgment is in a sense a legal history lesson. The Supreme Court explained that access to the courts is a constitutional right and an essential element of the rule of law. It is key to the system of government that citizens have confidence that the laws introduced by the Government will be enforced, otherwise they are liable to become meaningless.

The Supreme Court found that the introduction of Employment Tribunal fees had gone against this principle, and had significantly restricted access to justice and was unreasonably preventing employees from bringing claims.

They considered detailed examples showing how fees could create an impossible situation for employees bringing claims worth less than the fees payable, or being ineligible to claim a fee remission, despite having to fall below the acceptable standard of living for several months to fund the fees, or earning less than the national minimum wage.

They took into account the statistical evidence showing the huge drop in the number of claims, surveys confirming that employees were not bringing claims due to the fees, and evidence that the remissions system was not working. 

They were concerned that the fee system didn’t take into account the particular nature of Employment Tribunal claims, for example that these can include claims with no money value, such as for a declaration of employment status, and to protect fundamental rights, such as the national minimum wage. They also felt the level of fee didn’t take into account the low value of many claims, and the difficulties in enforcing Employment Tribunal awards, with 35% of successful claimants not actually receiving the compensation awarded.

The Government also failed to convince the Supreme Court that its objectives in introducing fees had been met in practice. The Supreme Court found that the number of claims that were successfully settled outside of the Employment Tribunal had actually gone down since fees were introduced, driven by employers “wait and see” approach to see whether the employee would pay the fee before negotiating. They also found that the fees weren’t actually covering the cost of the Employment Tribunal and the level of fees ignored the basic economic principles that in order to maximise revenue you need to set an optimal price – here the price was too high, reducing demand and the income achieved.

Importantly, they also felt that the Government had overlooked that Employment Tribunal cases are important for society as a whole, and not just those that use the system, and that the fees system was effectively encouraging employers to break the rules without fear of repercussions.

The emphasis was that if the employment relationship is to work, the possibility of claims being bought by employees whose rights are infringed must exist so that employment relationships are based on respect of those rights.

It’s a clear example of the court system curbing the Government’s powers and ensuring Government policies don’t go too far in restricting fundamental rights.