EMPLOYMENT TRIBUNAL FEES ORDER

Mark Higgins, Partner in our Employment Law department provides a brief overview of this new order.

The UK Supreme Court has today handed down its decision in the appeal pursued by UNISON against the legality of the Employment Tribunals and Employment Appeal Tribunal Fee Order 2013. The Court has allowed the appeal and has effectively quashed the Fees Order with immediate effect. From today, claimants lodging claims in employment tribunals will no longer be required to pay a fee to take a case to the employment tribunals nor will any party be required to pay a fee to pursue appeals in the employment appeal tribunal.

Since 2013, employees and workers wishing to access the employment tribunal service have had to pay substantial fees to enforce their legal rights. The rationale, according to Lord Reed (who gave the lead judgment in the appeal) was threefold: firstly, the cost burden placed on taxpayers to fund the ET system would be partly off-set by those using the service, secondly the requirement to pay a fee would incentivise earlier settlements, and thirdly, the requirement to pay a fee would serve as a deterrent for so-called ‘vexatious litigants’ i.e. those pursuing unmeritorious claims with a view to forcing the employer to settle the claim rather than pay legal costs of defending it.

The challenge against employment tribunal fees

UNISON’s challenge centred on the fundamental principle of access to justice. Rather than filter out the unmeritorious claims, the fees effectively barred access to justice for thousands of employees and workers whose rights had been infringed but who had been forced to abandon their claims in favour of meeting their monthly mortgage payments and other commitments at a time when they had often suffered a sharp loss of income. The effect was felt immediately with claims falling by approximately 75-80%. What had once been thronging places, Employment Tribunal hearing centres became almost deserted – except for the one or two cases brought by an unrepresented claimant hell bent on having his or her day in court. And this proves the point: it was apparent to all specialist practitioners that the ‘bread-and-butter’ cases which had formerly occupied the tribunal’s time had been swept away. Rather than dispensaries of justice, tribunals had become little more than theatre stage upon which a handful of misguided (but wealthier) claimants could parade their egos.

The challenge failed in the lower courts (including the Court of Appeal) initially on grounds of lack of statistical evidence to support what all practitioners knew to be the case. In later stages, (and as the statistics became more detailed and therefore harder to ignore) the emphasis switched to “fee remission” – the fact that poorer claimants could apply for a reduction in the fee they had to pay and hence were not barred from accessing justice after all. In reality, however, the threshold for eligibility for fee remission was so low that very few were able to meet it.

In allowing UNION’s appeal (i.e. reversing earlier decisions), the Supreme Court took a much more holistic approach. Access to justice is not purely a benefit to individual claimants as ‘court users’ but also a public benefit, since it is the pursuance of the thousands of individual cases that parliament’s laws are given practical purpose and the courts are given an opportunity to scrutinise, interpret and enrich those laws. It concluded that the empirical evidence now available showed that the Fees Order has not achieved the desired result. Indeed, there has been quite the opposite effect.

What employers can do to protect themselves

Employers are likely to read this news with dismay – especially those who were in business at the height of the employment claims ‘heyday’ in the early 2000s. The mid to long-term impact of today’s judgment is unclear. However, in the short-term, it is unlikely that the current Government will seek to reverse the impact of the decision, given the current constitution of parliament and the leftward shift in mood. The risk of an employer having to fight an Employment Tribunal (ET) claim has always been much higher than the risk of its offices burning down. From today, that risk has increased.

The news is not all doom and gloom, however. There are schemes for example the ABC insurance offering to employers by which they can protect their business (and the owners and directors personally) from these threats. However this decision could well trigger an early rise in premiums so Companies should move quickly to protect themselves, their companies and ultimately their other employees.

To learn how we can help protect your business from the threat of employment claims, click here

To read the Supreme Court’s full judgment, click here

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