Watch: Employment tribunal fees - major consequences for employers.

Darren Stevens provides an insight into one of the most important judgements handed down by the Supreme Court in the history of employment law. 

On 26 July 2017, in R (on the application of UNISON) v Lord Chancellor, the Supreme Court declared that the Employment Tribunals and the Employment Appeal Tribunals Fees Order 2013 was unlawful, and should be quashed. The immediate consequences of that decision will be that no tribunal fees will be payable by employees for the foreseeable future, and that the government will have to repay an estimated £32 million in respect of tribunal fees paid by employees since 2013.

Q&A

The Q&A below explains some of the likely consequences of the judgment in more detail, and why it is likely to have such profound and long-term effects on the behaviour and attitude to risk of both employees and employers:

Q. Why did the Supreme Court decide that employment tribunal fees were unlawful?

A. Because, as a matter of English and European law, the tribunal fees requirements infringed fundamental constitutional rights to access to justice. They were also indirectly discriminatory against women.

Q. In legal terms, was it a “close decision”?

A. No. The tabloid press described it as a “slap down” for the government. “Slap down” is not usually thought of as a legal term, but it is a perfect description in this case. The Supreme Court was scathing, even considering it necessary to explain the fundamental concept of “the rule of law” because it clearly felt that the government had driven a coach and horses through the fundamental legal right to access to justice, which went as far back to the Magna Carta. It identified that the poorest members of society were the worst affected.

Q. Does the requirement not to pay employment tribunal fees take effect immediately? 

A. Yes. But, in administrative terms, it will take a few days at least for the Employment Tribunal Service to change its online requirements which refer to the need to pay fees.

Q. Could the government, in future, introduce a different lawful employment tribunal fees regime to replace the old one? 

A. It could – but this almost certainly won’t happen for quite a while, if it happens at all. Before that could happen, the government would almost certainly issue a Consultation Paper on the subject and any such proposals would definitely be met with fierce political and union resistance. In its judgment, the Supreme Court seemed to anticipate that the government might try to quickly replace the old fees requirements with a new one, and indicated that simply introducing lower fees wouldn’t necessarily make tribunal fees lawful. The issues are far more nuanced than that.

In addition, in the light of the general election result, the political winds are now blowing in a very different direction to those prevailing when tribunal fees were introduced in 2013. Were the government to attempt to reintroduce tribunal fees any time soon, that could turn into a very hot political potato that the May government doesn’t need. And the focus on Brexit for the next 18 months at least is likely to leave the possible reintroduction of tribunal fees even lower on the government’s agenda.

Q. How will the Supreme Court decision change employee attitudes towards the merit of bringing employment tribunal claims?

A. This is going to be the really big change. The case is likely to literally change attitudes across large swathes of society. It is clear that huge numbers of employees, particularly the low-paid, have been put off bringing employment tribunal claims because of the tribunal fees regime.

In the short and medium term, we can expect to see a significant jump in the number of employment tribunal claims that will be brought. Particularly given the publicity surrounding the Supreme Court’s decision, many employees who believe that their employment rights have been infringed are likely to decide that they have “nothing to lose” by going to tribunal. The Supreme Court’s decision therefore makes the tribunal risk landscape for employers far less benign than they have been used to for the last few years.

Q. Is it possible that low-paid employees who were put off bringing tribunal claims by the high fees, and who are now outside of the normal three month time limit for bringing a claim, might decide to bring claims out of time and argue that they should be allowed to proceed now that there are no fees to stand in their way? 

A. That is possible and a potential development that Outset will be monitoring carefully.

Q. What can employers do to protect themselves?

A. Start with the fundamentals. Make sure that employment contracts and employment policies are up-to-date and relevant to present business circumstances. That simple step can head off many disputes before they develop into something more nasty. If employers make sure that the ACAS Code of Practice is always followed when dealing with disciplinary, poor performance and grievance matters, they will go a long way towards minimising tribunal litigation risk.

Overall though, employers receiving a greater number of tribunal claims is a near certain consequence of this decision. Inevitably, some of those claims will be entirely unreasonable.

Q. If the worst happens and an employer receives a tribunal claim, but defends it and wins, does it always mean that it has to pay its own legal costs?

A. No. The starting assumption in tribunal proceedings is that the winning party cannot recover its legal costs from the losing party. That said, Outset has acted for employer clients on several cases recently in which we have managed to secure costs orders against employees who have been shown to have acted unreasonably.

If you have any questions about the Supreme Court’s decision in the Unison case, or would like to discuss any employment law related difficulties in your business, including fixed fee advice and fixed fee contract/policy drafting arrangements, please feel free to contact any member of our Employment Law Team using the details below.