Employment Tribunal Fees Judgment July 2017

About four years ago, I was invited by the Department for Business to think through the potential ramifications of reforming the Employment Tribunal Court service. This included the provision to speak to Acas prior to lodging a claim, and the introduction of tribunal fees. Yesterday, in one of the most significant employment law decisions for fifty years, we learned that the Supreme Court has ruled that Employment Tribunal fees are unlawful because they have the effect of preventing access to justice. This is a momentous decision, and one that will have a considerable impact upon employees, employers, the tribunal system and indeed the process of conflict resolution. The immediate consequence of this landmark decision is that, as of yesterday, fees cease to be payable for claims in the Employment Tribunal (ET) and appeals to the Employment Appeals Tribunal (EAT), and fees paid in the past will be reimbursed.

The ET fees were introduced in July 2013 (“Fees Order”), meaning that Claimants who wanted to bring a claim against their employer had to pay a fee. The rationale and justification was the fees would transfer the cost of the tribunals from taxpayer to tribunal user, deter unmeritorious claims and perhaps encourage earlier settlement.

Yesterday, however, the highest court in the UK decided in favour of the trade union, Unison, which argued that fees of up to £1200 were preventing workers from getting access to justice in a tribunal system which is primarily designed for processing small claims. This unanimous decision, by a panel of seven judges, came after the union lost in both the High Court and the Court of Appeal. The Supreme Court’s decision was reached on the basis that fees had resulted in a substantial fall in the number of claims being brought to court (a 70% drop), and further that such fees were also contrary to the Equality Act 2010 and thus indirectly discriminatory as they disproportionately affected women. Indeed, cases brought to tribunal plummeted in the first year after the introduction of fees, including a 90% fall in sex discrimination cases.

As a reminder, the number of claims going to tribunal had reached 258,000 prior to the changes. In 2010, the Coalition government identified some £9m of annual savings that could be derived from the ET system to the tax payer (along with a range of other austerity measures).

On whether the fees encouraged settlement, the Court concluded that “it appears that the proportion of cases settled through Acas has slightly decreased since fees were introduced. That is consistent with the view that some employers were delaying negotiations to see whether the claimant would be prepared to pay the fee”.

Yesterday’s decision is likely to result in a deluge of claims. The courts have, for a long time, strongly encouraged parties to attempt to mediate with a view to settlement in order to keep their claim out of court altogether where possible. The introduction of Judicial mediation is an example of this. Our research at Globis Mediation Group indicates that the longer a dispute is left to fester, the more difficult it becomes to resolve. Yesterday’s ruling can thus be seen as a boon for organisations with conflicted parties to encourage dialogue and resolution instead of heading for court. Now, more than ever, is the time to ensure that line managers are equipped with the skills to nip any potential conflicts in the bud.

For those with an interest in the detail, a copy of the 45-page judgment is available here.

Clive Lewis is a business psychologist specialising in employee and industrial relations.