Employment Tribunal fees Q&A: What happens now?

On 26 July 2017 the Supreme Court handed down judgment in R (on the application of Unison) v Lord Chancellor, the challenge to Employment Tribunal…

On 26 July 2017 the Supreme Court handed down its Judgment in the case of R (on the application of Unison) v Lord Chancellor, the challenge to the Employment Tribunal fee regime mounted by trade union Unison.

In a dramatic and surprising decision the Court held that the Employment Tribunals and Employment Appeal Tribunal Fees Order 2013 (which introduced the charging of fees into the Employment Tribunal system in July 2013) was unlawful and discriminatory. The fee regime was scrapped with immediate effect.

Whilst the initial shock has now subsided a little, the decision throws up many practical problems. We tackle some of your frequently asked questions below.

Why were Employment Tribunal fees abolished?

The Supreme Court held that the fees order was unlawful under both domestic and EU law as it had the effect of preventing access to justice and made it disproportionately difficult for employees to enforce their employment rights. The Court pointed to the “substantial and sustained fall in claims” as proof of this. Importantly, the Supreme Court also found the Fees Order to be indirectly discriminatory, primarily because a greater proportion of women than men bring more expensive Type B claims (including claims of sex discrimination). For a more detailed analysis of the reasons for the decision read our update.

Is access to the Employment Tribunal now free of charge? Does this mean we will see an increase in claims?

The Supreme Court ‘quashed’ the Fees Order, rendering it invalid. From the date of the decision (26 July 2017) until further notice, access to the Employment Tribunal will be free of charge. The online portal for the submission of claims has already been redesigned so that claims can be submitted without payment of a fee. A number of our clients have seen an immediate increase in claims. There may also be an initial surge in submissions as claimants seek to reinstate old claims (see below).

Will claimants who paid fees now be reimbursed by the government?

Yes. Back in 2013 when fees were first introduced, the Lord Chancellor gave an undertaking that, if the regime was subsequently found to be unlawful, all fees paid would be reimbursed by the Treasury. It is not yet clear how this will be done. A recent case management order issued by the President of the Employment Tribunals in England and Wales and the President of the Employment Tribunals in Scotland suggests that claimant’s will have to apply to the Employment Tribunal for reimbursement rather then receiving an automatic refund. However, a government announcement to confirm the procedure is expected in September 2017.

Can claimants whose claims were rejected or dismissed for failure to pay a fee now reinstate their claims?

Yes. Previously Rule 11 of the Employment Tribunals (Constitution and Rules of Procedure Regulations 2013 allowed the Tribunal to reject a claim where the prospective claimant had not paid a fee or applied for help with fees. However, this rule has now been quashed along with the fee regime. Rule 40, which allowed the Tribunal to dismiss any claim where the claimant had failed to pay an additional fee in advance of the hearing, has also been quashed.

Now the fees regime has been declared unlawful, it follows that any decisions taken to reject or dismiss claims on the grounds of non-payment are retrospectively unlawful. Many claimants may therefore seek to have their claims reinstated in light of the Supreme Court’s decision. 

Until the anticipated government announcement in September, we do not know exactly how such claims will be dealt with. However, the recent case management order suggests that an administrative process (rather than a process involving a decision by an Employment Judge) is envisaged.

Can claimants who were deterred from bringing a claim because they could not afford the fees now bring claims?

The position is less clear where a claimant argues that they did not initiate a claim because they could not afford the fee. It is not clear whether the Employment Tribunals will introduce a specific process to deal with such claims. However, the fact that the recent case management order does not specifically refer to this situation, suggests that no designated procedure is contemplated. Most prospective claimants in this position will now be out of time to submit their claims. However, they may still present a claim in the usual way (after undertaking ACAS Early Conciliation). It will then be up to the Employment Tribunal to decide whether it is appropriate to extend time to allow late presentation of the claim. It is likely that this will be a case by case decision based on the evidence. However we fear that Tribunals are likely to be sympathetic to arguments based on an inability to pay. If you are faced with such hearings, please do talk to us about the best way of arguing that any such claim should not be allowed to proceed. The reinstatement of ‘historic’ claims may of course be problematic for employers if witnesses have left employment or documents have been destroyed.

We lost an Employment Tribunal claim and were ordered to pay the claimant’s fees. Will we be reimbursed for this?

Possibly. However we will have to wait for the anticipated government announcement in September for clarity on this. The government has stated that it will put in place a system to reimburse individuals who had to pay a fee, but we don’t yet know whether this will include respondents ordered by the Tribunal to reimburse a claimant’s fees. It may be possible in some circumstances to ask the Employment Tribunal to reconsider the costs order. Strictly speaking, any application for reconsideration should be made within 14 days of the date the order is made. However, the Employment Tribunals may be sympathetic to requests to extend this time period. If you have a query about a particular matter or think you may be able to be reimbursed for fees, please do not hesitate to get in touch with your Weightmans advisor.

We settled an Employment Tribunal claim with an employee using a settlement agreement or ACAS COT3 agreement. We reimbursed their Employment Tribunal fees as part of the settlement sum. Can we now get this money back?

For a Settlement Agreement, probably not. A settlement agreement is a contract between employer and employee. Unless there is any clear wording to the contrary (which is highly unlikely) you will not be able to recover from the claimant any sum paid under a settlement agreement in reimbursement of their Employment Tribunal fees. However if a COT3 agreement explicitly recorded that a payment was only being made to reimburse the claimant’s outlay of fees, there might be an argument depending upon the anticipated announcement in September. If in doubt, do speak to your usual Weightmans contact.

Could an Employment Tribunal order us to repay the claimant’s fees in an ongoing case?

It is possible that the Employment Tribunal might order to you to reimburse a claimant’s fees in an ongoing matter. Even though fees have now been scrapped, there are of course a large number of claims working their way through the system in which fees have been paid. However, it is difficult to see why an Employment Tribunal would do this, as it has already been made clear that claimants will be reimbursed by the government for fees paid and will not be out of pocket.

What does the future have in store for the Employment Tribunals? Are fees gone for good?

Many of you will be very concerned that the abolition of the fee regime will mean a return to very high volumes of claims. It is possible that the government could go back to the drawing board to work out a less onerous or differently structured charging regime as the Supreme Court decision did not say it will always be unlawful to charge a fee to pursue a claim and envisaged that a new system could be implemented in future. The Supreme Court observed that many claimants in employment matters are seeking relatively small sums of money (for example unpaid wages) or non financial remedies (for example a claim for a written statement of particulars of employment).The Court was critical of the fact that ET and EAT fees bore no relation to the value of the claim and in effect rendered it “futile or irrational” for a clamant to pursue a claim that might be of huge personal importance but relatively low monetary value. It is possible that the old fee regime could be replaced with a new tiered arrangement where the fee payable increases in accordance with the value of the claim. However it is open to considerable debate whether this government will in practice endeavour to re-introduce Employment Tribunal fees, as their focus may well be on other issues.

Even if access to the Employment Tribunals remains free of charge, this does not necessarily mean that claim volumes will climb back to very high pre-fee levels. Other changes such as the capping of unfair dismissal compensation at one year’s pay, the extension of the qualifying period for unfair dismissal from one to two years, and the introduction of mandatory pre-claim ACAS conciliation, may also have contributed to the decline in claims.  There may also have been a cultural change as a result of fees, which might mean that claims remain less frequent, or at least that it takes a little while for everyone to adjust to the new world. Therefore, while we will undoubtedly see a significant short term increase in claims and longer term upward movement, it remains to be seen what the longer term picture will look like.

The abolition of fees does however mean that it will be more important than ever to ensure that you follow appropriate procedures with staff and reach appropriate carefully thought through decisions.  The risk of a claim must be higher now than it has been for the last few years. When dismissing or when taking decisions which might lead to resignation, you will need to be aware of this risk. Do speak to us about any decisions, we are happy to help.

Louise Singh (louise.singh@weightmans.com) is a Professional Support Lawyer working with the national Employment Pensions and Immigration team and is based in Liverpool. If you have any questions please do not hesitate to contact Louise or speak to your usual Weightmans advisor.

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