Yesterday a land mark decision in the case of R (on the application of UNISON) v Lord Chancellor [2017] UKSC 51, commonly known as ‘the appeal against Employment Tribunal Fees’ will potentially have a dramatic effect on employers.

The decision is being cited as ‘the most important judgment in employment law in the last fifty years’ and determined that the Fees Order prevented access to justice and is unlawful.

On 29 July 2013 the charging of fees commenced for employment tribunals (and appeals).  The fees ranged from £160 to £500 to issue, and £950 for the hearing, the EAT fee for an appellant was higher still at £1,600. The lawfulness of the Fees Order was challenged by UNISON who were supported by the Equality and Human Rights Commission.

Lord Reed emphasised that unimpeded access to the courts is a benefit to the public and not just to the parties themselves.  He felt that the government’s consultation paper had assumed the justice system was only of value to ‘users’ of the system.  Lord Reed concluded that the Fees Order was unlawful as it effectively prevented access to justice.  The evidence which he used to formulate this decision included the statistic that 10% of claimants did not bring proceedings because they could not afford the fees. The judgment gave no consideration to the effect this would have on employers and businesses or the cost of dealing with unmeritorious claims.

The government failed to produce evidence as to why the fees were set at the level they were, and could not substantiate their belief that the introduction of fees would deter weak claims.

Lady Hale concluded that the fees were discriminatory in nature thereby deterring genuine discrimination claims. 

The Ministry of justice is now not only going to have to reimburse all fees that were wrongly charged, but also face claims against them by people who were denied a chance to bring a discrimination claim.  

What now?

With immediate effect there is no fee payable for the claimant to bring a claim before the employment tribunal.

Impact on businesses?

It is feared that one of the implications of the abolition of the fees is that it is likely to mean that businesses will face many more claims and that the door for malicious vexatious claims will also be open; all of this will of course have cost implications for employers in terms of having to defend proceedings or pay out on unmeritorious claims.

In the past employers have simply settled claims due to the time and cost involved in proceeding to the tribunal. With ever increasing regulation and demands on employers in relation to their compliance, such the gender pay gap and GDPR, this is a further headache employers could do without in such uncertain times.  Brexit brings enough uncertainty surrounding legislative changes for employers as Britain leaves the EU.  This decision increases the risk businesses face.  Potential compensation exposure for employers for tribunal awards is up to £80, 541 (or 12 months gross pay if less) and therefore employers have every right to be concerned if the number of claims against them rises.

Protect yourself

  1. Employers should review their policies and procedures to ensure they are robust and comply with current legislation.
  2. Staff are properly trained to ensure they adhere to the implemented policies and procedures.
  3. Employers should assess the risk arising from their current workforce, in particularly employees who are currently on sick leave, have on-going grievances and/or discipline issues.

Think ahead

There are further, wide ranging implications and exposure for employers from those employees who have been denied access to the tribunal due to the fees from 2013 as they could now be permitted to bring claims out of time. Employers need to act quickly if this happens and seek legal advice.

About the author

Suki Harrar Partner

Suki advises on all employment issues, including unfair dismissal, redundancy, TUPE, appointments of senior executives and contract documentation.