Access to justice trumps employment tribunal fees, Supreme Court rules
The order introducing substantial fees for employment tribunal claims is unlawful under both domestic and EU law because it has the effect of preventing access to justice, the UK Supreme Court ruled today.
Seven Justices unanimously upheld an appeal by the UNISON trade union and others, in judicial review proceedings brought against the Lord Chancellor, in which it claimed that the making of the Fees Order was not a lawful exercise of the Lord Chancellor’s statutory powers because it interfered unjustifiably with the right of access to justice under both the common law and EU law, frustrated the operation of legislation granting employment rights, and discriminated unlawfully against women and other protected groups.
Under the order, a single claimant has to pay fees totalling £390 for simple ("type A”) claims – those which require little preparatory work and only short hearings, and £1,200 for other claims, including for unfair dismissal, equal pay and discrimination (“type B”). Fees are remitted if a claimant’s disposable capital, together with their partner’s, is below a specified amount, in most cases £3,000.
In the two years after the fees were introduced, the number of claims brought to employment tribunals fell by up to 70%. Until 2013 there was no claim fee payable. The fees were introduced to transfer the cost burden of the tribunals to users, to deter unmeritorious claims, and to encourage earlier settlements. However the proportion of cases settles has not increased, and there are indications that some employers have been delaying negotiations to see whether the claimant would be prepared to pay the fee.
The High Court and Court of Appeal dismissed the proceedings, the latter holding that the imposition of a fee would not constitute an interference with the right of effective access to a tribunal under EU law unless it made it impossible in practice to access the tribunal. That depended on whether the fee was unaffordable, and there was no safe basis in th evidence for “an inference that the decline [in the number of claims] cannot consist entirely of cases where potential claimants could realistically have afforded to bring proceedings but have made a choice not to”.
Giving the lead judgment, Lord Reed said that in determining the extent of the Lord Chancellor's statutory power to set fees, "the court must consider not only the text of that provision, but also the constitutional principles which underlie the text, and the principles of statutory interpretation which give effect to those principles". The two principles of particular importance in this case were the the constitutional right of access to the courts, and the rule that specific statutory rights were. not to be cut down by subordinate legislation passed under a different Act.
The first principle was inherent in the rule of law: it was needed to ensure that the laws created by Parliament and the courts were applied and enforced. Tribunals were more than merely the providers of a service which was only of value to those who brought claims. As a matter of domestic law, the Fees Order was unlawful if there was a real risk that persons would effectively be prevented from having access to justice, or if the degree of intrusion into access to justice was greater than justified by the purposes of the order.
While court fees for small claims were related to the value of the claim, the ET and EAT fees bore no direct relation to the amount sought and could therefore be expected to act as a deterrent to claims for modest amounts or non-monetary remedies (which together formed the majority of ET claims). The recoverability of costs on success could not be decisive of the question of access to justice, as that right was not restricted to the ability to bring successful claims. The evidence before the court showed that the effect of the order was a dramatic and persistent fall in the number of ET claims, with a greater fall in the number of lower value claims and claims not seeking a financial remedy. Fees were the most frequently cited reason for not submitting a claim. It was likely that claimants would have to restrict expenditure that was ordinary and reasonable for maintaining living standards in order to meet the fees.
The question whether fees effectively prevented access to justice had to be decided according to their likely impact on behaviour in the real world. Fees had to be affordable not in a theoretical sense, but in the sense that they could reasonably be afforded. Where households on low to middle incomes could only afford fees by forgoing an acceptable standard of living, the fees could not be regarded as affordable. Even where fees were affordable, they prevented access to justice where they rendered it futile or irrational to bring a claim, for example where in claims for modest or no financial awards no sensible claimant would bring a claim unless they could be virtually certain they would succeed, the award would include recovery of fees, and would be satisfied in full. Further, although the stated purposes of the order were legitimate aims, it had not been shown that the order was the least intrusive means of achieving those aims. It was also unlawful because it contravened the EU law guarantee of an effective remedy before a tribunal: it imposed disproportionate limitations on the enforcement of EU employment rights.
Dealing with the discrimination aspects, Lady Hale, with whom the other Justices agreed, said the order was indirectly discriminatory under the Equality Act 2010: the higher fees for type B claims put women at a particular disadvantage, because a higher proportion of women brought type B than type A claims. The charging of higher fees was not a proportionate means of achieving the stated aims of the order. It had not been shown to be more effective at transferring the cost of the service from taxpayers to users, and in some type B cases (such as pregnancy dismissal) the higher fee did not correspond to a greater workload placed on the tribunal. Further, meritorious as well as unmeritorious claims might be deterred by the higher price, and there was no correlation between the higher fee and the merits of the case or incentives to settle.
"Resounding victory"
The result was described as a “a resounding victory for justice” by Elaine Motion of Scottish legal firm Balfour+Manson, who represented the Independent Workers Union of Great Britain (IWUGB) in the case, backing up the main claim by UNISON.
"This is the one of the most significant judgments in employment law in the modern era", she commented. "All the evidence pointed to fees denying the principle of access to justice – and the Supreme Court's decision is therefore a resounding victory for justice itself."
She added: “Employment tribunals were intended to provide a forum for enforcement of employment rights for all, including the lower paid. This judgment has helped restore that principle.”
The Ministry of Justice has confirmed that the Government will take immediate steps to stop charging fees, and will repay all fees charged since 2013, estimated to total up to £32m.