Employers Prepare For Surge in Tribunal Claims After Fees are Ruled Unlawful

Employers are expecting a surge in employment tribunal claims after the government agreed to scrap fees for them.

The fees for those bringing claims have been ruled unlawful after the Supreme Court upheld a challenge by trade union Unison that the charges were discriminatory. The government has said it would take immediate steps to stop charging and to refund payments.

The Supreme Court said it based its conclusion on the fact that fees were “inconsistent with access to justice” and had resulted in a substantive decline in the number of claims being brought. It ruled the fees order breached both EU and UK law.

The government introduced fees of up to £1,200 in 2013, which it said would cut the number of malicious and weak cases. Charges started at £160 for issuing a claim for lost wages or breach of contract and increased if the case was heard in a tribunal. More substantive claims, including unfair dismissal, carried a fee of £250 plus a hearing fee of £950. This meant total charges came to £1,200, with appeals against decisions costing a further combined sum of £1,600.

Government data showed 79% fewer cases were brought over three years – but Unison said the fees prevented workers accessing justice.

‘Thousands priced out of getting justice’

Lord Reed, handing down the court’s ruling, said the justices concluded the fees:

“have resulted in such a substantial and sustained fall in the number of claims being brought that it points to the conclusion that a significant number of people have found the fees unaffordable.”

David Isaac, chairman of the Equality and Human Rights Commission, said: “The right to justice must be based on the merit of your case, not your ability to pay. Thousands may have been denied of this right and priced out of getting justice. The judgment of the Supreme Court is a damning verdict on the current regime.”

The Supreme Court also found fees were indirectly discriminatory to women, and Mr Isaac commented: “Women face a double penalty with high fees and short timescales to bring maternity discrimination cases.”

Employers express deep concern about ruling

Business leaders have voiced their concern about the ruling. Seamus Nevin, head of employment and skills policy at the Institute of Directors (IoD), which represents 30,000 small and medium sized businesses across the UK, said the judgement “opens the door to a spike in malicious or vexatious claims . . . Businesses across the country will be extremely alarmed by [the] judgment. Before fees, individuals faced no risk or barriers in bringing claims that were not merited. Even the weakest or most vexatious cases meant sizeable legal expense and wasted valuable management time for companies.”

The IoD is particularly worried that new gender pay reporting requirements and the ‘immigration skills charge’ could lead to a surge in claims from women and workers from outside the European Union. Mr Nevin said: “Since fees were introduced, the government has imposed crude and potentially misleading gender pay reporting requirements, and an immigration skills charge that incentivises recruitment based on place of birth. Both of these could lead to an increase in unjustified claims.”

Mike Spicer, director of research at the British Chambers of Commerce, said the ruling would leave:

“employers concerned about a return to the past, when despite winning the majority of cases, companies would often settle to avoid a costly and protracted process even when their case was strong.”

Employment tribunals must now stop charging fees with immediate effect and the Ministry of Justice will commence refunding around £32m in fees which have been paid by claimants since their introduction in 2013.

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