What the employment tribunal fees ruling means for business

27 July 2017

The introduction of Employment Tribunal fees in July 2013 was handled extraordinarily badly by the Government right from the start. There was inadequate consultation at the time, and insufficient care was taken when establishing the level at which they were ultimately set. Even advocates for the introduction of fees often privately admitted that they were set too high. So the surprise is not that the Supreme Court has quashed the Fees Order, as it has now done, but that it took the Courts so long to get to that point.

In order to get a true sense of the impact of introducing fees, since July 2013 the number of claims coming before the Employment Tribunals declined by a dramatic 66-70%. That was never going to be sustainable. There is, after all, no point in having a scheme of (employment) protection provided in domestic and EU law, if it is possible simply to ignore those laws with relative impunity, particularly in low value cases, because they were no longer being utilised or tested. 

The judgment of the Supreme Court declaring the fees unlawful leaves the Government in a mess.  Misguidedly, despite all opposition, they have continued to try to justify retention of the fees scheme. They claimed initially that it was designed to ensure those who use the system should pay (rather than the general taxpayer) and that it was specifically not to cut a swathe through the number of claims being issued.

To guard against restricting access to justice for those with insufficient resource to apply, they brought in a remission scheme (designed to lessen the burden of fees for those who genuinely could not afford to pay them) -  but it is plain this has not worked. Arguably, if they had ameliorated some of the more disproportionate aspects of the scheme at an earlier stage, it would not now be in disarray. So it is back to the drawing board.

What does this mean for businesses, particularly those without significant in-house HR advisers?

First of all, there is no need to panic. Employers who act fairly and in accordance with best practice and (readily available) ACAS guidance should have little to fear.

The rules allowing tribunals to strike out claims that, for example, have no reasonable prospects of success, and the powers that Tribunals have to order costs in cases where a claimant has acted vexatiously or unreasonably, will remain.

Merely because the Supreme Court has quashed the current fee arrangements, does not mean they cannot be introduced in the future, albeit at a more realistic level. That will still serve to concentrate the minds of employees contemplating bringing proceedings in circumstances where such claims may be speculative and/or where they are brought merely to try and force an employer to "buy off" such claims for commercial reasons.

In the meantime there is undoubtedly going to be some uncertainty. The Government has undertaken to pay back all fees paid. There remains unanswered the question of what happens to claimants who would have engaged the Tribunal but did not because of the need to pay fees. Might they now be minded to bring "out of time" claims on the basis that it was not reasonably practicable for them to do so at the time their employment was terminated because of the fees? Such turbulence can be expected, at least for a while.

But most of all, the Supreme Court’s decision will return some measure of reality to the Employment Tribunal system. Decent employers no longer need fear that others who do not play by the rules, will provide unfair competition and employees, harshly treated and with a potential claim, will once again have a fair route to redress. At long last, we have an enlightened ruling, providing for sensible consequences for employer and employee alike – it’s just a shame it took the Supreme Court (rather than those before it) to deliver.

First published in Management Today in July 2017.

Further information

If you have any questions about the issues raised in this blog, please contact Richard Fox or a member of our employment team.

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