The Supreme Court has determined that the Employment Tribunal Fees regime currently in force is unlawful. The regime was introduced in 2013 and since then claimants have had to pay a claim fee (on presentation of the claim) and a hearing fee (prior to the full hearing of the claim). For claims of unfair dismissal, equal pay and discrimination those fees have totalled £1,200 per claim, consisting of a claim fee of £250 and a hearing fee of £950. Exceptions have been available on a very limited basis only.

The intention of the government in introducing the fees was to transfer the cost burden to the users of Tribunals, deter unmeritorious claims, and encourage earlier settlements.

Since the introduction of the fee regime, the number of claims brought has reduced by around 70%.

Unison brought judicial review proceedings in 2013 and 2014, in both cases unsuccessfully. The Court of Appeal then dismissed the appeal in August 2015. The Supreme Court has now overturned the decision of the Court of Appeal, holding that the fee regime was not a lawful exercise of the Lord Chancellor's statutory powers, because the fees interfere unjustifiably with the right of access to justice under both common law and EU law, and frustrate the operation of Parliamentary legislation granting employment rights. The regime is also unlawful as it indirectly discriminates against women and other protected groups, as they are placed at a particular disadvantage by the fee rates applicable to claims of discrimination (given they are statistically more likely to bring those claims).

What this means

The current fee regime has been declared unlawful, so it will have to be abolished. It is not clear whether it will be replaced by a different less onerous regime. The immediate consequence is that Tribunal and EAT fees are no longer payable in respect of new claims issued or those pending.

In the short term we can expect to see an increase in claims being brought by employees – given that there has been a reduction in claims of around 70% since the introduction of the fees, it is possible that the increase could be very substantial.

The rules governing Employment Tribunal and EAT proceedings will need to be revised to take into account the changes.

The Supreme Court has also determined that fees paid by claimants since the introduction of the fee regime will need to be refunded.

Importantly, it is possible that claimants who have been deterred from bringing claims since the introduction of the fee regime will now seek to bring those claims, based on an argument that time limits which have expired should be extended on the basis that it would be just and equitable or that it was not reasonably practicable (depending on the type of claim) to bring a claim in time. If such claims were permitted to proceed, this would potentially lead to a very substantial increase in litigation, and employers having potential liabilities that have not been anticipated or accrued for.