Christina Tolvas-Vincent, Partner, and Karen Plumbley-Jones, Managing Associate (PDL) at law firm Bond Dickinson, discuss whether the abolition of Employment Tribunal fees spells bad news for gig employers.
In a momentous decision, the Supreme Court held in R (UNISON) v Lord Chancellor that employment tribunal (ET) and Employment Appeal Tribunal (EAT) fees are unlawful because of their impact on access to justice. In this article, we explain the reasons underpinning the Supreme Court’s ruling and what this development means for gig economy and commission only employers.
Fees were introduced in July 2013 under the Employment Tribunals and Employment Appeal Tribunal Fees Order 2013 (the Fees Order). Claimants had to pay between £390 and £1200 (depending on the type of claim) to issue a claim and have it heard in the ET. Fees were also payable for bringing an appeal in the EAT. Fees could be fully or partially remitted, depending on the income and capital of the claimant and their partner and the number of children they had. A fee could also be remitted by the Lord Chancellor in exceptional circumstances.
The Fees Order was intended to pass some of the costs of running the ET system on to those who use it but the scheme failed to generate the amount of income expected, and the number of ET claims brought in the years following the Fees Order coming into force fell by around 80%.
In response to this, UNISON applied for a judicial review of the Fees Order and argued that it was not a lawful exercise of the Lord Chancellor’s statutory powers because the fees interfered unjustifiably with the right of access to justice under the common law and EU law, frustrated the operation of legislation granting employment rights, and discriminated unlawfully against women and other protected groups.
Whilst both the High Court and the Court of Appeal had rejected UNISON’s application, the Supreme Court unanimously allowed UNISON’s appeal, finding that the Fees Order was unlawful under both domestic and EU law because it prevented access to justice and contravened the EU law guarantee of an effective remedy. The Supreme Court therefore quashed the Fees Order with effect from the date it was introduced.
The Court stated that fees bore no relation to the value of the claim and therefore acted as a deterrent to claims for small amounts of money and non-monetary remedies. The Fees Order was also indirectly discriminatory because the higher fees for discrimination claims put women at a disadvantage. This is because a higher proportion of women bring these claims than claims that attract lower ET fees.
What happens now?
The Lord Chancellor previously gave an undertaking to repay all ET fees paid since July 2013 if the Fees Order was found to be unlawful, and the Government will need to set up a refund scheme. It is not yet clear whether HM Courts & Tribunals Service will contact all relevant claimants and offer them a reimbursement or whether the onus will be on claimants to make a claim for a refund. Neither do we know what will happen where a claimant was successful in the ET or EAT and the respondent employer was ordered to reimburse the fees.
Anyone wishing to make a claim now will not have to pay a fee. The online portal for submitting claims has been updated to remove references to fees.
We expect to see a sharp increase in the number of claims. There could be further litigation around whether individuals who would have brought claims in the four year period while ET fees applied but were put off are now able to do so. Although they would have missed the time limits, they may be able to argue that it was not reasonably practicable for them to bring their claims in time.
The Government is expected to consider whether to introduce a replacement scheme, perhaps by linking fees to the value of the claim or by implementing a more generous remission scheme. However, it is likely to take some time for this to happen and it may be difficult to get the legislation through Parliament.
Impact on gig and commission only employers
In recent months, gig-economy companies have come under increasing scrutiny about how they treat their workforce. There have been a number of cases brought by individuals working in the so called shared economy who were treated as self-employed but claimed they were workers or employees and therefore had employment rights. As the trend has been for such claims to succeed, it is likely that claims in this sector will increase since gig economy workers tend to have modest earnings and are likely to have been put off claiming in the past. It is interesting to note that last month’s Taylor Review of Modern Practices, which considers how employment practices need to change in order to keep pace with modern business models, recommended that ET fees should not be payable where individuals bring ET claims to establish their employment status.
Although this decision may look like bad news for gig and commission only employers, it may have the effect of levelling the playing field as unscrupulous employers will no longer be able to rely on the fact that so many individuals were unwilling or unable to pay fees to enforce their rights.