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Back to the future: the reintroduction of employment tribunal fees
Back to the future: the reintroduction of employment tribunal fees
31 January 2024
Series
Blogs
31 January 2024
Almost seven years after the Supreme Court found employment tribunal fees to be unlawful and quashed the scheme, the government is proposing to reintroduce them. Have lessons been learned?
A consultation has been launched by the Ministry of Justice on the introduction of fees for submission of claims in the employment tribunal and the Employment Appeal Tribunal.
With a view to avoiding the mistakes of the past, affordability, proportionality and simplicity are the watchwords of the proposal. The consultation describes the fees as “modest” and states that they would be “generally affordable”. When viewed in the context of the median value of tribunal awards (£5000 in 2018), the Ministry of Justice considers the proposed level of fees to be proportionate. It also believes the fees to be proportionate when considered in the context of low value awards and non-monetary remedies. The single rate of fees is clear and transparent, while also making the system easy for the tribunal service to administer.
Affordability, proportionality and simplicity were characteristics which the Supreme Court found to be lacking under the old fee regime. Under that system, claims were divided into two types, with different rates payable at two different stages: on issue of the claim and in respect of the hearing. A claimant seeking to recover unlawful deductions would have to pay a combined fee of £390 to bring the claim to a hearing, while a discrimination or unfair dismissal claim would cost a total of £1200 in fees.
Over the four-year lifespan of the regime, employment tribunal claims fell by almost 70%. When a challenge brought by Unison came before the Supreme Court, the court unanimously held that the fees system had a deterrent effect on the bringing of claims and therefore prevented access to justice. In addition, the fact that higher fees were payable for discrimination claims (brought by a higher proportion of women and claimants with protected characteristics) meant that the fees regime was indirectly discriminatory. The Supreme Court quashed the scheme, leading to a reimbursement of all fees paid since 2013.
The proposed fees regime is qualitatively different from that introduced in 2013. The new system would set the fees at a much lower level and, with a single flat rate payable, it would not carry the risk of discriminatory consequences.
However, proportionality remains an issue. The fee, when set against a low value claim or a non-monetary award, such as a declaration of discrimination, may still have a deterrent effect, rendering it futile or irrational to bring a claim.
In addition, the corollary of setting fees at a modest rate is the low revenue generated from the exercise. The consultation anticipates that the scheme would raise an annual amount of between £1.3m- £1.7m. When set against annual tribunal running costs of £80 million, a question arises as to the purpose served. Justification of any deterrent effect caused by the introduction of fees, which would take some time to measure and evidence, would have to be considered in the context of the overall benefit to the taxpayer in operating the scheme.