Government scraps employment tribunal fees – what does it mean for employees and employers?

Employment tribunal fees are to be abolished after the Supreme Court - the highest court in the UK - ruled them unlawful, despite the system having been in place for four years.

The decision by seven Supreme Court justices to back an appeal by the UK's largest public services union, Unison, overturned judgements by the High Court in 2013 and the Court of Appeal in 2015.

If this leads to the government scrapping fees altogether rather than introducing a new fee regime, as current reports suggest, this could herald one of the biggest practical developments in employment law for many years.

Already, it is expected that the scrapping of the current fees will almost certainly spark a sharp rise in claims issued against employers in the coming months.

Background

Tribunal fees were introduced by the coalition government in July 2013, starting at around £160 for issuing a claim for lost wages or breach of contract and increasing if the case was heard by a tribunal.

More serious claims, including unfair dismissal, came with a fee of £250 plus a hearing fee of £950 meaning some people had to pay £1,200 to see a claim through to its conclusion with appeals against decisions costing a further combined sum of £1,600.

Not surprisingly, a government report found that there had been a 70 per cent drop in the number of cases since 2013 with the fees acting as a deterrent to some claimants, a factor some commentators say has favoured employers.

Access to justice a 'fundamental right'

Speaking immediately after the judgement, Law Society president, Joe Egan, said: "These fees placed an insurmountable barrier in the way of tens of thousands of people. Access to justice is a fundamental right - if you can't enforce your rights then it renders them meaningless. Today's decision will serve as an urgently needed wake-up call - justice must never be a luxury for those who can afford it, it is a right we all share."

The Ministry of Justice has said it will take "immediate steps to stop charging fees in employment tribunals and put in place arrangements to refund those who have paid." According to estimates, this bill could run to between £27 and £31million.

As well as reimbursing employees who have paid tribunal fees, it seems likely that employers ordered by an employment tribunal to pay the fees of a successful claimant, will also be entitled to a refund

Implications

Without the deterrent of fees, it is expected that employees bringing lower value breach of contract claims will now commence employment tribunal proceedings as opposed to starting a claim in the Small Claims Court.

And some business leaders have expressed concern that the court ruling may "open the door to a spike in malicious or vexatious claims".

There is no doubt that the ruling means it is more important than ever for employers to consider the risks of claims and make sure they comply with their obligations towards employees and to deal with workplace issues before they escalate.

For more help and information about this area of the law, please contact Wards Solicitors' employment specialists for business and private clients.