In a decision that will have a huge impact on employers and employees, the Supreme Court has today declared that the Employment Tribunal (ET) fees regime, introduced in 2013, is unlawful on the basis that it prevents access to justice. In its unanimous decision the Supreme Court also held that the legislation introducing the fees (the Fees Order) is indirectly discriminatory on the grounds of sex.
The Supreme Court points out that the ET and Employment Appeal Tribunal fees bear no direct relation to the value of the claim, and can therefore be expected to act as a deterrent to an individual from bringing a claim for a modest amount (or seeking a non-monetary remedy). It also highlights the “dramatic and persistent” fall in the number of ET claims following the introduction of ET fees, with the fall more apparent in relation to the number of lower value / non-monetary claims.
The Fees Order is indirectly discriminatory on the grounds of sex because the higher fees for type B claims (which includes unfair dismissal, equal pay and discrimination claims) on the basis that more men than women bring these types of claims. The Court found that the higher fees were not a proportionate means of achieving a legitimate aim: it had not been shown that the fees regime had been more effective in transferring the cost of the service from taxpayers to users, and the type of claim did not necessarily correspond with a higher workload for the ET.
Employers will undoubtedly feel concerned about the impact of this decision on their businesses. Following the introduction of the fees regime the amount of ET litigation fell by an enormous 70%, with fees being pointed to as the main culprit for this (although the change in the minimum length of service required to being an unfair dismissal claim from one to two years in April 2012 will also have contributed). The likely outcome will undoubtedly be an increase in litigation and the associated costs that claims bring.
This graph conveys the huge drop in cases brought to employment tribunals:
Keep an eye out for further developments on this in next week's Employment Source, click here to sign up to receive this.