Unison challenge to legality of employment tribunal fees

Author: Darren Newman

Consultant editor Darren Newman gives his view on the likely outcome of Unison's challenge to the legality of the employment tribunal fee system.

Nobody should feel confident predicting the outcome of Unison's challenge to the legality of employment tribunal fees, which has now been heard by the Court of Appeal. If this judicial review succeeds, the legal consequences will be dramatic. Not only will the Government have to refund the fees paid so far by tens of thousands of unsuccessful claimants, but there will also be an argument that cases deterred by the fee regime should now be allowed to proceed, even if their time limit has long expired.

It has to be remembered, however, that the Court is not being asked to decide whether or not employment tribunal fees are a good thing, or even whether or not the level of fees is unreasonably high. To find the regime unlawful, the Court must be able to go much further than that. The judicial review is based on the argument that fees breach EU law. Not all employment rights are governed by EU law of course, but enough of them are - including discrimination, working time and TUPE - to mean that any employment tribunal fee regime must comply with EU principles. The precedence given to European law will mean that the fee regime will have to be struck down by the courts if it is found to be in breach.

Unison is arguing that tribunal fees breach EU law because they are discriminatory and contravene what is called the principle of effectiveness - which requires governments to ensure that there is effective legal protection in relation to rights granted by Europe. The European Court of Justice ruled in Levez v TH Jennings (Harlow Pools) Ltd [1999] IRLR 36 ECJ that this means that the procedural requirements for enforcing EU claims in domestic courts must not make it "virtually impossible or excessively difficult" for claimants to assert their rights.

The key issue for the Court of Appeal is whether or not the massive fall in the number of tribunal claims brought since the fee regime was implemented demonstrates that bringing a claim is now "excessively difficult". Unison is arguing that low-paid women in particular are being denied access to justice and points to the collapse in sex discrimination and equal pay claims.

It is certainly true that the fall in the number of tribunal claims is unprecedented. The latest figures show that in the first quarter of 2015 there were 4,229 individual claims brought in the employment tribunal. In the first quarter of 2013 that number was 13,491. A 68% fall in the number of claims is so dramatic that no one can seriously argue that it represents merely a "weeding out" of weak or vexatious claims. Nor has the introduction of Acas early conciliation had a major impact on the figures. Acas settles around 16% of the early conciliation cases referred to it but some 60% of those referrals do not progress to the employment tribunal. There is no avoiding the conclusion that many thousands of genuine claims that would succeed in a tribunal are no longer being brought - and the need to pay a fee before bringing a claim is the only sensible explanation for the decline.

This does not mean, however, that the judicial review will succeed. The Court may accept that potential claimants are being deterred from bringing claims without finding that they are effectively being prevented from doing so. There is overwhelming evidence that the number of claims has fallen, but evidence about why individuals did not pursue particular claims is much harder to obtain. Is it because they simply could not obtain the funds or navigate the complicated fee remission system? Or is it because they were making a rational choice that the potential value of their claim was not sufficient to make it worth risking the fee? Unison is relying almost entirely on statistics. It has not identified individuals who might have brought a claim and who have given evidence about how the need to pay an upfront fee prevented them from doing so. I struggle to envisage the Court of Appeal striking down a key government reform of the employment tribunal system on the basis of a statistical argument, however compelling those statistics might be.

The Court will not, of course, allow political considerations to influence its judgment. But imagine what would happen if the judicial review succeeded. As the Government seeks to renegotiate its position in the EU in preparation for an in-out referendum, it will be a major issue if EU law effectively abolishes a key feature of the UK employment law system.

The smart money may therefore be on the Court rejecting Unison's appeal. However, even if the judicial review does ultimately fail, there remains a general feeling that the level of fees is simply too high. Not even employers' representatives claim that charging £1,200 to bring an unfair dismissal claim - where the average award of compensation is no more than about £5,000 - is proportionate and reasonable. The Government has announced an internal review into the fee system and this may result in a reduction in the level of the fees - although it is highly unlikely that we will return to a situation where taking out an employment tribunal claim will be free.

Fees have dramatically shifted the terms of debate in employment law. When the country elected a Conservative Government on 7 May, it may have been assumed that this would lead to a significant reform of individual employment rights. Under the previous coalition it was only the strong opposition of Liberal Democrat ministers that prevented the effective abolition of unfair dismissal through the introduction of a system of "no-fault" compensated dismissals advocated by the Beecroft Report. However, the new Business Secretary Sajid Javid has indicated that he does not intend to revisit those proposals. The truth is that the concerns that fuelled the Beecroft Report have now largely gone away. Employers face a much smaller risk of being taken to an employment tribunal than they could have imagined five years ago. If the Court of Appeal changes that, the political fallout will be huge.

perspective@xperthr.co.uk