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ET Fees. What happens next?

ET Fees. What happens next?

"People and businesses need to know, on the one hand, that they will be able to enforce their rights if they have to do so, and, on the other hand, that if they fail to meet their obligations, there is likely to be a remedy against them. It is that knowledge which underpins everyday economic and social relations."

I tried to choose just one passage from yesterday’s Supreme Court judgment on ET fees which I felt captured this landmark decision, but – as you’ll see if you read further - it proved to be an impossible task!

Lawyers and academics will spend hours analysing the detail of the judgment and the underpinning principles, but setting that aside (as hard as that is for me to do!), there are some very pressing practical questions arising from the SC’s unanimous decision that the legislation which brought in ET fees was unlawful and should be quashed.

As a team we have been discussing what the judgment means in practical terms and what we predict the key issues for employers will be.

Why were ET fees unlawful?

The Supreme Court readily reached the conclusion that the introduction of ET fees breached a number of fundamental laws. Central to its decision, was the SC’s unequivocal finding that ET fees prevented access to justice, a right which the SC reminded us can be tracked back to the Magna Carta in 1215 and which has been cemented in numerous judgments since then. This barrier to justice was, in the SC’s view, a clear contravention of domestic “common” law. It also concluded that the fees regime breached European law and, furthermore, constituted indirect discrimination against women.

The SC determined that individuals were being deterred from bringing claims not just on the basis of unaffordability, but also on account of it being irrational for some individuals to bring claims where, for example, the value of their claim for unpaid wages was dwarfed by the level of fees they would have to pay to have their case heard by a Judge.

The SC were clear in their conclusion that the Government’s stated objectives when they introduced fees (to fund the cost of running the Tribunal system; deter unmeritorious claims; and encourage settlement of disputes) were manifestly not met when the relevant evidence was considered.

Against this backdrop, the SC appeared to have no hesitation in striking down the legislation introducing fees and in doing so categorised it as unlawful from the day it was brought into force.

What happens for new claims?

The practical effect of the decision was illustrated yesterday: within hours of the decision, Employment Tribunals were accepting claim forms without payment of fees; notices to pay fees were being revoked; and the Tribunal website for submission of claims now clearly states that no fees are payable when claims are presented.

Put simply, no fees will be payable in either the Employment Tribunal or the Employment Appeal Tribunal unless further legislation is brought in to introduce a new fees regime (which I touch on further below). It is therefore highly likely that the number of ET claims presented will increase significantly, which will certainly pose challenges for a Tribunal system which has, over the last few years, adjusted its resources to reflect the substantial reduction in case load. That said, employers who have in place robust policies and procedures and who, as such, are confident that they adopt fair employment practices, should not necessarily fear the flood of vexatious claims which some media reports have predicted. The statistical information produced by the Government does not demonstrate that the introduction of fees resulted in a corresponding increase is successful claims, and the Supreme Court was clear in their finding that the Government had not achieved its aim of deterring vexatious claims.

The ET Rules of Procedure provide mechanisms for weeding out claims with no or little reasonable prospects of success, and respondents and their representatives should strongly urge the Tribunal to use these powers where appropriate, to prevent unnecessary cost and time being incurred.

What about fees already paid?

It is clear that those who have paid fees since the regime was brought in will be entitled to reimbursement, and the Ministry of Justice has committed to putting arrangements in place for this. How this will work from a practical point of view, however, remains to be seen (I don’t envy the person whose responsibility it is to trawl the ET records identifying the relevant information…).

Even more complex will be the task of dealing with scenarios where respondents have been ordered to reimburse fees paid by Claimants and where reimbursement of fees has occurred through ACAS settlement.

The position for respondents who have paid fees in respect of counter claims for breach of contract and judicial mediation will also need to be considered.

The assumption is that guidance on these reimbursement arrangements will be issued in due course, but meantime we expect that the Ministry of Justice and no doubt the Tribunals will receive a flood of enquiries regarding this.

What about claims that have been rejected or dismissed for non-payment of fees?

Under the ET Rules of Procedures, claims could (before yesterday’s decision) be rejected or dismissed where the applicable fee had not been paid either on presentation of the claim or in advance of a hearing. On the basis of the SC’s decision, those fees were not lawful in the first place, and so a question arises as to the status of those such decisions.

There is no question that the Tribunals acted in accordance with the Rules as they applied at the time, but the effect of the SC’s decision means that the underpinning fees legislation is quashed, so this could be said to compromise subsequent legislation made by reference to it. These are not straightforward issues. On this, and other technical points arising from the SC’s decision, it may be that Presidential Guidance issued in due course to assist parties in navigating the new landscape. It is certainly the case that the ET Rules of Procedure will need to be amended in light of the SC’s decision.

What about claims that have not been brought because of fees?

The SC were clear in their assessment that the (approximate) seventy per cent drop in Tribunal claims was largely attributable to the introduction of fees (either through unaffordability or the “irrationality” principle referred to above). It therefore follows that some individuals may seek to bring their claims now that the fees barrier has been removed. Strict time limits for the presentation of claims operate in the Tribunals, and these are only extended where claimants successfully argue that it was either “not reasonable practicable” to bring their claim in time or (in cases of discrimination) that it would be “just and equitable” to extend the time limit.

Tribunal Judges may well have to determine competing arguments as to whether the requirement to pay a fee provides a basis for claimants establishing one of these two “escape clauses” where they seek to present an out of time claim. Our view is that such claimants would face substantial difficulty satisfying the “not reasonably practicable” test (which assesses what was feasible in the circumstances), with potentially wider latitude being given when it comes to discrimination claims. What evidence would be required for such issues to be determined will no doubt be a matter of great debate, and unfortunately at this stage no definitive answers can be provided.

Will a new system of fees be introduced?

While this case made its way up through the Courts (and evidence built up to demonstrate the effect fees were having on the number of claims being presented), many suggested that the Ministry of Justice might consider reviewing and revising the fees regime, perhaps introducing fees at a lower level or ones which scale up or down depending on the value of the claim (as is seen in the Civil Courts). This did not occur, and rather than recommend that the Government undertake such an exercise, the SC held that the fees system was unlawful from its commencement, and in doing so has sent a clear message to the Government that it does not have the statutory power to introduce fees in the manner in which it did.

Theoretically, it is open to the Government to propose new legislation (which would no doubt be the subject of a consultation in the normal fashion) to introduce a new fees regime. Given the political climate – in particular the issues arising from Brexit – we do not envisage any such new legislation being proposed in the short term. It should also be kept in mind that the Scottish Government had, in any event, repeatedly confirmed its commitment to scrapping ET fees once they were given the statutory power to do so.

Against that background, it looks unlikely that ET fees will be back on the political agenda for some time.

What else can be taken from the SC’s decision?

Clearly the SC’s decision primarily impacts employers and workers, and those whom advise and represent these parties. However, Lord Reed (who delivered the leading judgment in the case) took the opportunity – in ever so eloquent and elegant terms - to reaffirm wider legal principles. I’m in no doubt that the following passage (I warned you I couldn’t choose just one!) will stand the test of time as an illuminating and immutable statement of the rule of law – and the reasons for it:

“At the heart of the concept of the rule of law is the idea that society is governed by law. Parliament exists primarily in order to make laws for society in this country. Democratic procedures exist primarily in order to ensure that the Parliament which makes those laws includes Members of Parliament who are chosen by the people of this country and are accountable to them. Courts exist in order to ensure that the laws made by Parliament, and the common law created by the courts themselves, are applied and enforced. That role includes ensuring that the executive branch of government carries out its functions in accordance with the law. In order for the courts to perform that role, people must in principle have unimpeded access to them. Without such access, laws are liable to become a dead letter, the work done by Parliament may be rendered nugatory, and the democratic election of Members of Parliament may become a meaningless charade. That is why the courts do not merely provide a public service like any other.”

Why is this important? Whilst yesterday’s decision related to the determination of employment law disputes, the clear message from the SC was that they will – as is their role – always intervene where they determine that the Government has gone beyond the scope of its powers and/or has breached established legal principles. This reflects and indeed justifies the principle of an independent judiciary, a concept which has been increasingly the subject of commentary in the media as a result of Brexit. At a higher level, therefore, this decision has implications for – and will act as an influential factor in shaping - a number of other legal areas in the future.

Jennifer Skeoch
Senior Associate

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