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The Supreme Court today allowed UNISON’s appeal and held that fees imposed in respect of proceedings in employment tribunals and the Employment Appeal Tribunal are unlawful because of their effects on access to justice.

Until the coming into force of the Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013 (“the Fees Order”), a claimant could bring and pursue proceedings in an ET and appeal to the EAT without paying any fee.

However, the Fees Order prescribes various fees. In the ET, a claimant must pay an “issue fee” when a claim form is presented and a “hearing fee” upon the listing of a final hearing of the claim. The amounts vary depending on the type of claim and whether it is brought by a single claimant or a group. The fees for a single claimant total £390 for a “type A” claim and £1,200 for a “type B” claim. In the EAT, fees of £1,600 are payable, again in two stages. Claimants and appellants can seek remission of fees if their disposable capital and gross monthly income are both less than specified amounts.

UNISON sought judicial review of the Fees Order on the ground that it unlawfully prevents or restricts access to justice. The lower courts dismissed UNISON’s claim but a seven-judge Supreme Court unanimously allowed its appeal, holding that the Fees Order was unlawful ab initio and must therefore be quashed.

The Court approached the case primarily by reference to the common law and the constitutional right of access to the courts. Such access is of value not only to the particular individuals involved in litigation but also to society more broadly, not least in relation to laws conferring rights on employees. Even where a statutory power authorises an intrusion upon the right of access to the courts, it is interpreted as authorising only such a degree of intrusion as is reasonably necessary to fulfil the objective of the provision in question.

The Tribunals, Courts and Enforcement Act 2007 empowered the Lord Chancellor to prescribe fees. The purposes of the Fees Order – transferring some of the cost burden of operating ETs and EAT to those who use the system, incentivising earlier settlement of claims and disincentivising the bringing of weak or vexatious claims – were legitimate. However, the Fees Order would be ultra vires if either of two conditions were met: (1) that there is a real risk that persons will effectively be prevented from having access to justice, or (2) that the degree of intrusion is greater than is justified by the objectives which the measure is intended to serve. The Court found that both conditions were met.

First, the evidence before the Court led to the conclusion that the fees were not set at a level that everyone could afford, even taking into account the availability of remission. It was sufficient that a real risk had been demonstrated, but in any event the fall in the number of claims has been so sharp, so substantial and so sustained as to warrant the conclusion that a significant number of people who would otherwise have brought claims have found the fees to be unaffordable. Moreover, fees can prevent access to justice not only where they are unaffordable, but also where they render it futile or irrational to bring a claim. This was the case here, since many ET claims do not seek any financial award or seek only modest amounts.

Secondly, the primary aim of the Fees Order – to transfer some of the cost burden to users of the system – has been achieved to some extent, but it does not follow that fees which intruded to a lesser extent upon the right of access to justice would have been any less effective. The Government proceeded on the basis that the higher the fee is, the more effective it is, but it is elementary economics and common sense that the revenue derived from the supply of a service is not maximised by maximising the price, but by identifying the optimal price. It was clear that the fees were not set at the optimal price: the price elasticity of demand was greatly underestimated. It had not been shown that less onerous fees, or a more generous system of remission, would have been any less effective in meeting the objective of transferring the cost burden to users. Nor had fees at the level set in the Fees Order been shown to be necessary in order to achieve its secondary aims. Further, in setting the fees the Government had failed to consider the public benefits flowing from the enforcement of rights which Parliament had conferred. Fundamentally, it was because of that failure that the system of fees was, from the outset, calculated to infringe constitutional rights.

The Court also upheld UNISON’s challenge by reference to EU law.

The ET is generally the only forum in which a number of rights derived from EU law can be enforced. So far as applicable to those rights, restrictions on the right of access to ETs and the EAT fall within the scope of EU law. EU law has long recognised the principle of effectiveness and has also recognised the principle of effective judicial protection as a general principle of EU law stemming from the constitutional traditions common to the Member States, enshrined in Articles 6 and 13 ECHR and reaffirmed by Article 47 of the EU Charter of Fundamental Rights.

Under CJEU and ECtHR case law, although the interest of the proper administration of justice may justify the imposition of a financial restriction on access to a remedy, that restriction must retain a reasonable relationship of proportionality between the means employed and the legitimate aim sought to be achieved. This is consistent with the principle of domestic law that rights of access to a court or tribunal may be curtailed only to the extent reasonably necessary to meet the ends which justify the curtailment.

The Court of Appeal was wrong to construe the requirement of proportionality as meaning that the basic question was whether the fee payable is such that the claimant cannot realistically afford to pay it, or whether the difficulty of paying the fee was such as to make payment impossible in practice. Under EU law and the ECHR, the ability to pay fees is not determinative of their proportionality: it is merely one among a number of relevant factors, which include whether the fees are proportionate in amount to the sums being claimed in the proceedings.

Given the conclusion that the fees imposed by the Fees Order are in practice unaffordable by some people, and that they are so high as in practice to prevent even people who can afford them from pursuing claims for small amounts and non-monetary claims, it followed that the Fees Order imposes limitations on the exercise of EU rights which are disproportionate, and that it is therefore unlawful under EU law.

The Supreme Court judgment is available here.

Dinah Rose QC and Iain Steele acted for UNISON.

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Staff