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Supreme Court Ruling

Supreme Court Ruling on Employment Tribunal Fees

You may have read in the Press recently that the Supreme Court has ruled that employment tribunal claim fees were unlawful and must end immediately, with the Government required to refund the estimated £32m in fees already paid. With effect from 26 July 2017, the requirement for employees and ex-employees to pay a fee to bring an employment tribunal claim ended.

How did this arise?

Prior to the introduction of fees in 2013 there were on average 5,000 cases per month. This fell to about 1,500 per month following the introduction of fees.

Fees were introduced to reduce the number of frivolous claims being brought; such claims were often without substance. Almost 90% of cases were kicked out by the Tribunal, dropped by the employee or won by employers. However the cost of defending them often meant that employers were advised to settle early on in the process, even with a good prospect of winning the claim, because of the legal costs involved.

Following the introduction of fees, with only the strongest cases going to court, the percentage of claimants winning cases dropped from 12% before fees, to 6% last year. In addition, default judgements - when one party fails to turn up - fell by 80% once fees were introduced. The Supreme Court took the view that the current employment tribunal fees regime was unlawful on the basis that it effectively prevented access to justice. In order for the fees regime to have been lawful, the fees would need to have been set at an affordable level.

How might the Government respond?

The Government has already agreed to refund the fees already paid. We can expect it to explore the implementation of a 'lawful' employment tribunal fee scheme, but this is likely to take time and be subject to consultation. Such a scheme might involve a scale of fees linked to the value of claims, as in the small claims court, taking into account potential discrimination against women and individuals with other 'protected characteristics' (this being one of the criticisms of the Supreme Court).

So how does this affect you the employer?

With no fee charging scheme in place for access to an Employment Tribunal there is likely to be an increase in employment tribunal claims from current and former employees following this ruling. However, while that does not necessarily mean they have to reach the same levels as 2012 - there is more reason for employers to ensure their employees feel valued and, at the same time, protect themselves from employment tribunal claims. This is where the Human Resources function of a business can play a key role.

So now would be a good time to review your policies and procedures to ensure that they are fit for purpose. By treating everyone within the organisation in a fair and equitable manner, you minimise the risk of spurious claims being brought. Take early advice from your HR provider when things start to go wrong. Don't sit on a problem hoping it will go away, because it is much easier to resolve an issue early on rather than after an employment tribunal claim has been lodged.

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