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Tribunal fees: challenge to tribunal fees fails at the Court of Appeal

Submitted By Firm: Addleshaw Goddard

Contact(s): Michael Leftley, Sarah Harrop

Author(s):

Helen Almond and Richard Branson

Date Published: 10/6/2015

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The Court of Appeal has rejected Unison's latest challenge to the tribunal fees system, primarily on the basis that there is still insufficient evidence that the fees have prevented particular individuals from bringing claims because they could not afford the fees. The Court did, however, acknowledge that the drop in the number of claims was "sufficiently startling to merit a very full and careful analysis" of the fees regime. Unison has sought permission to appeal the decision to the Supreme Court (R (Unison) v Lord Chancellor and another (2015) EWCA).

Background

In July 2013, the Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013 (Fees Order) came into force. The Fees Order introduced issue and hearing fees for claimants bringing claims in an Employment Tribunal (ET) and for appellants pursuing appeals in the Employment Appeal Tribunal (EAT). In summary, the Fees Order imposes the following fees:

  • "Type A" claims in the ET (e.g. claims for statutory redundancy payments, unlawful deductions from wages and breach of contract) attract an issue fee of £160 and hearing fee of £230.
  • "Type B" claims in the ET (e.g. claims for unfair dismissal, discrimination and whistleblowing) attract an issue fee of £250 and hearing fee of £950.
  • In the EAT, appeals attract an issue fee of £400 and a hearing fee of £1,200.

Full or partial fee remission (which takes into account disposable capital and gross monthly income) is available for individuals who qualify. In exceptional circumstances, the Lord Chancellor retains discretion to waive the fee, whether or not the remission criteria are met.

Since the Fees Order came into force, the Tribunal quarterly statistics have revealed a startling drop in the number of claims brought in the ET (see table below). For example, there was a 79% drop in the number of single claims made between October and December 2013 compared to the same period in 2012. This figure increased to an 81% drop in the number of single claims made between January and March 2014, as compared to the same period in 2013.

October – December

2012 v 2013

January – March

2013 v 2014

April – June

2013 v 2014

Single claims

79% drop

81% drop

81% drop

All claims

64% drop

59% drop

70% drop

Unison's judicial review challenges

Unison initially challenged the introduction of fees by way of judicial review in 2013 on four grounds, the main ground being that the fees regime denied claimants’ access to justice, thus breaching the "principle of effectiveness" under EU law. However, the challenge was dismissed by the High Court. One of the key reasons given for dismissing the challenge was that it had been brought too early, as there was not yet sufficient evidence to show the impact of the new fees regime. You can read our report on the High Court's decision here.

A second judicial review application was launched in 2014. However, this was also dismissed by the High Court. Whilst the Court suspected that there may be cases where a worker (who did not qualify for a fee remission) would be unable to find the money pay the fees, there was no evidence before the Court of any individual in this position. In the Court's view, the argument could only properly be tested by reference to actual cases which would enable the Court to review the income and expenditure of a particular individual. In any event, the Court held that quashing the fees system may be a disproportionate step. If evidence were to suggest that only a very small number of potential claimants were unable to enforce their employment rights (as opposed to merely being deterred), then the right solution might be for the Lord Chancellor to invoke his discretion to relieve such individuals from the obligation to pay fees in exceptional circumstances. You can read our report on this decision here.

Permission to appeal to the Court of Appeal was granted.

Appeal

On appeal, Unison's grounds of challenge to the Fees Order were as follows:

  1. Breach of the principle of effectiveness: Unison argued that the regime introduced by the Fees Order 2013 breaches the EU "principle of effectiveness" by making it impossible in practice, or excessively difficult, for claimants to enforce the rights conferred upon them by EU law, thus denying them access to justice.
  2. Indirect discrimination: Unison argued that, by imposing a higher level of fees for Type B claims, the Fees Order is indirectly discriminatory against claimants with particular protected characteristics,
  3. Public sector equality duty: Unison argued that, by deciding to make the Fees Order, the Lord Chancellor had breached his duty under section 149 of the Equality Act 2010 (i.e. to have due regard to the need to eliminate discrimination, advance equality of opportunity and foster good relations between those who share protected characteristics and those who do not).

Decision

The Court of Appeal dismissed the appeal.

1. Breach of the principle of effectiveness

The Court of Appeal found that it had not been proved that the Fees Order breached the principle of effectiveness. In particular, the Court noted that:

  • Unison's approach in basing the case on the overall decline in claims cannot succeed by itself, but needs to be accompanied by evidence of the actual affordability of the fees in the financial circumstances of (typical) individuals. Only this type of evidence would enable the Court to reach a reliable conclusion that the fees payable under the Fees Order are unaffordable in some cases.
  • In principle, there was no reason why well-constructed cases of notional individuals could not be used to assist in proving that the fees would be realistically unaffordable for at least some typical claimants.
  • The fact that the Lord Chancellor retained discretion to grant remission for those claimants who did not meet the remission criteria meant that, on the face of it, the Fees Order did not inherently result in claimants being unable to bring proceedings.

Overall, the Court concluded that: "the decline in the number of claims in the Tribunals following the introduction of the Fees Order is sufficiently startling to merit a very full and careful analysis of its causes; and if there are good grounds for concluding that part of it is accounted for by claimants being realistically unable to afford to bring proceedings the level of fees and/or the remission criteria will need to be revisited."

2. Indirect discrimination

Unison submitted that the Fees Order was indirectly discriminatory on the basis that:

  • The proportion of Type B claimants who were women was higher than the proportion of Type A claimants (leading to a greater proportion of women than men having to pay the higher fee in order to issue proceedings).
  • The majority of discrimination claims are brought by women and, therefore, there is discrimination against those bringing discrimination claims (the statistics apparently showed that 58% of all discrimination claims are brought by women).
  • There was a difference between the proportion of Type B claimants who were women (said to be 54%) and the proportion of women in the workforce (said to be 47%).

In relation to (a), the Court held that the two-tier fees system was objectively justified on the basis that the higher fee in respect of discrimination claims reflected the greater demand that these claims placed on tribunal resources.

Regarding strand (b), the Court noted that the provision, criterion or practice of the requirement to pay a higher fee was applied to all Type B claimants, regardless of the type of claim brought. As Type B claims also include unfair dismissal (where no gender disproportion is alleged as regards the group as a whole), accordingly, the higher level of fee cannot be said to particularly disadvantage women.

Finally, in relation to (c), the Court noted that in Unison's second challenge, the Lord Chancellor had, in fact, produced more recent evidence from 2013 to show that the proportion of Type B claimants who were women was 45%, i.e. broadly equivalent to the proportion of women in the workforce. Therefore, the Court held that this argument was not borne out by the statistics put before it.

3. Public sector equality duty

Unison focussed their appeal on this ground on the Equality Impact Assessment dated 13 July 2012 (EIA). However, in considering the EIA, the Court noted that their role was to go no further than to identify whether the essential issues had been conscientiously considered and rational conclusions reached. In the Court's view, this (fairly low) threshold had been met and so this ground of appeal was also dismissed.

Comment

Unison has already applied for permission to appeal to the Supreme Court.

In the meantime, as noted by the Court in their conclusion on the "breach of effectiveness" principle, the Justice Committee is currently conducting a formal review on the impact of tribunal fees, the result of which is expected later in the year. This review is intended to: "consider how effective the introduction of fees has been in meeting the original financial and behavioural objectives while maintaining access to justice". The Court noted that just because Unison's arguments on the breach of effectiveness principle had not been made out before them, this should not prevent the Lord Chancellor from making his own assessment on that question, on the basis of all the evidence to which he will have access.

Separately, across the border, the Scottish Government has announced that it will abolish employment tribunal fees once it is "clear on how the transfer of powers and responsibilities" under the Smith Commission agreement will work. The announcement was made in September 2015 as part of the 'Programme for Government' agenda for 2015/2016.

R (Unison) v Lord Chancellor and another (2015) EWCA

 

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