The UK government recently published a consultation on the re-introduction employment tribunal fees, almost seven years after the Supreme Court's finding that they were unlawful.
The 2013 fee regime
There are currently no fees to bring a claim in the employment tribunal ('ET') or employment appeal tribunal ('EAT'). However, fees were previously in place for four years between July 2013 to July 2017.
The 2013 fee regime categorised ET claims into 'Type A' and 'Type B' claims with a hearing and issue fee payable for each type. Type A claims were for simple claims (such as unpaid holiday pay) and had a combined hearing and issue fee of £390. Type B claims were for more complex claims (such as discrimination) and had a combined fee of £1200. The EAT had a £400 issue fee and a £1200 hearing fee.
The introduction of tribunal fees over a decade ago led to a substantial fall in the number of claims. Case volumes dropped by 53% in the 12 months after fees were introduced. In the four-year time span of the fee regime, ET claims fell by almost 70%.
The fee regime was challenged by Unison and, in July 2017, the Supreme Court held unanimously that it was unlawful: the fees were unaffordable in practice and had a deterrent effect on bringing claims. Moreover, the Supreme Court found the fee structure to be indirectly discriminatory against women and individuals with protected characteristics, who were more likely to bring discrimination (Type B) claims and pay the higher rates.
Since tribunal fees were scrapped, ET cases have increased from approximately 18,000 in 2016/2017 to around 33,000 in 2022/2023.
The new fee proposal
On 29 January 2024, the UK government announced that it had launched a consultation on the re-introduction of fees in the ET and the EAT (closing on 25 March 2024).
Under the new fee proposal:
- ET fees: £55 per claim (even if brought by multiple claimants). No separate hearing fee would be payable: the £55 issue fee would cover the entire journey of the claim through the ET.
- EAT fees: £55 fee for lodging an appeal in the EAT. This would apply per judgment, decision, direction or order of an ET being appealed.
- Fee exemptions: no fee will be payable where proceedings are bought to establish a right to receive a payment from the National Insurance Fund (generally only applicable on the insolvency of an employer).
- Fee remission: eligible individuals who cannot afford the proposed fees will be able to apply to the current fee remission scheme, Help with Fees, for a partial or full reimbursement of ET or EAT fees.
- Costs orders: no change is proposed to the existing rules on costs orders (in terms of which there are only very limited circumstances in which one party will have to pay the other party's legal costs).
Comment on the new fee proposal
Principles of affordability, simplicity and proportionality are said to be at the heart of the new fee proposal. In its case for the re-introduction of tribunal fees, the government acknowledges that the 2013 fee regime did not "strike the right balance between meeting the policy objective for claimants to meet some of the costs of the ET and EAT and protecting access to justice".
It is true that the new system sets fees at a much lower level than before (£55 being significantly less than £390 for a 'Type A' claim). The government considers the fees themselves as "modest" and "broadly affordable" (although the consultation asks whether a higher fee should be charged). The proposal to have only one type of fee for claims lodged at the ET and EAT is also simpler for users to understand and avoids the risk of discrimination.
However, it is more difficult to know whether the proposed new fees are proportionate. Although a fee of £55 might not necessarily incentivise an individual to settle a monetary dispute, it could deter them from raising a claim if they are only seeking a non-monetary award (e.g. a declaration in a discrimination claim / enforcing the right to a section 1 statement).
The government estimates that the new proposed fees could generate £1.3m to £1.7m a year from 2025/26 onwards. The direct running costs of the ET and EAT were £80 million in 2022/2023. When the estimated income is viewed against the running costs, any potential contribution would proportionately be very small.
How likely is it that tribunal fees will be re-introduced, and when?
The consultation suggests that, if implemented, fees may become payable from November 2024. However, as well as the outcome of the consultation, much depends on the timing and outcome of the general election. If Labour was to come to power after tribunal fees were re-introduced, it remains to be seen whether they would make abolishing them a priority (as they did as part of their 2017 manifesto).
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Solicitor
