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News | Wed 26th Jul, 2017
The Rule of Law and Access to Justice in Employment Tribunals
A discussion of the background to the imposition of fees in the Employment Tribunal and the declaration that they are in fact unlawful by the Supreme Court in R (on the application of UNISON) (Appellant) v Lord Chancellor (Respondent) [2017] UKSC 51.
Background
At the outset of its judgment handed down this morning the Supreme Court highlighted the issue in this long running battle between the union and the Lord Chancellor’s department to be a simple question of whether;
“fees imposed by the Lord Chancellor in respect of proceedings in employment tribunals (“ETs”) and the employment appeal tribunal (“EAT”) were unlawful because of their effects on access to justice.”
This question has been on the lips of many employment practitioners as they witnessed the rapid decline in the number of cases being pursued in the Employment Tribunal up and down the country over the last four years.
Prior to the introduction of fees the governments Equality impact assessment of 13 July 2012 stated that;
“The fundamental policy aim for the introduction of fees is to transfer a proportion of the cost of running the ET and EAT from taxpayers to users. The policy objective is to require users to pay fees where they can afford to do so in order to have their workplace dispute resolved through the ET and EAT process. Parliament has already approved the principle of fee-charging in the form of the Tribunals, Courts and Enforcement Act 2007. This created the statutory power to prescribe fees in tribunals.
The introduction of fees into the ET and EAT is also part of a wider Government review of Britain’s employment laws that is designed to improve the efficiency and effectiveness of the ET and encourage employers and employees to work together to resolve workplace disputes at the earliest stage.
The intended effects of introducing fees are to:
However, as was observed by many commentators at the time this was seen simply as a cost cutting exercise because “The Ministry of Justice claim(ed) that the £84m (or £74m, depending on which particular Government document you happen to be looking at) cost of running the Employment Tribunals Service is too high.” Additionally the government’s impact assessment published in May 2012 concluded that it was not possible to predict how claimants would respond to the introduction of fee-charging. Two alternative assumptions were therefore made for modelling purposes a low response scenario, where demand was assumed to decrease by 1% for every £100 of fee and a high response scenario, where demand was assumed to decrease by 5% for every £100 of fee.
Practitioners and Unions and other representatives were patently not convinced of the approach to this issue and communications from the Employment Bar Association, the Law Society, the Law Society of Scotland and many other professional organisations, representatives and bodies began to appear over the following years. The common theme was criticism of the effect of fees, the level of fees and an apparent correlation between the introduction of fees and a significant reduction in the number of claims being pursued suggesting an interference with access to justice.
Statistical Evidence
Over time evidence has been compiled as to the types of cases being pursued, success rates, settlement rates and official statistics of income and expenditure levels of hypothetical litigants and this formed part of the analysis conducted by the Supreme Court when considering the issue it set itself. It will be recalled that the High Court originally considered Unison’s challenge to be premature based upon a lack of available evidence.
In particular Tribunals and Gender Recognition Certificate Statistics Quarterly published in December 2016 and a consultation paper published by the Ministry of Justice in January 2017, entitled Review of the introduction of fees in the Employment Tribunals: Consultation on proposals for reform (Cm 9373) (“the Review Report”), neither of which were available in the courts below, were referred to as a source for the numbers of cases.
It is noted at paragraph 39 of the judgment that;
“Although there are differences between the figures given in the different sources, the general picture is plain. Since the Fees Order came into force on 29 July 2013 there has been a dramatic and persistent fall in the number of claims brought in ETs. Comparing the figures preceding the introduction of fees with more recent periods, there has been a long-term reduction in claims accepted by ETs of the order of 66-70%. The Review Report considered possible explanations, besides the introduction of the fees, and suggested that improvements in the economy would have been expected to result in a fall in single claims of about 8%. It concluded:
“The actual fall since fees were introduced has been much greater and we have therefore concluded that it is clear that there has been a sharp, substantial and sustained fall in the volume of case receipts as a result of the introduction of fees.” (para 105)
The Report concluded that “the overall scale of the fall … is troubling” (para 336).
It is also observed (at para 49) that in the Review Report the Ministry of Justice state that “while there is clear evidence that ET fees have discouraged people from bringing claims, there is no conclusive evidence that they have been prevented from doing so”
In dealing with this issue of those who had been prevented from doing so the argument was advanced on behalf of the Lord Chancellor that the ability to remit fees in an appropriate case overcomes any restriction on access to justice in any particular case.
Further reference is made to the research Acas carried out on its own behalf, based on a survey of a representative survey of claimants (“Evaluation of Acas Early Conciliation 2015”) and although subject to some argument over precisely which figures should be used the court considered the Joseph Rowntree Foundation, Minimum Income Standards for the UK in 2013 from which the union presented 2 hypothetical claimants for the Supreme Court to consider, firstly;
“a single mother with one child, working full-time as a secretary in a university. She has a gross income from all sources of £27,264 per annum. Her liability to any issue or hearing fee is capped under the remission scheme at £470 per fee. She therefore has to pay the full fees (£390) in order to pursue a type A claim to a hearing, and fees totalling £720 in order to pursue a type B claim.” and secondly a female worker with;
“a partner and two children. She and her partner both work full-time and are paid the national minimum wage. They have a gross income, when benefits and tax credits are also taken into account, of £33,380 per annum. The claimant’s liability to fees is capped under the remission scheme at £520. She therefore has to pay the full fees of £390 in order to pursue a type A claim, and fees totalling £770 in order to bring a type B claim.”
An Individual Right of Access to Justice
The Supreme Court begins by considering this issue as centrally related to the rule of law and notes at paragraph 68 that;
“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.”
It then considers the evolution of the right of access to justice and notes that chapter 40 of the Magna Carta remains on the statute book …”in the version issued by Edward I in 1297:” and that;
“We will sell to no man, we will not deny or defer to any man either Justice or Right.”
Whilst observing that those words were not a “prohibition on the charging of court fees, but they are a guarantee of access to courts which administer justice promptly and fairly”; it is recounted earlier in the judgment that “In 1968 the Donovan Report (the Report of the Royal Commission on Trade Unions and Employers’ Associations, Cmnd 3623) recommended that labour tribunals should be established to provide “an easily accessible, speedy, informal and inexpensive procedure” for the settlement of employment disputes (para 578).”
In an interesting observation, which might be seen as a criticism of a non – lawyer Lord Chancellor, it is noted at paragraph 73 that;
“A Lord Chancellor of a previous generation put the point in a nutshell, in a letter to the Treasury:
(Genn, Judging Civil Justice (2010), p 46, quoting a letter written by Lord Gardiner in 1965)”
The court then conducted a comprehensive review firmly re-affirming the common law evolution of a right of access to justice before considering two cases involving court fees.
Fistly, R v Lord Chancellor, Ex p Witham [1998] QB 575 which concerned court fees prescribed by the Lord Chancellor under a statutory power.
“The order in question repealed a power to reduce or remit the fees on grounds of undue financial hardship in exceptional circumstances. The order had been made with the concurrence of all four Heads of Division, as well as the Treasury. It had also been laid before Parliament. The applicant was in receipt of income support of £58 per week, and wished to bring proceedings. The prescribed fee was either £120 or £500, depending on the amount claimed. The applicant said that he could not afford to pay a fee of either amount. There was also evidence that a person on income support could not afford the £10 fee to set aside a default judgment in debt proceedings, and that another person on income support who was facing eviction could not afford the £20 fee to be joined in possession proceedings. Laws J, with whom Rose LJ agreed, said that he saw no reason not to accept what was said, and concluded that there was a variety of situations in which persons on very low incomes were in practice denied access to the courts.”
In the second case R (Hillingdon London Borough Council) v Lord Chancellor (Law Society intervening) [2008] EWHC 2683 (Admin); [2009] 1 FLR 39 the court concluded that in that particular case the lawfulness of an increase in fees order would be determined by asking whether there was “a real risk that the increase in fees will cause local authorities not to make applications which objectively should be made”.
The Lawfulness of Fees now applied in Employment Tribunals
It is noted at paragraph 87 that;
“The Lord Chancellor cannot… lawfully impose whatever fees he chooses… It follows from the authorities cited that the Fees Order will be ultra vires if there is a real risk that persons will effectively be prevented from having access to justice. That will be so because section 42 of the 2007 Act contains no words authorising the prevention of access to the relevant tribunals. That is indeed accepted by the Lord Chancellor.”
Accordingly the question for the court to answer was whether or not on the statistical analysis before it the court could conclude that there was a real risk of prevention of access to justice based upon the imposition of the fee regime.
It is at paragraph 91 and 92 that the full criticism of the imposition of fees becomes apparent, it is stated that;
“In order for the fees to be lawful, they have to be set at a level that everyone can afford, taking into account the availability of full or partial remission. The evidence now before the court, considered realistically and as a whole, leads to the conclusion that that requirement is not met. In the first place, as the Review Report concludes”it is clear that there has been a sharp, substantial and sustained fall in the volume of case receipts as a result of the introduction of fees”. While the Review Report fairly states that there is no conclusive evidence that the fees have prevented people from bringing claims, the court does not require conclusive evidence: as the Hillingdon case indicates, it is sufficient in this context if a real risk is demonstrated. The fall in the number of claims has in any event 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.”
The court went on to observe that;
“whether fees effectively prevent access to justice must be decided according to the likely impact of the fees on behaviour in the real world. Fees must therefore be affordable not in a theoretical sense, but in the sense that they can reasonably be afforded. Where households on low to middle incomes can only afford fees by sacrificing the ordinary and reasonable expenditure required to maintain what would generally be regarded as an acceptable standard of living, the fees cannot be regarded as affordable.”
In a very clear dismissal of the arguments related to the use of discretionary remission of fees to minimise or reduce risks of impediment to justice the court stated;
“The discretionary power of remission may be capable of greater use than has been the case in the past, but it can only be exercised “where the Lord Chancellor is satisfied that there are exceptional circumstances which justify doing so.” The problems which have been identified in these proceedings are not confined to exceptional circumstances: they are systemic.”
Having made this determination unanimously in a Supreme Court of seven including Lord Neuberger and LJ Hale it is plain that the regime was unlawful from the outset and is void “ab initio”.
The court went on to consider whether this decision means the fees order was unlawful under EU law and concluded,
“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 follows that the Fees Order imposes limitations on the exercise of EU rights which are disproportionate, and that it is therefore unlawful under EU law”.
In an interesting exchange within the judgment it is plain that the Lord Chancellor accepted that in light of the evidence now before the court the introduction of fees could not be shown to have achieved any of the secondary benefits claimed when they were introduced namely the reduction of unmeritorious claims or the promotion of early settlement.
Discrimination
An interesting outcome is that the decision given by Lord Reed is agreed by all and makes no mention of discriminatory issues as there is no need to do so because the fees order is unlawful on a common law and EU assessment of access to justice,
However, Lady Justice Hale delivers a judgment dealing solely with discrimination because as she notes “the Lord Chancellor will no doubt wish to avoid any potentially unlawful discrimination in any replacement Order.”
After setting out the law relating to discrimination she notes that;
“It is not suggested that the whole of the Fees Order amounts to a discriminatory “provision, criterion or practice” (PCP) for this purpose. Rather, it is suggested that the higher fees payable, either for Type B claims in general or for discrimination claims in particular, are indirectly discriminatory against women (and others with protected characteristics too). In relation to Type B claims in general, this is because a higher proportion of women bring Type B claims than bring Type A claims. Before the Court of Appeal, UNISON suggested that 54% of Type B claimants were women, whereas only 37% of Type A claimants were women. However, the Lord Chancellor put in figures suggesting that 45% of Type B claimants were women. The Court of Appeal accepted that this was still a disparate impact (para 85). This meant that the higher fees for Type B claims might put women at a particular disadvantage when compared with men. Both the Court of Appeal and the Divisional Court therefore proceeded on the basis that “the situation” had to be justified and this has not been challenged by the Lord Chancellor.”
In justifying a difference of fee levels for Type B case the Lord Chancellor was effectively arguing that this type of case required more resource and therefore was justifiable.
In an interesting conclusion Lady Justice Hale says;
“It is not necessary finally to resolve this question in these proceedings. If the fee charged for unfair dismissal claims had been lower than the fee charged for discrimination claims, then it might well have been necessary (and very difficult) to demonstrate that the higher fee for discrimination claims was a proportionate means of achieving a legitimate aim. But that is not this case. And in any event, it is accepted that the higher fees generally have a disparate impact and in my view it has not been shown that they are justified”.
Where Now
Whilst I have yet to see any official response it seems to me that fees will need to be refunded to all who have paid them, any cases which were not proceeded with because of fee issues may wish to be considered on the basis of a possible extension of time argument. Cases which have not yet been issued are unlikely to be asked for payment of fees. It seems in light of the current political situation that presenting a new order on fees is likely to be contentious.
Perhaps employment practitioners who have held on long enough will breathe a sigh of relief as they head to sunnier climes this August before reaching for a new copy of the handbook in September.
Call: 1998
