Employment tribunal fee regime unlawful - what happens now?

The employment tribunal fee regime is unlawful.

So says a Supreme Court ruling published this week, despite the system having been in place for four years already.

If this leads to the government scrapping fees altogether - as current reports suggest will happen - we’d see the biggest practical development in employment law for years.

Background

In 2013, the government introduced fees for raising claims in employment tribunals.

As a result, people often had to pay more than £1,000 to pursue a claim to its conclusion.

Fees had an immediate and radical effect, leading to a reduction of around 70% in claims against employers.

Many saw this as excellent news for businesses, but unions and other employee representatives took a different view. This led to attempts to get the courts to rule that fees were unlawful.

And the Supreme Court has agreed.

The immediate effect is that thousands of claimants who have paid fees in the past four years are to be repaid by the state. That total is thought to run into the tens of millions.

What’s next?

So where does this leave us?

The thinking has been that if the challenges were successful, the government may regard this as unfortunate interference from the courts, but then seek to introduce a more legally compliant scheme (think President Trump and travel bans).

Instead, in what may be a sign of the turbulent political times, it is now being reported the government intends to scrap employment tribunal fees entirely.

Whilst this does not rule out the possibility of a new fee regime being introduced later on, the current one is now at an end: employment tribunals are reportedly not accepting fee payments for claims lodged in person (with applications submitted online to follow suit).

The question of the effect on HR practices and refunds for employers

It appears likely employers ordered by an employment tribunal to pay the fees of a successful claimant will be entitled to a refund; however, it seems unlikely employers who have agreed to pay a claimant’s fees as part of a settlement will be entitled to any reimbursement.

There is also a wider issue: did the reduction of claims affect HR practice?

A gambler, a statistician, or even a cynic would no doubt point out that a 70% reduction in the chances of a claim being lodged meant the odds were more favourable to employers.

Could this have led to a more robust approach to employee relations?

This would perhaps be understandable, even if not necessarily a conscious decision.

If employers have developed a slightly more relaxed approach to procedures - and a more robust approach to negotiation - in the last four years, it may be a good time to remind colleagues of the risk of claims and the need to follow demonstrably fair procedures the next time they require to consider unsatisfactory behaviour in the workplace, or handle an employee’s grievance.