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Changes to the Employment Fee Regime - How Could This Affect Your Family Business?

on Wednesday, 06 September 2017.

Family businesses with a strong sense of the family ethos running through the business generally enjoy good relations with employees.

However things do go wrong, for a variety of reasons, and employee claims can be costly and take up a lot of management time.

There has been a clear reduction in the number of claims brought against businesses as a result of the imposition of court fees on claimants. However, a recent decision of the Supreme Court in a case brought by Unite, has overturned the current fee regime as an unlawful restriction of access to justice. Whilst the government decides what to do next, one consequence is likely to be an increase in claims. Nick Murrell explains the case in more detail below.

As of 26 July 2017, and subject to a new fee system being introduced, fees will not be payable for Employment Tribunal (ET) claims or appeals to the Employment Appeal Tribunal (EAT). In addition any fees paid since the introduction of fees in 2013 will now have to be refunded.

Short Term Implications

The most immediate implications are that fees are no longer payable under the 2013 regime and that any fees paid since 2013 will be refunded. The cost of refunding is estimated as being £27m to £32m.

It is likely that there will be an immediate spike in ET claims including potentially some claims that would be technically out of time. Claimants may seek to argue that in light of the unlawful fee regime it was not reasonably practicable for them to bring their claims in time.

Long Term Implication

In the long-run it is likely that the Government will seek to introduce a new fee regime albeit one that does not impede access to justice. We can therefore expect a consultation paper on a new fee regime in due course.


Background

ET fees were introduced in July 2013. Having previously not been required to pay any fees, prospective Claimants needed to pay issue and hearing fees totalling £390 or £1,200 depending on their claim. From the outset ET fees were controversial and subject to particular scrutiny on whether they impeded access to justice. Following their introduction the number of claims brought in the ET fell by 70%.

The public service union, Unison, challenged the fee system by way of Judicial Review. The claim was originally heard by the High Court in November 2013 but dismissed as premature. A further judicial review challenge was brought in October 2014 but dismissed by the High Court in December 2014. In April 2015 Unison's appeals against the High Court decisions were heard in the Court of Appeal and, in August 2015, these were also dismissed. In February 2016 Unison were granted permission to appeal to the Supreme Court.

Decision

The Supreme Court unanimously agreed that the fee system was unlawful under both domestic and EU law. Lord Reed, giving the principal judgment, cited the significant drop in the number of claims being brought, a recent review estimating that 10% of prospective claimants did not bring claims because they could not afford the fees and various examples of how hypothetical prospective claimants with low to middle incomes would be affected by the fees.

In light of this the Supreme Court concluded that the level of fees was not set at a level that everyone could afford. The Supreme Court also held that the Government had not produced evidence to justify why the fees had been set at the particular level and were not therefore justified as a necessary intrusion on the right of access to the courts. The Supreme Court also held that the fee system was a disproportionate restriction on the EU principle of effective judicial protection.


For more information, please contact Nick Murrell in the Employment Law team on 0117 314 5627.

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