In a surprise judgment handed down on 26 July the Supreme Court unanimously decided that charging claimants to bring employment tribunal claims was unlawful and the fees scheme (introduced in 2013) was quashed. The Government promptly acknowledged that it accepted the judgment and wasted no time in confirming that the fees have been scrapped. The Law Society Gazette described the judgment as a humiliation for the Government.

Commentators have described the judgment as being constitutionally significant, since it addresses the question of what is meant by “access to justice”. As such its ramifications could extend well beyond the relatively narrow issue of employment tribunal fees. In his lead judgment (which distinguished legal commentator Joshua Rozenberg described as “terrific”) Lord Reed began by recognising that relationships between employers and employees are “generally characterised by an imbalance of economic power”. He noted that tribunals “are designed to deal with issues which are often of modest financial value, or of no financial value at all, but are nonetheless of social importance”.

In 2011, the Government proposed the introduction of fees on the basis that (1) this would transfer some of the cost of the system from the general taxpayer to its users, (2) it could encourage early settlements and (3) that it would help to weed out weak and vexatious claims.

What happened following their introduction was “a dramatic and persistent fall in the number of claims brought in ETs…of the order of 66-70%”.

Lord Reed first considered whether the fees order was unlawful under English law. At paragraphs 66 to 85 of the judgment, headed “The constitutional right of access to the courts” he sets out a compelling analysis of what is meant by the rule of law and how it is inextricably linked with access to justice. He is concerned that these concepts may have become lost in favour of an ideological view that “…the administration of justice is merely a public service like any other, that courts and tribunals are providers of services to the “users” who appear before them, and that the provision of those services is of value only to the users themselves and to those who are remunerated for their participation in the proceedings”. His response is firm and clear:

67. It may be helpful to begin by explaining briefly the importance of the rule of law, and the role of access to the courts in maintaining the rule of law. It may also be helpful to explain why the idea that bringing a claim before a court or a tribunal is a purely private activity, and the related idea that such claims provide no broader social benefit, are demonstrably untenable.

68. 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.

His review of the law goes back to Magna Carta itself and the declaration at Chapter 40 (still on the statute book): “Nulli vendemus, nulli negabimus aut differemus rectum aut justiciam” (“We will sell to no man, we will not deny or defer to any man either Justice or Right”).

Having considered the general principles underpinning access to justice he went on to consider how they apply to tribunal fees. He readily accepted that there can be legitimate purposes for charging court fees. However this did not give the Lord Chancellor a green light to impose “whatever fees he chooses”. In order for the fees to be lawful they had to be set at a level that everyone could afford, taking into account  the availability of full or partial fee remissions. Lord Reed concluded that the evidence before the court “considered realistically and as a whole, leads to the conclusion that that requirement is not met”. This was evidenced in particular by what was noted in the Review Report as “a sharp, substantial and sustained fall in the volume of case receipts as a result of the introduction of the fees”.

All of the analysis and the conclusion that the fees were unlawful was based on English law. It is not until paragraph 105 of his judgment that Lord Reed considers the potential application of EU law. He refers to the principle of effectiveness, “…that is to say, that the procedural requirements for domestic actions must not be ‘liable to render practically impossible or excessively difficult’ the exercise of rights conferred by EU law…”. He concluded:

Given the conclusion that 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 nonmonetary 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.

Lady Hale, pending President of the Supreme Court, added her own judgment, having recorded that she was in full agreement with Lord Reed’s judgment. She pointed out that charging higher fees for bringing certain types of claims, including discrimination claims, was itself discriminatory because it disproportionately disadvantaged women.

The response to the judgment has been surprisingly balanced. It seems that many commentators in the press have respected the meticulous rationale set out by Lord Reed.

The Times was predictably unimpressed:

If the old routine of abuse and copious claims returns, that will be bad for employers, bad for their bottom lines and thus bad for employees too. The system did not work perfectly, but it did lead to a 79 per cent reduction in the number of cases brought. The court’s ruling is all the more disappointing because the rules already made provision to remit fees for those who really could not find the money. The government is bound to respect the court’s decision. Parliament, however, should take another look.

Unsurprisingly, The Guardian has a different take:

Dave Prentis, the general secretary of Unison, can be forgiven for boasting that Wednesday’s supreme court ruling against employment tribunal fees is “the biggest victory in a court in British employment history”. The justices’ decision that the fees, of between £400 and £1,200, are an unconstitutional denial of access to justice, is a triumph both for workers and for the union that has been fighting their corner ever since the fees were introduced almost exactly four years ago. Even the most buttoned-up of lawyers thought that the seven justices who heard the case had done more for working people than anyone in the past decade.

The judgment was more than that, however. It was, above all, a triumphant defence of the rule of law and a brutal reprimand to Chris Grayling, now transport secretary but who as justice minister introduced fees without proper parliamentary scrutiny, without gathering evidence to support his decision, and in a way that undermined the access to justice on which the rule of law depends.

As for the Daily Mail, it made the judgment its front page story with the banner headline: “Queue Here for the Gravy Train”, noting that “furious bosses” expect “a tide of claims”. They turned for opinion to Charlie Mullins, founder of Pimlico Plumbers, who predictably said “This is a charter for litigants which will fuel Britain’s compensation culture. I have sympathy with people with genuine claims but a lot of people make false allegations and try it on. This ruling will only encourage those who abused the system to come back into the market”. Mr Mullins had not exactly advertised his credentials as a political commentator when commenting earlier in the day on whether the UK should attempt to stay in the single market on Radio 4’s The World at One and stating: “Course we should be staying in; Jeremy Corbyn’s a twat, ain’t he?”. Mr Mullins lost a significant case on the status of workers earlier this year.

In practical terms, fee payments have been suspended until they can be phased out and the Government is arranging to reimburse the estimated £27m worth of fees paid over the last four years.

I will provide my own opinion about what it means for SME employers in next week’s Canter Levin & Berg Employment Solutions Newsletter. If you do not already subscribe, you can do so free of charge here.