Case Facts
In this case, UNISON, the trade union, brought a judicial review challenge against the Lord Chancellor, arguing that the Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013 (SI 2013/1893) was unlawful. The Fees Order had been introduced by the Lord Chancellor pursuant to the power conferred by s 42 Tribunals, Courts and Enforcement Act 2007, which authorises the Lord Chancellor to prescribe fees payable in respect of proceedings before certain tribunals. Employment Tribunals (ETs) and the Employment Appeal Tribunal (EAT) were brought within the scope of that power by the Added Tribunals (Employment Tribunals and Employment Appeal Tribunal) Order 2013 (SI 2013/1892), which designated them as "added tribunals" for the purposes of s 42 Tribunals, Courts and Enforcement Act 2007.
Prior to the Fees Order, bringing a claim before an ET had been free of charge. The historical foundation for this approach was significant. The Donovan Report (1968) had recommended that labour tribunals provide "an easily accessible, speedy, informal and inexpensive procedure" for the settlement of employment disputes. The Leggatt Report (2001) subsequently identified the absence of fees as one of three elements that had rendered ETs successful, a point Lord Reed cited as evidence that Parliament intended ETs to be accessible without financial barrier.
The Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013 (SI 2013/1893) introduced a fee structure under which claimants were required to pay both an issue fee upon lodging a claim and a hearing fee before the final hearing. Claims were divided into two categories. Type A claims covered simpler, lower-value matters such as unlawful deduction of wages, attracting a total fee of £390 (comprising a £160 issue fee and a £230 hearing fee). Type B claims covered more complex matters such as unfair dismissal and discrimination, attracting a total fee of £1,200 (comprising a £250 issue fee and a £950 hearing fee). A remission scheme existed to assist those of limited means, but the evidence demonstrated that many claimants who might have qualified did not apply, and the scheme was in any event insufficiently wide to protect all those who genuinely could not afford to pay.
The government advanced three objectives for introducing the fees: first, to transfer some of the cost burden from general taxpayers to those who use or cause the system to be used; secondly, to incentivise earlier settlement of disputes; and thirdly, to disincentivise unreasonable or vexatious claims. The government's own impact assessment of May 2012 had proceeded on the assumption that the use of ET and EAT services did not generate gains to society exceeding the aggregate gains to the individual parties involved — in other words, that there were no positive externalities from tribunal proceedings. The Court was later to reject this analysis as fundamentally misconceiving the constitutional role of the courts.
Following the introduction of fees in July 2013, the number of claims brought in ETs fell dramatically, by approximately 66 to 70 per cent. The Court found that this sharp and sustained reduction could not be explained by other factors and constituted strong evidence that the fees were deterring persons with legitimate claims from bringing them. UNISON argued that the Fees Order was unlawful on three principal grounds: it impermissibly interfered with the common law constitutional right of access to justice; it frustrated the purpose of Parliamentary legislation conferring employment rights; and it constituted unjustified indirect sex discrimination.
Held
The Supreme Court allowed UNISON's appeal unanimously and quashed the Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013 (SI 2013/1893) in its entirety. Following the judgment, the UK government announced that it would refund all fees paid under the order, a sum estimated at approximately £32 million.
The leading judgment was delivered by Lord Reed, with whom Lord Neuberger, Lord Mance, Lord Kerr, Lord Wilson, and Lord Hughes agreed. Lady Hale delivered a separate concurring judgment dealing exclusively with the discrimination issues.
The Court held that the Fees Order was unlawful on two distinct grounds. First, it unlawfully interfered with the constitutional right of access to justice at common law and frustrated the purpose of the legislation conferring employment rights. Secondly, in Lady Hale's separate judgment, the Fees Order constituted unlawful indirect sex discrimination contrary to the Equality Act 2010.
On the first ground, the Court held that the power in s 42 Tribunals, Courts and Enforcement Act 2007 did not authorise the making of a fees order that rendered access to a tribunal effectively impossible or excessively difficult. The fees as set went far beyond what was necessary to achieve the government's stated objectives. For Type A claims in particular, the fee of £390 was disproportionately high relative to the value of the claim, making it economically irrational for many claimants to pursue their rights. The Court found that the remission scheme did not adequately remedy this: evidence showed that many eligible claimants did not apply for remission, and the scheme was insufficiently broad to protect all those unable to afford the fees.
On the discrimination ground, Lady Hale held that the Fees Order constituted unjustified indirect sex discrimination under the Equality Act 2010. A higher proportion of women than men bring Type B claims, particularly discrimination claims, with the result that the higher fees applicable to Type B claims imposed a particular and disproportionate disadvantage on women that was not justified.
Ratio Decidendi
The ratio of this case rests on the relationship between executive fee-setting powers, the constitutional right of access to justice, and the principle of legality.
The Court held that the constitutional right of access to courts and tribunals is inherent in the rule of law. Courts and tribunals exist not merely for the benefit of individual litigants but to maintain the rule of law and the Queen's peace and to enforce the rights of all persons. Decisions upholding the law benefit society as a whole and deter unlawful conduct generally. The government's impact assessment, which had treated tribunal usage as generating no positive externalities beyond the parties themselves, was therefore founded on a fundamental misconception of the constitutional function of courts.
The principle of legality provides that Parliament must use clear and express statutory language if it intends to authorise executive interference with a fundamental constitutional right such as access to justice. In the absence of such language, the courts will presume that Parliament did not intend to confer on the executive a power to take steps that would render the exercise of statutory rights effectively impossible. The power conferred by s 42 Tribunals, Courts and Enforcement Act 2007 contained no such express authorisation and must therefore be read subject to the constitutional right of access to justice.
The test the Court applied is whether the fees imposed make it "impossible or excessively difficult" for individuals to exercise their statutory rights in practice. On the evidence, the dramatic fall in ET claims of approximately 66 to 70 per cent following the introduction of fees in July 2013, combined with the particular burden imposed on low-value Type A claimants and the inadequacy of the remission scheme, satisfied the Court that this threshold was met. The Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013 (SI 2013/1893) was therefore ultra vires s 42 Tribunals, Courts and Enforcement Act 2007 and was quashed in its entirety.
A separate but equally important element of the ratio concerns the frustration of Parliamentary intention. ETs are the only forum in which most employment law claims may be brought. This exclusivity makes access to ETs constitutionally more significant than access to an optional alternative forum. Parliament had, through successive statutes, conferred a body of employment rights on working people. A fees order that made enforcement of those rights economically impossible in practice effectively deprived the legislation of practical effect. The Lord Chancellor was not empowered by s 42 Tribunals, Courts and Enforcement Act 2007 to undermine the scheme of employment protection that Parliament had enacted.
Obiter Dicta
Lord Reed made a series of observations of broader constitutional significance that go beyond the immediate ratio. He emphasised that the right of access to courts is not merely a private right enjoyed by individual litigants but a right whose vindication serves the public interest. When a court gives effect to the law, it does so not only for the benefit of the successful party but for the benefit of all persons who are subject to that law: an employer deterred by a successful ET claim from repeating unlawful conduct benefits other employees who may never need to bring proceedings of their own. This reasoning directly contradicted the government's impact assessment, which had treated ET proceedings as generating purely private value.
Lord Reed further observed that the rule of law requires that the law be accessible in practice and not merely in theory. There must be a real and practical possibility for individuals to enforce their legal rights before the courts and tribunals that Parliament has created for that purpose. A system in which rights are declared by statute but rendered unenforceable in practice by prohibitive fees is inconsistent with the constitutional order and with Parliamentary sovereignty itself, since Parliament's enactments are rendered hollow.
These observations have considerable significance for the limits of executive action in relation to court and tribunal fees, and for the broader constitutional principle that the executive cannot, without clear Parliamentary authority, take steps that undermine access to the legal system that Parliament has established.