31 July 2017

By Michael Ford QC, Professor of Law University of Bristol and Counsel for the EHRC in the UNISON case

As described by one commentator, the Supreme Court judgment in R (UNISON) v Lord Chancellor [2017] UKSC 51 is "the biggest single victory in the history of employment law". At a stroke, the Supreme Court declared unlawful the fees which for more than four years rendered many employment rights illusory in practice. The judgment also has very important implications for the effective protection of legal rights beyond the workplace, and its reasoning will echo in domestic and international constitutional law for many years to come.

The case was an unqualified triumph for UNISON, which brought the challenge, supported by the Equality and Human Rights Commission (EHRC) as intervener. Defeats in front of eminent judges in two Divisional Courts and in the Court of Appeal made victory in the Supreme Court all the sweeter. With immediate effect from the day of the judgment, fees ceased to be payable in the employment tribunal. For the Government, which faces a bill of over £30 million in honouring the undertaking it gave to the courts in the event of its defeat, the case was a disaster.

But let's start at the beginning. The introduction of fees for tribunal claimants was announced, without consultation, in the BIS publication of January 2011, Resolving Workplace Disputes: A Consultation. The aims, according to the Coalition Government, were to transfer some of the costs from taxpayers to users; to incentivise early settlements; and disincentivise unreasonable behaviour, such as pursuing weak or vexatious claims. On this consumer-based model, any wider social benefits of tribunals in upholding social rights were ignored. Objections by the IER and others, including evidence of how few claimants were paid their award in full, were brushed aside in the later consultation on the detail of fees. The Government's Impact Assessment predicted only a small drop in claims as a result of fees, and assumed no social costs from fewer tribunal claims being brought: tribunals, on this model, serve no wider function than a supermarket serving its customers.

When the Employment Tribunals and EAT Fees Order came into effect in July 2013, UNISON was caught on the horns of a dilemma. Any delay in issuing a claim for judicial review is often fatal; yet at that stage there was little evidence of the effect of fees. UNISON was told by the first Divisional Court that its claim was premature. Even after statistical evidence emerged showing a dramatic drop in the number of claims, a second Divisional Court still dismissed the claim, saying such evidence was not sufficient to show workers were unable, as opposed to unwilling, to bring claims. Though troubled by the statistics, the Court of Appeal too thought they were not sufficient to show that claimants could not afford fees, and nor was it persuaded that UNISON's hypothetical claimants would be unable to pay fees.

Though many would have given up at this stage, UNISON fought on. Indefatigable commentators, such as Richard Dunstan, continued to highlight the unfairness caused by fees. Each set of quarterly official tribunal statistics confirmed that the dramatic drop in claims was not a statistical blip, that if anything the success rate of claims had dropped post-fees, and that far fewer claimants than predicted were obtaining remission. Detailed research for ACAS based on a representative sample of actual claimants found that fees were the most common reason for those who did not settle through ACAS deciding not to submit a claim.

The final piece in the evidential jigsaw, produced not long before the Supreme Court hearing, was the Government's long-awaited Review into tribunal fees. Its claim that the introduction of fees "has broadly met its objectives" was contradicted by the evidence it relied on. This showed that fees were raising much less money than predicted, there had been no improvement in the success rate of claims, some employers were not engaging in pre-claim conciliation as a tactic to see if the claimant would pay a fee, and about 8,000 claimants each year did not bring claims because they could not afford fees. Undeterred by its own evidence, the Review baldy asserted there was "no evidence that people had been prevented from bringing ET claims".

It was against this background that the claim reached the Supreme Court, where UNISON was again supported by the EHRC. The fact that the case was listed in front of seven Supreme Court Justices and not the usual five was an early sign of how seriously the Court viewed the issue. Quite how opposed the Court was to the Government's marketisation of legal rights, exemplified by Lord Reed's stinging criticism of the Government's assumption that the provision of court services "is of value only to users themselves", only became clear when the judgment was issued.

A remarkable feature of the principal judgment, given by Lord Reed, is his reliance on the common law, rather than EU law or the ECHR, to strike down tribunal fees. Traditionally, the common law has not been kind to workers, exemplified by how the doctrine of freedom of contract pretty much ignored the inequality of bargaining power in the employment relationship, and how judge-made torts curbed industrial action or union organisation. Over recent years court rulings favourable to workers have tended to be based on EU law or, less frequently, the European Convention on Human Rights.

But the quiescence of the common law in contract law contrasts sharply with its rapid evolution, over the past half century, in the sphere of public law. Here, the courts have formulated new quasi-constitutional principles for controlling government action. One right buried deep within the common law, going back at least to Magna Carta, is the fundamental right of access to the courts. In Lord Reed's memorable words (para. 68):

Without [unimpeded access to the courts], 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.

The UNISON case marks an evolutionary leap in the importance of that right, recognising at the highest level that the formal right of access to the courts is worthless unless citizens have an effective means of vindicating their rights. If fees are set at a level where there is a "real risk that persons will be effectively prevented from having access to justice" (para. 88; emphasis added) they will, according to the Supreme Court, be unlawful.

Moreover, in addressing whether fees were set at a level everyone could afford (including after you take account of the remission scheme), the Court looked at a wide range of empirical evidence – the sharp, substantial and sustained fall in the number of claims after fees; the evidence from the Review that around 8,000 claimants each year did not bring proceedings because they said they could not afford the fees; and evidence based on the income of the hypothetical claimants relied on by UNISON, showing that payment of fees would result in their having less income than the Joseph Rowntree Foundation considers necessary for an acceptable standard of living (paras 91-4). The existence of the discretionary power held by the Lord Chancellor to grant remission in "exceptional circumstances", in fact exercised only about 50 times between July 2015 and December 2016, was no answer to these deep-seated systemic problems.

Lord Reed's analysis was also based on economic theorising, probably influenced by an article of Abi Adams and Jeremias Prassl which was cited to the Court though it was then not yet published. An economically rational claimant would not pay a fee of £390 to pursue a claim worth £500 (the median award for deduction from wages) unless she was virtually certain of winning and recovering the award and fee in full (para. 96). The evidence of the Government's own research, however, was that only about half of claimants who succeed before the employment tribunal recovered their award, and a third receive nothing.

For good measure, Lord Reed added some supplementary arguments. The Fees Order was also unlawful on the alternative ground that it went further than was reasonably necessary and justified by its objectives. The Lord Chancellor had failed to consider the "elementary economics, and plain common sense" that lower fees might have raised more money (para. 100). There was no evidence fees had incentivised earlier settlements or discouraged weak claims. Most fundamentally of all, the Government's consumer-based logic had ignored altogether the wider, social benefits flowing from tribunal claims – that they are a means of ensuring adherence to labour standards.

But, in the words of Dr Seuss' Cat in the Hat, "that is not all". For similar reasons, the Fees Order was ruled a disproportionate interference with the right to a court inherent in Article 6 ECHR, in turn guaranteed by Article 47 of the EU Charter, with the consequence that it was unlawful under EU law. And, as Lady Hale explained in a short separate judgment, it was also indirectly discriminatory against women, who bring a disproportionate number of discrimination claims because, err, they are discriminated against more often than men, and who have to pay the higher fee to do so (type B).

The immediate effect of the judgment was summarised by Lord Reed: because fees were in practice unaffordable to some people, and so high as to prevent people bringing claims for small amounts, the Fees Order "was therefore unlawful ab initio, and must be quashed" (para. 119).

On the day of the judgment, employment tribunals began telling claimants they no longer had to pay a fee to bring a claim or for a hearing. The effect of the Court's decision extends equally to the higher fees for appeals to the EAT. The Government must reimburse all those who paid a fee in the past and who have not recovered it. Other issues remain to be resolved - for example, what about claimants whose claims were dismissed because they failed to pay a hearing fee, which we now know was unlawful?

With its policy in tatters, it is not clear what the Government will do. Now they have re-labelled themselves as the workers' party, the Conservatives may have little appetite for constructing a new fees scheme that will pass muster with the Supreme Court's judgment. In any case, the current chaos of passing legislation to give effect to Brexit means that there is little time for anything else. The Court's reasoning itself, based on the common law, is immunised against Brexit, so for once the EU cannot be the scapegoat.

In the longer-term, the judgment is likely to be much cited in future cases in the UK and beyond about access to justice, a right which appeals across the political spectrum and which, as the judgment shows, has radical potential within it. The judgment represents another chapter in the use of fundamental legal rights to further the interests of workers and their unions, which end up having much broader long-term effects - just as US unions in the last century appealed to civil liberties to gain traction for the right to protest.

Though the rule of law is much cited as an idea, to date the courts' focus has mainly been on the protection of an individual's legal rights. They have given little explicit recognition to how individual claims, in the absence of state-backed enforcement, are also an essential means of ensuring that the system delivers the public goods which it promises. Undermine employment tribunal claims and, as the Supreme Court explains, you take away the keystone which underpins the legislation purporting to give effect to labour standards in general. The means for the enforcement of rights are just as important as the rights themselves.

UNISON has every right to be immensely proud of fighting a case not only for its members but for all workers, all those whose practical right to a court is threatened or needs defending, and the wider public who benefit from social rights being implemented in practice, not just in law books.