In July 2013, the UK Ministry of Justice introduced fees of up to £1200 to submit a claim to the Employment Tribunal. In its December 2011 Consultation Paper, the Government explained that its reasons for seeking to introduce fees were threefold. Firstly, to place the Employment Tribunal on a similar footing as the Civil Courts who had been charging fees to litigants for many years. Secondly, to transfer the significant cost, some £84 million, of running the Employment Tribunals from the taxpayer to those actually using the system. Finally, it was hoped that the introduction of fees will encourage those involved in Employment Tribunals to attempt to resolve their differences through other means (such as workplace mediation) and promote early settlement. The Government stressed that the fee introduction was not intended to deter claims and a fee exemption procedure was introduced to ensure continued access for those with limited resources.
The introduction of fees coincided with a steep decline in the number of claims received by employment tribunals. Between Q1 (April to June) of 2013/14 and q1 of 2014/2015, total claims accepted fell by 81 percent from 44,334 to 8450. (Tribunal Statistics April to June 2014,Table 1.2, https://www.gov.uk/government/statistics/tribunal-statistics-quarterly-april-to-june-2014). In light of this evidence, Professor Abi Adams, in collaboration with Professor Jeremias Prassl of the Faculty of Law, University of Oxford, examined whether the adverse economic incentives created by the introduction of claimant fees constituted a barrier to justice in the context of UK and EU law. In order to address this question, they developed an entirely novel approach, combining economic theory and statistical analysis with constitutional legal principles.
In their paper, Adams and Prassl set out a detailed economic model of rational claimant behaviour in which the decision to submit a claim is determined by the expected pay-off taking into account all cost and benefits. Drawing on a range of data sources, including individual-level data from the Survey of Employment Tribunal Applications, they demonstrate that given the relatively low monetary value of most tribunal claims, a high proportion of successful claimants would receive a negative pay-off following the introduction of claimant fees. Consequently, it is economically irrational for an individual to pursue a claim, even if it is meritorious. Moreover, they argue that the measures were disproportionate in light of the Government’s stated policy aims: fees having failed to transfer cost away from taxpayers; failed to encourage early dispute resolution, and failed to deter vexatious litigants.
In July 2017, the Supreme Court declared the fee system for employment tribunals to be unlawful on the grounds that it restricted access to justice. The Adams and Prassl argument that fees restricted access to justice when set at levels that made it irrational to bring claims was central to the decision. As a consequence of the ruling, the Fees Order became void and the HM Courts and Tribunals Service ceased to collect fees with immediate effect. In October 2017, an employment tribunals refund scheme was established to reimburse approx. £33 million in fees (plus interest).
Adams, A and J Prassl (2017) ‘Vexatious Claims? Challenging the Case for Employment Tribunal Fees’ Modern Law Review 412-442 and online appendix https://doi.org/10.1111/1468-2230.12264 (Winner of the Wedderburn Prize for the best paper published in Modern Law Review in 2017)
Adams, A. and Prassl, J. (forthcoming) ‘Access to Justice, Systemic Unfairness, and Futility: A Framework‘, Oxford Journal of Legal Studies.