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Ruth Kennedy discusses employment tribunal fees in New Law Journal

Date: September 1, 2017

Unlawful fees & out of time claims

Gus Baker & Ruth Kennedy ask whether claimants who could not afford to pay employment tribunal fees could now bring claims out of time.

  • Quashing of Fees Order 2013 as ultra vires ab initio means claims could be brought out of time under the ‘reasonably practicable’ test.
  • For discrimination claims, the statutory discretion test is more flexible.
  • Proceedings must be issued immediately, with supporting evidence.

Between 2013 and July this year, individuals presenting claims in employment tribunals were required to pay a fee of up to £1,200 in order to avoid their claims being struck out. In R (on the application of Unison) v Lord Chancellor[2017] UKSC 51, [2017] All ER (D) 174 (Jul) the Supreme Court held that the employment tribunal fees introduced in the Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013 (SI 2013/1893) were unlawful as being ultra vires ab initio and in breach of EU law (see page 22). At the time of writing it is not known how tribunals will deal with claims of individuals who were previously unable to present claims because of the illegal Fees Order, but are now prima facie out time to do so. This article attempts to answer that question.

Employment tribunals can generally only consider claims which are presented before the end of the period of three months beginning with the date on which the cause of action accrues. This time limit is statutory. The tribunal can only extend the time for presenting a claim in accordance with its statutory powers. In discrimination claims, the tribunal can extend time to bring a claim to the extent that it considers that extra period is ‘just and equitable’ (s 123(2)(b) of the Equality Act 2010). In almost all other claims, claimants must prove that it was ‘not reasonably practicable’ to bring the claim within time.

The Lord Chancellor is in the process of paying back the fees collected since the order came into force. Estimates suggest that this will cost in the region of £27m. However, this does not assist those with meritorious claims who were part of the 66%–70% fall in claims following the introduction of the fees (Lord Reed at [39]). The quashing of the Fees Order may well lead to the number of claims to employment tribunals increasing in the future, but employers and individuals may be anxious to know the prospects of claims that would have been subject to fees.

General employment claims

The ‘not reasonably practicable’ test has been interpreted strictly by tribunals and appellate courts. The employee must plead and prove the reason that she missed the time limit. A debilitating illness might prevent a claimant from bringing their claim in time, but relying on the faulty advice of a solicitor will not ( Dedman v British Building and Engineering Appliances Ltd [1974] ICR 53). Perfectly rational considerations, such as deciding to wait for an internal appeal or a criminal trial may not meet the test (Palmer v Southend-on-Sea Borough Council [1984] ICR 372).

Whether it was not reasonably practicable to bring a claim is a question of fact. Where an individual can prove (with reference to bank statements) that he or she did not have the money to bring a claim within time due to fees, she may be able to persuade a tribunal that it was not reasonably practicable to have done so. It cannot be argued to have been reasonably practicable to commence proceedings when those proceedings would have been struck out due to non-payment of a fee. Note that an individual would also be likely to be required to prove that they did not qualify for remission from the fees to make out this claim.

The emphasis of the ‘not reasonably practicable’ test is not on the surrounding circumstances but on the decisions made by the employee and whether it would have been possible to present the claim. In this context, the fact that an individual couldn’t afford to bring a claim might be a relevant circumstance, but the fact that the Fees Order was illegal or that it was rational to decide not to pay is unlikely to be, without a departure from the current authorities.

The decision to quash the Fees Order 2013 creates an unusual situation for courts in deciding whether retrospective claims should be allowed. However, the situation is arguably analogous to that where domestic legislation has been found by the courts to be incompatible with EU law, meaning that an individual would have had a good claim but had decided not to present it in time due to the absence of merit at the time of limitation. This was, effectively, the situation in Biggs v Somerset County Council [1996] ICR 364, in which Neill LJ held that: ‘it would be contrary to the principle of legal certainty to allow past transactions to be re-opened and limitation periods to be circumvented because the existing law at the relevant time had not yet been explained or had not been fully understood’. While the situation in Biggs is different to that which will soon face employment tribunals as the Fees Order was void ab initio , rather than misunderstood, it is possible that appellate courts will take a draconian approach to retrospective cases for the policy reason of legal certainty.

Discrimination claims

An extension of time on the basis that it is just and equitable is the exception rather than the rule ( Bexley Community Centre v Francis Robertson [2003] EWCA Civ 576). When considering whether it is ‘just and equitable’ to extend time, tribunals have regard to the factors listed in the Limitation Act 1980.

Claimants who have been dissuaded from litigating due to the Fees Order may well have a good reason for their delay, although again their financial circumstances should be evidenced. In their paper Employment Tribunal Fees, Access to Justice and Rational Choice theory: a Primer ([2017] 80 Modern Law Review 412) Abi Adams and Jeremias Prassl argue that a rational claimant will only instigate proceedings when the benefit she expects to receive exceeds the expected costs of bringing the claim. The Supreme Court accepted this in finding that where fees make it irrational to bring a claim they prevent access to justice (Lord Reed at [96]). On this analysis, failing to commence proceedings due to the irrationality of doing so may well be a good reason for delay. If tribunals were to accept the need to consider whether bringing a claim would have been a ‘rational choice’ during the limitation period (when the fees were in place), it would follow that the higher the value of claim, the less likely it will be that the tribunal will find it to be just and equitable to extend the time period.

Even where it can be shown that there was a rational reason for not presenting claims, tribunals will still scrutinise whether a fair trial can take place due to the passage of time. It is suggested that tribunals should not put too much weight on this factor. Whilst the length of the delay is a relevant factor, which means cases where time expired in 2017 will be easier to bring than those where it expired in 2013, there is no upper limit. Indeed, inSouthwark London Borough Council v Afolabi [2003] ICR 800, the Court of Appeal upheld a decision to extend time where a claimant brought his claim nine years after the cause of action. The court noted that there was equal prejudice to each side of the lost documentation, although it was observed that it would be a ‘wholly exceptional case that the employment tribunal could properly conclude that despite a delay of a magnitude anywhere approaching nine years it was just and equitable to extend time’ (as per Peter Gibson LJ at paragraph 35).

The changing state of the law may be a good reason (see British Coal Corp v Keeble [1997] IRLR 336). Even so, tribunals in discrimination claims routinely take note of the policy reasons behind the short limitation period. As Peter Gibson LJ said in Afolabi : ‘the policy of the… Act is made clear by the brevity of the limitation period; that period of three months is in marked contrast to the limitation periods in ordinary litigation. Parliament having envisaged that complaints within the jurisdiction of the employment tribunal will be determined within a short space of time after the events complained of, it will be an extremely rare case where the employment tribunal can properly decide that there can be a fair trial so long after those events’.

While discrimination claims out of time due to fees may be possible, it will not be easy to persuade a tribunal to allow claims that are several years old to be litigated.

Francovich damages & claims against the Lord Chancellor

Claimants who wish to assert particular EU law rights in a tribunal claim may have a claim against the UK for failing to secure access to those rights in the UK. In Francovich v Italy (1991/C-6/90) damages were awarded to Mr Francovich and his colleagues on the basis that Italy had failed to properly implement a Directive. The damages were assessed on the basis of the losses borne by Mr Francovich and his colleagues resulting from the failure. Arguably, there is no substantive difference from the perspective of the EU citizen whether the Member State has denied her rights by incorrectly implementing a Directive or by creating barriers that make enforcing that right impossible.

If tribunals refuse to extend time and find that it was reasonably practicable for claimants to bring claims based on EU rights (especially for holiday pay under the Working Time Regulations 1998), despite the illegal Fees Order, claimants might succeed in showing that the Order caused them loss and be able to recover Francovich damages. However, it might well be persuasively argued that the tests discussed above for extending time, now the Fees Order has been abrogated, allow individuals to access those rights.

It is a crucial aspect of the judgment of the Supreme Court that the fees were unlawful ab initio. This means that they were illegal immediately after they were enacted. At least in theory this means that it is possible to bring a claim against the Lord Chancellor for his ultra vires action. In practice, however, this will be tricky. Courts in judicial review proceedings seldom award monetary compensation. Even in these exceptional circumstances, the same problems will arise as in Francovich claims if claimants try to allege loss. If the damage alleged is simply loss of access to justice ie bringing the claim at all, then this may be successful. But how the courts should go about quantifying this type of claim is uncharted territory, and may result in nominal damages at best. In short, if a claimant wants financial redress this is probably not her best option.

Conclusion

The statutory discretion to allow claimants to bring discrimination claims out of time is far more flexible than the reasonably practicable test which governs other employment rights. Our view is that bringing both types of claim out of time may be possible, but discrimination claims are far more likely to proceed. The best option for a claimant will be to issue proceedings immediately, supported by evidence explaining the delay in commencing proceedings. Any delay now is likely to be fatal. Employers defending discrimination claims should prepare arguments as to whether a fair trial is possible. In other claims, employers would be well advised to carefully scrutinise the claimant’s reasons for not presenting the claim at the time. Other methods of redress against the Lord Chancellor or UK are possible in theory, but face grave practical difficulties in practice.

 

This article was originally published in New Law Journal and can be accessed here

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