The order introduced in 2013 imposing employment tribunal fees is unlawful and breaches both common law and EU rights of access to justice, the Supreme Court has ruled.
The unanimous ruling this morning means that the government will have to refund fees paid by claimants.
Lord Reed, who gave the leading judgment, said: “The question whether fees effectively prevent access to justice must be decided according to the likely impact of the fees on behaviour in the real world.
“Fees must therefore be affordable not in a theoretical sense, but in the sense that they can reasonably be afforded.
“Where households on low to middle incomes can only afford fees by sacrificing the ordinary and reasonable expenditure required to maintain what would generally be regarded as an acceptable standard of living, the fees cannot be regarded as affordable.”
Lord Reed said the Lord Chancellor argued that nobody had given evidence in the proceedings that they were unable to bring a claim because they could not afford the fees.
However, Lord Reed said the court did not require “conclusive evidence” if there was a “real risk” that the fees were not set at a level that everyone could afford.
“The fall in the number of claims has in any event been so sharp, so substantial, and so sustained as to warrant the conclusion that a significant number of people who would otherwise have brought claims have found the fees to be unaffordable.”
Delivering judgment in R (on the application of UNISON) v Lord Chancellor  UKSC 51, Lord Reed said it was not only where fees were unaffordable that they could prevent access to justice, they could have the same effect “if they render it futile or irrational” to bring a claim.
He gave the example of claims that did not seek a financial award – a claim to enforce the right to regular work breaks or written particulars of employment.
He said many claims for financial awards were “modest”, and, if the claim was for £500 and the fees were £390, “no sensible person will pursue the claim unless he can be virtually certain that he will succeed” and get the fees reimbursed.
Lord Reed said all the statistical evidence showed that the Employment Tribunal and Employment Appeal Tribunal Fees Order 2013 had “a particularly deterrent effect on the bringing of claims of low monetary value”.
He concluded: “For all these reasons, the fees order effectively prevents access to justice, and is therefore unlawful.”
Lord Reed went on to find that the fees order was unlawful not only under common law but under EU law.
“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 non-monetary 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.”
Lord Reed rejected an argument by counsel for the Lord Chancellor that the evidence on the impact of fees was not available at the time the order was made.
The Supreme Court justice made it clear that this was not an administrative decision being challenged on the basis that relevant considerations were not taken into account or because it was unreasonable.
The fees order was unlawful under domestic and EU law because it prevented access to justice and was therefore “unlawful ab initio” – unlawful from the beginning – and must be quashed.
He allowed UNISON’s appeal. Lord Neuberger, Lady Hale, Lord Mance, Lord Wilson, Lord Kerr and Lord Hughes agreed.
Lady Hale, who takes over from Lord Neuberger as president in October, gave an additional ruling on the discrimination issue, with which the other justices agreed, finding that the fees order was also indirectly discriminatory under the Equality Act 2010, because it put women at a particular disadvantage.