The Government could face a bill of more than £30 million and courts are expecting a wave of employment disputes in the wake of a supreme court ruling that fees for cases are illegal.

The charges for using employment tribunals, introduced in 2013, were meant to prevent spurious or opportunistic claims by employees, but critics say they have led to an 81% drop in all cases, effectively denying access to justice from those wrongfully sacked or mistreated.

In a case brought by public sector union Unison, the Supreme Court ruled the government was acting unlawfully and unconstitutionally when the fees were introduced.

The costly and embarrassing reverse for the UK Government was widely welcomed by the Law Society of Scotland, the Scottish Government and Citizen’s Advice Scotland, but the Institute of Directors said businesses would be be alarmed by the judgement.

Those who wish to take their employers to a tribunal must currently pay £250 to lodge a claim, and £950 if the case goes ahead. The Government said it would stop charging fees immediately and reimburse those who had been forced to pay for access to tribunals.

UK Justice minister Dominic Raab said there was a balance to be struck between access to justice and making sure spurious claims do not clog up tribunals, as well as keeping costs down. But he said: “We respect the judgement and we are going to take it fully on board and we are going to comply with it.”

Scottish Legal Affairs Minister Annabelle Ewing said the Scottish Government was delighted by the decision and had planned to scrap the fees when ministers acquired the power to do so. “We strongly opposed the introduction of employment tribunal fees and had committed to abolishing the fees in Scotland when the management and operation of employment tribunals are devolved,” she said.

The Law Society of Scotland said the impact of fees had been drastic and unfair, preventing legitimate cases from reaching a tribunal. Stuart Naismith, convener of the Law Society of Scotland’s access to justice committee, said: “The fees have been a major barrier to access to justice for thousands of people, with the huge drop in the number of cases being brought to an employment tribunal supporting this.”

Figures showed fees had led to an 81% drop in the number of claims accepted in the last quarter of 2013-14, Mr Naismith said. He added: “The relationship between employer and claimant is often imbalanced and having a system which serves both parties effectively is crucial in the interests of fairness.”

Seamus Nevin, Head of Employment and Skills Policy at the Institute of Directors, said businesses would be “extremely alarmed” by the ruling. “Before fees, individuals faced no risk or barriers in bringing claims that were not merited. Today’s judgement opens the door to a spike in malicious or vexatious claims,” he said.

However Rob Gowans, spokesman for Citizen’s Advice Scotland (CAS) said fees made it harder for people to dispute unfair treatment at work. “Fees have also negatively affected the power balance between workers and employers,” he said. “This judgment should be implemented without delay.”

Katie Williams, an employment law specialist for Pinsent Masons, said the fees had failed to prevent unfounded claims from people who were just “having a go”. “The evidence shows that has not happened,” she said.