Employment Tribunals are supposed to be designed so that individuals can run their case without the need for legal representation. To encourage this Employment Tribunal rules tend to be a little more user friendly and sanctions are only supposed to be applied if the party acts in a frivolous of vexatious manner. Accordingly orders for costs were not usual to be made in an Employment Tribunal.
This means that in most cases the Claimant and the Respondent will require to pay for their own legal fees. Accordingly unless you have Employment Tribunal claims insurance (usually found within your home contents insurance) cover legal costs can make instructing solicitors prohibitively expensive. If you are on an average salary and your claim does not involve an element of discrimination it is likely that your legal costs could exceed the value of your claim.
Under what circumstances is it possible for costs to be awarded by an Employment Tribunal?
Orders for costs may only be applied for by a party in certain circumstances, such as:
– Where a party has failed to comply with an order
– Where the Tribunal is of the opinion that the party or their representative has acted veraciously, abusively, disruptively or otherwise unreasonably
Even the Tribunal determines that a party is guilty of one of the above circumstances the Tribunal then has a discretionary power to award costs. Any costs order made will only cover the costs involved in circumstances such as hearings being postponed because of the actions of one party.
The recent Employment Appeal Tribunal case of Doyle v North West London Hospitals UKEAT/0271/11 demonstrated the Courts reluctance to order costs by in effect reducing the costs ordered in the Employment Tribunal (reported to be claimed in the region of somewhere between £60,000 and £100,000) to nil. The EAT determined that the Employment Tribunal it had erred in failing to take into account the Claimant’s ability to pay costs at the level considered. This could have led to a substantial injustice and accordingly the EAT allowed the appeal and set aside the costs order.
Of the 487 awards made in the last stats out of 216,000 claims, the median costs award was £1,273, and there were only 4 awards over £10,000.
Costs are usually capped at £20,000, although this can be surpassed if the Tribunal orders that costs are assessed by the County Court (in England and Wales) or by the auditor of the Sheriff Court (in Scotland). In his judgement in Doyle, the Employment Judge summarised why awards at the level discussed in this case are so rarely seen:-
“…such an order will often be well beyond the means of the paying party and have very serious potential consequences for him or her and it may also act as a disincentive to other claimants bringing legitimate claims; for these reasons in our view a tribunal should always be cautious before making such an order.”
It appears safe to say that, despite the recent increase in the cap to £20,000, high value costs awards will continue to remain very much reported as the exception that proves the rule. That said, if the other side has acted in a way which would allow the Employment Tribunal to award costs then orders for costs remain a very real threat to the unsuspecting employment claimant or employer.
We can assist at Benchmark Solicitors with your employment claim and guide your claim past the possible pitfalls of adverse costs orders. As an employer we can also seek to apply the Tribunal’s jurisdiction and have the frivolous or vexations claimant pay for their employment claims against companies.
Paul Rogers, Solicitor, Benchmark Solicitors LLP