Employment Tribunal Cost Orders

Three types of costs may occur in tribunal claims:

• Compensation payable to the employee if a claim is successful
• Legal costs payable to solicitors or barristers involved in the case. Usually, each party bears its own legal costs
• Possible fines or penalties payable to the government.

In addition, tribunal claims can absorb significant amounts of management time.

The employer will not be able to claim its legal costs in most cases. Each side usually bears its own costs. In unusual cases the tribunal can make:

• costs orders in favour of legally represented parties
• preparation time orders in favour of represented parties, and
• wasted costs orders against either the employer's or employee’s representatives.

Costs may be claimed if, for example, the tribunal considers a claim to be so weak it should not have been brought or – at the extreme end – if an employee is found to have lied on their claim form (a case example -  Daleside Nursing Home Ltd v Mathew, 2009). Lying does not automatically justify a costs award, however, especially if the lies are not central to the case (a case example - Yerrakalva v Barnsley Metropolitan Borough Council, 2010).

Usually, a costs order is made only if the receiving party is legally represented and may be awarded if either a claimant or respondent or their representative acted vexatiously, abusively, disruptively, or otherwise unreasonably, in bringing or conducting of proceedings or that the proceedings were misconceived. If proceedings were misconceived or conducted unreasonably the tribunal has a wide discretion as to the amount of costs to be awarded. Costs may also be awarded if a party has not complied with a tribunal order or practice direction or is responsible for postponing a hearing.

When considering whether to make a costs order, tribunals will take into account the ability of the paying party to pay (including trade union backing). Deposit orders may be available for claims identified at an early stage as having little prospect of success. These orders require a deposit to be paid by a claimant or respondent, thereby creating a risk of costs if the claim fails.

Although costs orders are rare, tribunals will prevent employers being held to ransom by employees with vexatious or unfounded claims. In extreme cases, the tribunal may make a significant costs order in the employer’s favour (a case example - Khan v Kirklees Metropolitan Borough Council, 2007).

Costs can even be awarded against a solicitor or other representative personally. In one case, Jackson v Cambridgeshire County Council (2011), an initial order for wasted costs of £16,037.04 against the representative was later overturned. The representative was a solicitor specialising in banking law and a cousin of one of the employees. Wasted costs orders will not usually be made against a representative who is acting on a not-for-profit basis such as a relative, trade union representative, Citizens Advice Bureau adviser or representative from voluntary bodies.

An employer can recover costs in respect of time spent by an in-house solicitor (a case example - Ladak v DRC Locums Ltd, 2014).