Fri 04 May 2012

Awards of costs by employment tribunals

Costs (or expenses to use the Scottish terminology) are generally awarded to the successful party in civil court litigation, but when it comes to Employment Tribunals, the position is very different, with most Tribunals very reluctant to award costs at all.

This means that in most cases the Claimant and the Respondent will require to meet their own legal fees which is a factor that must be considered when considering the overall economics of raising or defending a Tribunal claim.

To give you an idea of the numbers, the most recent set of available statistics which cover the period from 1 April 2010 to 31 March 2011 show that costs were only awarded in 487 cases, compared to the 216,100 claims accepted during that period.

So, under what circumstances is it possible for costs to be awarded by an Employment Tribunal?

A costs order may only be applied for in certain circumstances and cover circumstances where hearings have been postponed because of the actions of one party, where a party has failed to comply with an order or where the Tribunal is of the opinion that the party or their representative has acted vexatiously, abusively, disruptively or otherwise unreasonably.

If any of these circumstances exist, the Tribunal then has a discretionary power to award costs: they must consider whether it is appropriate for them to make an award, and if so what is an appropriate sum to award.

It was this latter point that came under scrutiny in the recent case of Doyle v North West London Hospitals UKEAT/0271/11. In this case the claimant, Ms Doyle, was ordered to pay the full costs of the proceedings, which amounted to somewhere between £60,000 and £100,000. On appeal, the EAT held that whilst it was within the Tribunal’s discretion to order Ms Doyle to pay the whole of the costs, it had erred in failing to take into account her ability to pay costs at the level considered. It further held that this failure was an error of law and one that could have led to a substantial injustice, and accordingly allowed the appeal and set aside the costs order.

It is perhaps unsurprising that Ms Doyle’s appeal was successful. Of the 487 awards made in the last stats, the median costs award was £1,273, and there were only 4 awards over £10,000. Costs are usually capped at £20,000 (recently increased from £10,000), 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.”

I think it is safe to say that, despite the recent increase in the cap to £20,000, that high value costs awards will continue to remain very much the exception rather than the rule. That said, we have had some recent successes arguing costs before Employment Tribunals so it is well worth pursuing costs in appropriate cases.

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