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When can you recover your costs in the Employment Tribunal?

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Whilst instructing a solicitor to represent you in a Tribunal claim can benefit your case, it is true that the cost of instructing a solicitor to represent you throughout such a claim can potentially be significant. 

It is common for a party to Employment Tribunal proceedings to ask the question as to whether or not they are able to recover their costs from their opponent if they are successful in their case, be they a Claimant or Respondent to a matter. 

This question may become all the more frequent as given the abolition of Tribunal fees back in July 2017 (see my article on this here – Supreme Court Rules That Employment Tribunal Fees Are Unlawful), there may now be more disgruntled workers looking to pursue their claim in a Tribunal.  By the same token, and as reported at the time of the abolition of Tribunal fees, the fear of employers is that this may open the floodgates to more spurious claims by workers looking for a quick settlement and although those claims may not have much prospect of success, they will likely cost time and money to defend.

It remains to be seen whether the abolition of Tribunal fees will lead to an upsurge in claims, including those where the Claimant’s prospects of success are low and they appear to have presented a claim with the sole aim of achieving a financial settlement.  If it does, it also remains to be seen whether or not the Tribunals will be more willing to make cost orders against parties to proceedings.

A costs order is an order by a Tribunal that a party make a payment to another party in respect of that other party’s costs whilst represented, to another party in respect of a tribunal fee paid (this remains the case despite the abolition of fees referenced above) or to another party or witness in respect of expenses incurred.

Currently, costs orders by the Tribunal are still relatively rare and are the exception rather than the rule.  The starting position is generally that each party will bear their own costs, so even if you are a Claimant who is successful in bringing a claim against a Respondent, or you are a Respondent who is successful in defending a claim, the likelihood is that you are going to have to pay any costs, including legal costs, that you incur. 

There is one scenario where a Tribunal must make a costs order (or preparation time order – this is an order that a party must make a payment to another party in respect of that party’s preparation time when not represented): in a case for unfair dismissal where a final hearing is postponed or adjourned, the Tribunal shall order the Respondent to pay costs incurred as a result of the postponement or adjournment if:-

  • The Claimant has expressed a wish to be re-instated or re-engaged which has been communicated to the Respondent not less than seven days before the hearing; and
  • The postponement or adjournment of that hearing has been caused by the Respondent’s failure, without special reason, to adduce reasonable evidence as to the availability of the job from which the Claimant was dismissed or of comparable or suitable employment.

There are other circumstances where a Tribunal may make a costs or preparation time order and shall consider to do so where it considers that:-

  • A party or their representative has acted vexatiously, abusively, disruptively, or otherwise unreasonably in the bringing or conducting of the proceedings, or a part of them;
  • Any claim made in the proceedings by a party had no reasonable prospect of success.

A Tribunal may also make a costs order where either of the following apply:-

  • A party has been in breach of any order or practice direction;
  • A hearing has been postponed or adjourned on the application of a party.

Where it is the case that a Tribunal may make a costs order, the Tribunal does have a wide discretion when deciding whether or not to do so.  However, and as already set out above, Tribunals are often reluctant to make such orders, in particular against parties who are not legally represented.  That said, it remains to be seen whether the abolition of Tribunal fees will lead to more claims being made and subsequently, more successful applications for costs.

If you have a question as to costs in the Employment Tribunal or about any other aspect of employment law, please do not hesitate to contact the Chattertons employment team.