Employment Tribunal

The rules in relation to costs and cases in the Employment Tribunal are different to the rules in the Courts as laid down by the Civil Procedure Rules 1998.

The Employment Tribunal rules are governed, inter alia, by the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004. The general principles are that costs are not recoverable by either side.

There are exceptions to this rule. Under Rule 14(1) the Employment Tribunal has powers to award costs if a party, or his/her representative, has acted vexatiously, abusively, disruptively or otherwise unreasonably, or the bringing or conducting of the proceedings by a party has been misconceived.

This means that a party bringing proceedings needs to think carefully about the merits of their case, and the way they conduct proceedings during the case. If for example, they consistently miss Tribunal deadlines or withdraw the case at a late stage without good reason then there is a good chance that the other side will make an application for costs against them.

 Employers defending cases should also think carefully about whether they can make an application for costs at the end of a case. The Barrister will ultimately present this argument to the Employment Tribunal on the grounds of unreasonable conduct by the Claimant.

The Employment Tribunal also has a discretion to request that a party asking for a postponement or adjournment pay any costs cause by that adjournment.

The Employment Tribunal has the power to award costs to either side up to a maximum of £10,000.

Both sides need to consider how they conduct the case. If the case if frivolous or they act disruptively or abusively the Employment Tribunal will not take kindly to this and there is the risk of a costs award.

So whilst generally speaking costs awards are unusual, both sides need to understand the risks involved if they do not conduct their cases properly.

The other issue that both sides need to consider is funding. There can be significant expense in bringing a case to the Employment Tribunal. One point to bear in mind is that ACAS will get involved with cases on an early basis and attempt to conciliate/instigate settlement between the parties, thus avoiding the full expense of proceeding the a full Tribunal hearing. The parties will need to pay for a Solicitor to prepare the case up to hearing and a Barrister to present the case at the Employment Tribunal.

Employers should consider whether they wish to make a settlement offer, even on a commercial basis, at the start of proceedings. They should also consider whether they have insurance cover in place to cover the legal costs associated with defending a claims as well as the costs of any award made by the Employment Tribunal.

Employees should think carefully about how they will fund a case to the Employment Tribunal. They should review any legal expense insurance policies that they have. It is sometimes the case that home insurance policies provide legal expense insurance cover. This often relates to employment fees, with the standard position being that they will provide funding once the case is issued with the Employment Tribunal. Funding will be dependant upon a Solicitor agreeing to their terms and conditions. The Solicitor will need to provide the provider with regular updates and review any settlement offers. Generally speaking a legal expense insurance provider will only fund a case with a +55% chance of success.

Claimants should bear in mind that once an award is obtained it will then need to be enforced against a company. They should consider carefully the solvency of that company and their ability to meet the judgment. There is nothing to be gained by succeeding in a claim against an insolvent company who will then not be able to meet the judgment against them.

It is important that all parties consider the commercial aspects of bringing a claim, or defending a claim, in the Employment Tribunal from an early stage. Advise should be sought and you will need to balance the costs and risks involved. A case will take some time to be resolved and long term financing must be resolved at the beginning. Failure to do so will jeopardise the case both from a Claimants point of view and a Respondent. A defence or claim cannot be managed properly without correct funding in place.