Unlike claims in the civil courts, a winning party in an Employment Tribunal case does not automatically receive its costs from the losing side. As such, it can be disheartening for an employer to be faced with having to spend money on legal fees defending claims which are weak, spurious, or even vexatious. So, can you claim back costs in the Employment Tribunal? Our Senior Solicitor, Charlotte Ashton, explains more.
While Employment Tribunals do have the authority to award costs, such decisions are regarded as the “exception and not the rule.” These awards are typically based on the conduct of parties throughout the case or if a claim or defence lacked reasonable prospects of success. Recent case law, such as Mr C H Tan v Copthorne Hotels Ltd, highlights that tribunals can and will award costs against claimants in certain circumstances.
Learning from Mr Tan’s Case
The case of Mr C H Tan v Copthorne Hotels Ltd stands out for the significant costs awarded against the claimant— a staggering £432,000, believed to be the highest cost award by any Employment Tribunal. This case involved a high-level employee of a hotel business who was made redundant. Despite numerous claims being struck out before the full hearing, Mr Tan persisted in pursuing weak claims. The claimant had made many covert recordings of his conversations with people involved in the business and introduced thousands of pages of evidence at the tribunal.
Despite being required to pay a deposit order, the claimant persisted with numerous claims despite their lack of reasonable prospects for success. Ultimately, the claimant was unsuccessful on all fronts. While detailed reasoning for the tribunal’s substantial cost order is unavailable, it is probable that the elevated costs were influenced by the claimant’s behaviour in his pursuit of weak claims and his subsequent actions during the proceedings.
This case is a powerful reminder that tribunals will make an award for costs where it is appropriate, and this is something that both parties should bear in mind during proceedings.
Reasons Tribunals May Award Costs
It is important for both employers and employees to understand the circumstances under which tribunals can make cost awards:
- Vexatious, Abusive, or Unreasonable Conduct: Parties or their representatives acting vexatiously, abusively, disruptively or otherwise unreasonably in either the bringing of the proceedings (or part) or the way that the proceedings (or part) have been conducted;
- No Reasonable Prospect of Success: Claims or responses with no reasonable prospect of success;
- Late Hearing Postponements: Hearings postponed or adjourned on a party’s application made less than seven days before the date on which the relevant hearing begins; or,
- Breach of Tribunal Orders or Directions: Parties in breach of any order or direction issued by the Tribunal.
Practical Considerations for Employers
Whilst an award of costs remains relatively rare – and the amounts awarded are often much lower than in Mr Tan’s case – employers should be aware of the potential reasons behind such orders. Where spurious and vexatious claims are issued against the business, employers should bring this to the claimant’s attention by way of a costs warning letter, and consider making a costs application to the tribunal when successful.
Care should be taken when issuing a costs warning letter to ensure a respondent doesn’t act in a manner which could attract criticism from the tribunal, and advice should always be sought.
Early Assessment: Undertake early assessments to gauge the strength of claims and consider the grounds for a potential costs application.
Legal Representation and Conduct: Maintain professional and reasonable conduct during proceedings, promptly addressing any disruptive behaviour.
Learning from Precedents: Explore other cases to gain insights into how tribunals approach cost orders, staying informed about recent developments.
Alternative Dispute Resolution (ADR): Consider ADR methods to resolve disputes amicably, potentially avoiding substantial legal costs.
Managing Costs Effectively: Budget for potential tribunal cases, negotiate legal fees, and explore insurance options covering employment dispute costs.
Employee Awareness: Educate employees about the financial risks associated with pursuing unfounded claims through employment contracts or policies.
Recent Legislative Changes: Stay abreast of recent legislative changes that may impact the tribunal’s approach to awarding costs.
Expert Advice: Seek expert legal advice to navigate the complexities of Employment Tribunal proceedings effectively.
