Costs Awards in Employment Tribunals

2 August 2013: The Cost of Employment Tribunal Proceedings:

Many employers worry that even if they win in the Employment Tribunal, they cannot normally recover legal costs from the Claimant, putting them in a lose-lose situation.

Costs can only be claimed if proceedings are brought or conducted in a vexatious, abusive, disruptive or unreasonable manner, or where they are ‘misconceived’ – ie where there was no reasonable prospect of success.

In Sud v London Borough of Ealing (July 2013), the Court of Appeal upheld the decision to order the Claimant to pay half of the Respondent’s costs. In that case the Tribunal ordered LB Ealing to pay compensation of £2,000 for disability discrimination but ordered Ms Sud to pay 50% of the LB Ealing’s costs, which weighed in at over £100,000. The Tribunal took into account the following factors:

• The claim included an unfocused and extensive whistleblowing claim which meant that a “massive” amount of documentation had to be disclosed. (In fact The Tribunal was presented with an eye-watering 11 lever arch files of documents running to 3,600 pages, from which a core bundle of 2 lever arch files was prepared)
• The claims for race and sex discrimination were only abandoned at the outset of the hearing.
• Ms Sud brought no evidence to challenge the reason for her dismissal, but the LB Ealing had to deal with wide-ranging allegations relating to her disability and claims that her dismissal was engineered as a result of protected disclosures.
• It was only accepted that the disability-related discrimination claims were unsustainable in the final submissions.
• Offers of settlement of up to £40,000 were rejected out of hand, and Ms Sud held out for a settlement of £360,000.

The EAT noted that careful attention that been given by the tribunal to Ms Sud’s financial resources, hence the 50% reduction.

This decision will encourage many employers. However such awards of costs are still relatively unusual and it may still be difficult to actually recover the costs awarded from an unemployed Claimant with no resources.