As a rule, costs do not “follow the event” in employment tribunal cases, unlike in civil courts. This means that if you are successful in bringing or defending a claim, the tribunal will not generally make an order that your opponent pays your costs. However, costs orders can be made in certain circumstances.
What Do We Mean By ‘Costs’?
Costs means fees, charges, disbursements or expenses that have been incurred by or on behalf of any party to employment tribunal proceedings, including expenses that witnesses incur for the purpose of in connection with attendance at a tribunal hearing. Costs therefore cover the work done by solicitors as well as any barristers involved in the proceedings.
When Will A Costs Order Be Made?
The general position is that orders for costs in the employment tribunal remain the exception rather than the rule. However, there are circumstances when a costs order must or may be made.
A costs order must be made against a respondent where, in unfair dismissal proceedings, both of the following apply:
- A final hearing has been postponed or adjourned because the respondent failed, without a 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.
- The claimant had informed the respondent, at least seven days before the full hearing, that they were seeking reinstatement or re-engagement.
A costs order may be made by a tribunal on its own initiative or on the application of a party.
A tribunal must consider making a costs order where it considers that any of the following apply:
- 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, response or reply has no reasonable prospect of success.
- The hearing has been postponed or adjourned on the application of a party made less than seven days before the date on which that hearing begins.
In these circumstances there are two separate stages in the tribunal’s decision-making process. It must first decide whether one of the threshold criteria apply, such as the claim having no reasonable prospects of success (the objective test), and it must then decide whether to exercise its discretion to award costs (the subjective test).
A tribunal may also make a costs order on the application of a party where either of the following applies:
- A party has been in breach of any order, rule or practice direction, for example if a party failed to comply with an order to disclose documents.
- A hearing has been postponed or adjourned.
In its decision-making, the Tribunal will be careful not to be influenced by the hindsight of taking into account things that were not, or could not have reasonably been, known at the start of the litigation. The tribunal must also disregard conduct pre-dating the proceedings when determining whether there has been unreasonable conduct of those proceedings. The fact that a party is a litigant-in-person is generally relevant to the question of whether a tribunal should award costs as a tribunal will not generally judge a litigant-in-person by the standards of professional representative. However, it does not mean that litigants-in-person never have costs awarded against them.
What is Vexatious Or Unreasonable Conduct?
Conduct is vexatious, for example, if an employee brings a hopeless claim without any genuine expectation of recovering compensation but out of malice or to harass or inconvenience the employer or for some other improper motive. Such conduct would also constitute ‘unreasonable conduct’.
Whether conduct is unreasonable is a matter of fact for the tribunal. A common type of unreasonable conduct is dishonesty, including lying to the tribunal.
Costs Warnings
In cases where it appears that a case (or part of a case) has been misconceived, it is common practice for tribunals to warn the relevant party that if they continue with the argument and lose, they are at risk of having a costs award made against them.
A party may also warn its opponent directly that they will apply for costs if the opponent continues with its case.
How Do You Apply For A Costs Order?
The application should include the specific grounds and reasons relied on for making the order. A detailed schedule of costs will need to be prepared. A party may apply for a costs order up to 28 days after the date on which the judgment finally determining the proceedings in respect of that party was sent to the parties. The party against whom the application is made must have a reasonable opportunity to make representations in response to the application. There may be a separate hearing to determine the application.
Can You Appeal A Decision to Award Costs?
You can appeal a decision to award costs but appeals rarely succeed, unless it is established that the costs order is impaired by an error of legal principle or that the order was not based on the relevant circumstances.
Lincs Law Employment Solicitors Can Help You
Although costs orders may be the exception, they can be significant. If you have been warned about costs, or had an application for costs made against you, or if you want to apply for costs and would like advice on your own situation, please contact us for a free enquiry on 01522 440512 or via the web chat or contact form on our website at www.lincslaw.co.uk.
Kathryn Bolton
Associate
Specialist Employment Solicitor
Lincs Law Employment Solicitors
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