Costs awards in employment tribunals

25 Jul 2012

The topic of costs awards in Employment Tribunals has received a certain level of media coverage recently: one element of the Government’s plan to reduce the numbers of Employment Tribunals has been to increase the amount a Tribunal can award, without County Court assessment, from £10,000 to £20,000, from April of this year.

Nevertheless, as any employer faced with defending a claim which, on the face of it, seems doomed to failure, knows, costs awards in Employment Tribunals remain the exception rather than the rule.

That said, the circumstances in which costs can be awarded were recently considered by the Employment Appeal Tribunal in the recent case of Ms L Boras Topic v Hollyland Pitta Bakery & Others.

In that case the Claimant had made a number of allegations of sex discrimination and harassment, which the Tribunal found to be untrue.  The Tribunal was, in fact, quite damning in its assessment of the Claimant’s evidence, stating:

“It gives the tribunal no pleasure to state that in all instances where there was a dispute in facts, the tribunal, without hesitation, preferred the evidence of the respondent’s witnesses, who appeared to the tribunal to be honest and who gave cogent and coherent evidence.  The claimant’s evidence was, quite simply, unbelievable.  It was neither consistent, in itself, nor did it reflect the contents of any of the documentation.  For whatever reason, and this is not a matter upon which the tribunal would care to speculate, the claimant’s perception of reality, sincerely held as it might be, is damaged and, as a result, utterly unreliable.”

As a result, the Tribunal ordered the Claimant to pay the Respondent’s costs which, as they exceeded £10,000, were to be assessed by the County Court.

The Claimant appealed against the costs award on the basis that the Tribunal, whilst finding that her allegations had not been true, did not find that the Claimant had in fact lied, instead referring to the Claimant’s damaged perception of reality.

In considering the Claimant’s appeal, the Employment Appeal Tribunal considered the 2012 Court of Appeal case of Barnsley Metropolitan Borough Council v Yerrakalva and, in particular, Mummery LJ’s statement that “The vital point in exercising the discretion to order costs is to look at the whole picture of what happened in the case and to ask whether there has been unreasonable conduct by the claimant in bringing and conducting the case…”.

The Employment Appeal Tribunal set out three helpful guidelines in considering costs applications:

1. The fact that a Claimant has based his or her claim on lies does not automatically mean that costs should be awarded;

2. The fact that there have been no lies does not automatically mean that costs cannot be awarded; and

3. The Tribunal must look at the whole picture, bearing in mind that costs remain the exception rather than the rule.

Taking those three points into account, the Employment Appeal Tribunal dismissed the Claimant’s appeal against the costs award.

Our view:

Many companies feel a real sense of injustice in having to incur costs in defending claims which are never likely to succeed.  Although costs awards are rare, any guidance from the Tribunals in what to take into account when making such an award is to be welcomed.