Costs in Tribunal – myth or reality

23 May 2012

In two recent cases, the Employment Appeal Tribunal (EAT) has given some insight into the position on recovering costs in Employment Tribunals.

In Peat & Ors v Birmingham City Council, the Claimants had been dismissed and re-engaged by the Council. 

The Council’s solicitors had sent the Claimants a detailed costs warning letter, setting out how the Council had undertaken an extensive consultation.  The Employment Tribunal had awarded costs on the basis that the Claimants’ representatives had failed to turn their mind to the points raised in this letter.

The EAT had to consider whether it was unreasonable conduct to effectively ignore the costs warning and reasons given.  It confirmed that, to obtain costs for “unreasonable conduct”, it was not necessary to show that the claim had no reasonable prospects of success.  If the Claimants’ solicitors had engaged with the issues raised, they were likely to have realised how weak the Claimants’ case was and not pursued it to a hearing.  Costs were awarded.

Our view:

This case goes to show that when giving costs warnings, it is advisable to set out clear reasons for doing so.

In a second case, Doyle v North West London Hospitals NHS Trust, the Employment Tribunal had ordered that the Claimant pay the Respondent’s entire costs, estimated to be in the region of £60k but actually totally £95k (not Ms Doyle’s finest hour, one suspects).

The EAT concluded that whilst the Tribunal was entitled, in principle, to award costs, the Tribunal should have turned its mind to the Claimant’s ability to pay these costs in the circumstances, even though this was not specifically raised by the Claimant’s representative.

The EAT sent it back to the Tribunal to assess Ms Doyle’s ability to pay and then to assess the appropriate costs order to make.

Our view:

It is always important to bear in mind the other side’s ability to pay.  Even if a Tribunal is persuaded that costs should be awarded, if the Claimant is a man of straw, it is likely that little or no costs award will actually be made.