Costs orders 


As a general rule, in the employment tribunal each party pays its own legal costs. However, there are limited circumstances in which costs may be awarded. 


Although still comparatively rare (costs are awarded in around 0.5% of cases that lead to a full hearing), the number of costs orders made by tribunals has been increasing alarmingly — up from 487 in 2009-10 to 612 in 2011-12. Eighty-one per cent of all costs orders are against claimants. This is particularly troubling given that employers are more likely than claimants to incur very significant legal costs. There is also an increase in the number of tribunals making orders for costs “to be assessed” by the County Court — a process that results in larger costs orders (see below).


Tribunals can award costs where a party or their representative has acted “vexatiously, abusively, disruptively or otherwise unreasonably”, or where the proceedings were “misconceived” (i.e. had no reasonable prospect of success).


Costs orders can only cover costs that the other side has actually incurred or is liable to pay. 


Here are some examples of the sorts of conduct that can lead to a costs order: 


• making extensive and unfocused requests for unnecessary documents; 


• insisting on including large quantities of documentation in the bundles and then not using them at the hearing;


• insisting on pursuing arguments that the tribunal has already warned have no chance of success; 


• withdrawing your case without justification shortly before the hearing;


• refusing to consider a reasonable settlement offer and insisting on an unreasonable sum;


• abandoning claims at the last moment without justification;


• asking for last minute amendments;


• refusing to follow tribunal guidance about joint expert medical evidence;


• insisting on including “without prejudice” or privileged material in the tribunal bundles;


• abusing tribunal members, representatives or the other side;


• intimidation;


• lying; and 


• making unjustified secret recordings.


Unreasonably failing to issue a grievance, as required by the Acas Code, can also lead to an order for costs because it represents a “lost opportunity” to settle the claim (Topic v Hollyland Pitta Bakery [2012] UKEAT 0523/11/1903). 


A tribunal should warn an unrepresented claimant that they are at risk of a costs order if they carry on without changing their behaviour, and only make the order if the warning is ignored. 


When deciding whether to order costs, a tribunal can take into account a claimant’s genuinely held belief that their claim had a good chance of success. However, once a claimant has been warned by the tribunal that the case is weak and that they are at risk of a costs order, this line of argument becomes far less likely to succeed.


A tribunal should take an individual’s means into account before making a costs order (Howman v Queen Elizabeth Hospital Kings Lynn [2013] UKEAT 0509/12/3004). Normally, this means looking at income and expenditure, but it can also include capital. A tribunal that decides to disregard ability to pay must explain why (Doyle v North West London Hospitals NHS Trust [2012] UKEAT 0271/11/0404). One good reason for disregarding ability to pay is where a party lies about their means (Shields Automotive Limited v Grieg [2011] UKEAT 0024/10/1507).


The fact that a party “doesn’t need the money” , for example, because they are wealthy, or have employment litigation insurance, is never a good reason not to award them their costs (Mardner v Gardner [2014] UKEAT/0483/13/DA). 


A tribunal judge has the power to award costs up to a maximum cap of £20,000. Alternatively, the tribunal can order that the costs be assessed through a separate process, either by an employment judge or the county court. Where costs are assessed in this way, there is no cap and the amount can be substantial. 


A wasted costs order can be made against a legal or any other representative who has caused another party, including their own client, to incur costs through their “improper, unreasonable or negligent act or omission”. 


Preparation time orders can be awarded to a party who has not incurred any legal costs. This means that unrepresented parties or those represented by voluntary or not-for-profit sector representatives can also recover costs for time spent preparing. These are made in the same circumstances as other costs orders.