Costs orders 




As a general rule, in the employment tribunal each party pays its own legal costs. However, there are limited circumstances in which one party can be ordered to pay some or all of the costs incurred by the other party, known as a “costs order”. 




Although still quite rare, in recent years the number of costs orders made by tribunals has been increasing. There is also a rise in the number of orders for costs “to be assessed” by the County Court, a process that results in larger costs orders.
Tribunals can award costs where a party or their representative has acted “vexatiously, abusively, disruptively or otherwise unreasonably”, or where proceedings were “misconceived” (i.e. had no reasonable prospect of success).
Here are some examples of conduct that can lead to a costs order:


• making extensive and unfocused requests for unnecessary documents;



• not complying with case management orders;




• 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; 



• failing to provide details of allegations after repeated requests by the other side and the tribunal;



• withdrawing a claim or response 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 without justification;




• 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;




• concealing relevant evidence;


• intimidation;




• lying; and 




• making unjustified secret recordings.




Unreasonably failing to issue a grievance (where required by the Acas Code) can lead to an order for costs. This is 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 do not change their behaviour, and only make the order if the warning is ignored. 




A tribunal has the discretion to consider someone’s ability to pay before making a costs order. Normally, this means looking at income and expenditure, but it can also include capital (even equity in a home). 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), for example because a party has lied about their means (Shields Automotive Limited v Grieg [2011] UKEAT 0024/10/1507), or has not produced adequate evidence of their means (Jilley v Birmingham and Solihull Mental Health NHS Trust [2006] UKEAT/0584/06). A claimant’s genuine and reasonable “future earning capacity” can be taken into account (Herry v Metropolitan Borough Council [2016] UKEAT 0101/16/1612).



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




A tribunal judge can award costs up to a maximum of £20,000 but they can also order that the costs be assessed through a separate process, either by an employment judge or the county court and where this happens, there is no cap and the amount can be very large. 


A wasted costs order can also 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”. 




Finally, 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 recover costs for time spent preparing. These are made in the same circumstances as other costs orders.