Costs Awards in Employment Tribunals

Costs Awards in Employment Tribunals

A recent case in the Employment Appeal Tribunal (EAT) could have far reaching repercussions for Claimants in terms of costs awards.
In the case of Vaughan v London Borough of Lewisham the EAT held that Employment Tribunals can make a costs award even if the paying party cannot afford to pay.
In the case itself the Claimant brought three sets of proceedings against numerous respondents. The claims resulted in a 20 day hearing following which the claims were rejected in their entirety. The Tribunal ordered the Claimant to re-pay one third of the Respondents’ legal costs – which amounted to approximately £260000 – on the basis that the claims were misconceived.
The EAT held that the Tribunal was correct in the way it had approached the question of costs. They said although the case was fact sensitive (a further relevant fact here is that the Respondent actually offered to settle the claims for £95000 – although this was explicitly stated to be for commercial reasons only and not because they felt they may lose the case) the case was clearly misconceived. Because of this it held the Tribunal was not wrong in awarding the Respondents one third of their costs even taking into account the fact it would take the Claimant several years if not longer to satisfy the order.
Costs awards have traditionally been very hard to obtain against unsuccessful Claimants and I wonder if this is the Tribunal’s attempt to address this issue. I do not believe this should have any effect on the vast majority of Claimants bringing justified and genuine claims against their current or former employers. However it is a warning shot to the small number of Claimants attempting to use the Tribunal process as a stick to beat their employers with or a means to trying to extract a commercial settlement.
If you are considering taking Tribunal action against a former employer or have already commenced an Employment Tribunal action and require expert representation then please give me a call to discuss on 0113 200 9720.
Anthony Fox

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