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Costs awards against employers


The usual approach in Employment Tribunal proceedings is for either party to meet their own legal costs, regardless of whether they win or lose. However, when costs are awarded, the Tribunal has to decide when costs should be awarded from. A recent case has considered just that point and the employer received an expensive bill as a result.

A Tribunal has the power to dismiss a claim (or defence) if it has no reasonable prospects of success. A Tribunal can award costs against a party where proceedings are misconceived, have been brought or conducted unreasonably, frivolously, vexatiously or otherwise disruptively. This wording enables claims to be brought against employers who unreasonably defend cases.

In the case of Sunava Ltd v Martin, the EAT upheld a Tribunal's decision to award the employee's costs extending beyond the costs caused by the employer's unreasonable conduct. In other words they ordered the employer to pay the costs that the employee had incurred before the ET3 (the company's defence) was filed.

Mrs Martin was made redundant. She argued her dismissal was unfair. At the hearing, the company's witnesses confirmed that the decision to dismiss Mrs Martin had been pre-determined and a procedure later put in place to suggest otherwise. The Tribunal concluded that the company should have conceded unfair dismissal from the outset and that the defence had no reasonable prospects of success. Whilst Mrs Martin had also claimed discrimination which may have resulted in a hearing anyway, the company's failure to concede the issue of unfair dismissal at an early stage meant they were penalised by a costs award of £17,136.90.

The moral of the tale. If your defence has no reasonable prospects of success, concede the point and do not flog a dead horse, or face costs consequences if you do. Those costs are likely to compensate the employee for the entirety of their legal costs for the inconvenience of having to take proceedings in the first place.

For further information relating to the points raised in this article, please contact Partner in our award-winning Employment Team, Angela Gorton.

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.


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