Costs in the employment tribunal – a difficult prospect

A recent case in the Employment Appeal Tribunal (“EAT”) has highlighted the difficulties faced by respondents in getting a costs order against an unsuccessful claimant.

The case of HCA International ltd v May-Beheemul [2010] was regarding an employee who resigned and subsequently lodged claims of disability discrimination, constructive unfair dismissal and detriment on the grounds of having made protected disclosures (i.e.whistleblowing) at the tribunal.

The claims related to an assertion by the employee that other staff had used her password and log in details resulting in financial irregularities, security breaches and fraud. Shortly after making these allegations the employee had become unwell and was diagnosed with a severe depressive illness. The employee was unable to address her allegations further at the time with her employer and they were unable to investigate any further without the employees input. After her recovery, she resigned and lodged the claims at the tribunal.

The disability discrimination part of her claim was dismissed during the early stages of the case for technical reasons, with the remainder of her claims dismissed following a ten day hearing. During this process the employee also made a number of complaints to external bodies such as the serious fraud office and the police regarding her former employer. Although there was a successful outcome; considerable time and expense was incurred by the employers and they therefore sought a costs order on the basis that the employee had behaved unreasonably, rejected an early reasonable settlement proposal and the fact was that the central foundation of the claim was rejected by the Employment Tribunal.

The tribunal refused the costs order and this decision was supported by the EAT. The EAT reiterated that there is no principal that costs follow the event and that costs are still the exception rather than the rule. In this case the fact that the central allegation had not been made out were not enough to find that they had been a lie or that she had pursued a claim that she knew not to be true, and even if they had been a lie, the tribunal would have had to look at the nature, extent and gravity of the lie to determine if it amounted to unreasonable conduct. The reasonable settlement offer was not taken into account and the complaints to external bodies were found not to be related to the conduct of the proceedings and therefore outside the tribunals remit.

Therefore even in a case where an employer had highlighted at an early stage that they did not believe there to be prospects of success, tried to settle the matter on a commercial basis, succeeded on all counts and incurred the costs of a ten day hearing, a costs order was not made. The outcome leading to the not unreasonable question of whether a costs order will ever be made if you cannot prove actual malice or intentional deception on the part of the employee.

The Association of Recruitment Consultancies (ARC) has been campaigning for a change in tribunal rules and procedures to prevent this blackmail effect, which forces employers to settle claims due to the fact that costs are a rarity in the tribunals. The ARC has responded to the recent consultation on tribunal reform and held a successful event attended by staff from BIS and the Tribunals Service, at which members had the opportunity to put their views to government. For more information on the ARC and this campaign click the link below.

ARC Campaign: Employment Tribunal Review

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