Legal fees in the Employment Tribunal: a quick guide

The normal rule

The courts usually deal with costs differently[/caption] If you spend money on legal representation in the Employment Tribunal, you can’t normally recover your legal fees from the other side, even if you win.  This can come as a surprise to clients since it goes against the well-known principle usually applied in the Courts, where the loser pays the winner’s costs.  In addition, there have been a couple of recent changes to the costs rules so it seems appropriate to write a blog that outlines the basics.   Exceptions to the rule   As with many areas of law there are several exceptions to the rule, the most common being that costs may be awarded if the Employment Tribunal takes the view that a party or their representative has:   – acted vexatiously, abusively, disruptively, or otherwise unreasonably, or   – the bringing or conducting of proceedings has been misconceived.   Conduct can be vexatious “if an employee brings a hopeless claim not with any expectation of recovering compensation but out of spite to harass his employers or for some other improper motive“.   “Misconceived” is usually taken to mean that the claim has no reasonable prospect of success.

Consider the costs consequences of any dispute[/caption]   This is an important provision since it provides a disincentive for disgruntled employees to waste their employer’s time and money by bringing unmerited claims.  If appropriate the employer’s lawyer will often warn the employee that their claim is misconceived and invite them to withdraw it.  If they refuse and then go on to lose the claim the employer will then ask the judge for an order that the employee pays its legal fees, and the earlier warning will be brought to the judge’s attention.   Recent changes     As part of its recent review of employment legislation the Government has recently increased the maximum amount of costs that can be awarded from £10,000 to £20,000 for claims issued on or after 6^th April 2012.  This can be welcomed by employers since the threat of a higher costs award should make vexatious litigants think twice before starting a claim.  At the same time employers have to ensure that their defence of the case is handled properly to avoid the risk of being ordered to pay the employee’s costs.   Key points to note   Always consider the costs position at the outset of any dispute as it can have a real impact upon your strategy.  We can help you identify if there is a threat of costs or if the case you are facing is one where costs warnings should be put to the employee.   If you require assistance with any HR issues or the defence of a Tribunal claim then please contact one of our specialist employment lawyers.