Employment Tribunal - Dealing with Costs Orders
In what circumstances can an employment tribunal make an order in relation to legal costs?
Costs in the employment tribunal are the exception not the rule.
Generally parties in tribunal litigation bear their own costs in tribunal proceedings but costs orders may order the paying party to pay a specified amount to the receiving party:
- of up to £20,000, in respect of their costs
- the whole or a specified part of their costs, with the amount to be determined by way of a detailed assessment in a county court or by an employment judge.
A tribunal may make a costs order in the following circumstances:
- A party, or their representative, has acted vexatiously, abusively, disruptively, or otherwise unreasonably in the bringing or conducting of the proceedings, or a part of them; and
- Any claim made in the proceedings by a party had no reasonable prospect of success.
Kuwait Oil Co (KOC) v Al-Tarkait
In Kuwait Oil Co (KOC) v Al-Tarkait, the employee was summarily dismissed from his employment at KOC. An employment tribunal upheld the employee's claim for unfair dismissal and awarded compensation totalling £79,724.20.
In what is perhaps unusual, costs applications were made by both parties at the end of the case. The tribunal made costs orders in favour of both parties due to their respective unreasonable conduct at different points in the case.
The tribunal held that the employee was of limited financial means, and applied a maximum limit to its cost order. The tribunal said that the maximum amount of costs payable would be the sum of the compensation awarded to the employee plus the costs awarded to the employee.
The EAT held that the employment tribunal could impose a cap on costs.
Best Practice
Costs do not follow the event in employment tribunals as they do in civil courts. Whilst this case is fact specific, parties to litigation in the employment tribunals should be aware that costs can be awarded against a party that conducts the proceedings unreasonably.