EMPLOYMENT TRIBUNALS – THE COSTS
We regularly sympathise with employers who despite successfully defending Employment Tribunal claims made against them have to meet their own legal costs. This can be hugely frustrating, especially when the employer has done everything correctly but has to undergo the somewhat stressful experience Tribunals often become. Even those that don’t go all the way to a hearing cause much anguish and divert vital management time.
So under what circumstances can a Tribunal order costs?
Employment Tribunals have the power to award costs against a party only in limited circumstances. This being if a party - or his/her representative - has acted "vexatiously, abusively, disruptively or otherwise unreasonably, or the bringing or conducting of the proceedings by a party has been misconceived".
Our experience is that many employers would feel the above applies in their case but in truth the instances of Tribunals actually awarding costs remains at very low numbers. That said, there are examples of when costs have been ordered in favour of the Employer.
In a 2009 case involving the Royal Navy, an officer brought a claim for race discrimination alleging he had been subject to “Mugabe taunts”. He claimed against his employer, Ministry of Defence (MOD) and against two other individuals and they gave evidence that it was the Claimant himself who introduced the “Mugabe” nickname at a time when he was bringing in a stricter regime. The Claimant’s claim failed on the basis that it was vexatious that the facts he advanced for his case were false. He has been ordered to pay £28,000 in costs.
You may have read in the press the case of the Muslim chef who brought a claim for religious discrimination against Scotland Yard after having been made to cook pork sausages and bacon. He claimed the suggestion that he should wear gloves and use tongs to cook them left him feeling stressed and humiliated. The claim failed when it came to light in evidence that he had asked for a bacon roll for his own consumption and in fact ate pork. In this light his claim was doomed from the start with no reasonable prospects of success. The courts have held the Claimant should pay costs to the Employer. The exact amount of costs are, at the time of writing unknown but are likely to be substantial. It is understood that the Employer’s costs are in the region of £76,000.
CONTROL THE COSTS – WHAT SHOULD EMPLOYERS DO?
These two cases are extreme in terms of the levels the costs ran to but they do illustrate how important it is to keep in control of costs. In the vast majority of cases costs will not be awarded – so what can employers do to minimise the costs to them?
A few straight forward guidelines:
Make sure that you take good and pragmatic advice when dealing with employee matters
Ensure your managers are up to speed with legal implications
Have in place a robust and strong contract of employment
Keep a close eye on Tribunal cases as they develop
Check out the costs before instructing a representative
Make sure you get regular cost reports from whoever you instruct to represent you
Always consider the commercial implications and weigh up the balance of early settlement against the potential build up of defence costs
Consider putting in place Legal Expenses Insurance to provide protection against such costs. This can also include commercial settlements and awards.
Sentient provide experienced HR and legally qualified advice to employers in all sectors given in a highly pragmatic way. We also provide the option of insurance against the costs incurred when defending Employment Tribunal claims.
As usual, do call us if you would like an informal discussion if any of the above has identified an area where you would like to gain a little extra protection.