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Winning Tribunal Costs Awards: A Tough Task even for Lord Sugar

Tuesday, 7 January 2014

The conclusion of an employment tribunal claim usually brings great relief for the parties involved but there can sometimes be one final hurdle to complete if costs awards are sought.

Despite succeeding in the tribunal claim, even the most persuasive parties such as Lord Sugar can fail to convince employment tribunals to award them their costs.

There is actually a sound underlying principle at issue in these circumstances.

Bringing a Case Before the Employment Tribunal

In preparing for a case before an employment tribunal, both employer and employee may have spent a substantial amount on their legal advice. The sums involved usually include not only the costs of specialist legal advice from solicitors but also payments for expert reports, travel costs and fees paid to the tribunal.

Although in other areas of law, the losing party is often ordered to pay the costs of the successful party, this is generally not the case in employment law claims. In the employment tribunal, both parties are generally responsible for their own costs.

Lord Sugar Wins Against Apprentice but No Costs Awarded

The issue received media attention recently after Lord Sugar’s employment tribunal success against the winner of the Apprentice TV show, Stella English. The employment tribunal in the case refused to order Ms English to pay Lord Sugar’s £50,000 tribunal costs after she lost her constructive dismissal claim against him.

This is not an unusual decision as it is rare for an employment tribunal to make a costs order against the losing party, particularly when that party is an individual claiming against an employer. Of the 230,000 employment tribunal cases heard in 2011/12, only 1,411 cost orders were made.

Principles Underlying the Presumption Against Costs Awards

Part of the reasoning for there being a general presumption against tribunal coasts awards is that, in the interests of justice, employees should not be afraid to bring a claim against their employer for fear of having to pay tribunal costs.

However, some argue that the small likelihood of employees being ordered to pay costs contributes to the “claim culture” in England, encouraging employees to make frivolous claims and causing unnecessary disruption and expense for frustrated employers.

New rules introduced in July 2013 go some away to addressing the imbalance as they now allow for a party to apply for a tribunal costs order where the employment tribunal case brought against them “had no reasonable prospect of success”.

Comment

The Apprentice case highlights just how difficult it is to persuade an employment tribunal to make a costs order. Even though the initial tribunal in the case indicated that Stella English’s claim “should never have been brought”, a costs order was still not made against her.

Whether you are an employee or employer, if you are involved in or contemplating an employment tribunal claim, it is important to seek specialist legal advice. Experienced employment solicitors can help ensure that you are in a position to make the most of the new rules should you win while avoiding opening you up to an adverse cost order should you lose.

Please contact Aneil Balgobin via e-mail ABalgobin@rollingsons.co.uk or by telephone on 0207 611 4848 to discuss your options.

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