Tribunal proceedings and costs

Settlement Agreements are sometimes an alternative to Employment Tribunal or Court proceedings as your actual or potential claims against your employer are settled. To this end, you are compensated. However, what if you believe that you have a strong case and the compensation on offer is, in your opinion, inadequate. Before attempting to re-negotiate with your employer or rejecting the agreement in favour of proceeding with your claims, you should consider the costs implications of any Tribunal proceedings.

Unlike in Civil Claims, costs do not follow the event in the Employment Tribunal. This means that you pay your own legal fees unless you have arrangements such as insurance that will pay them for you. There are limited circumstances where a Tribunal can order a party to pay another’s costs. In 2011/12, only 1,411 costs awards were made from 186,300 claims issued.

Costs awards can take two mutually exclusive forms; a costs order which represents the legal costs incurred by a party in the proceedings and a Preparation Time Order for the time spent by a party who is unrepresented.

A Tribunal may make a costs award and must consider whether to do so where it finds that;

 
  • A party, or their representative, has acted vexatiously, abusively, disruptively or otherwise unreasonably in bringing or conducting the proceedings or part of them;

  • Any claim made which had no reasonable prospect of success;

  • A party has been in breach of an order or practice direction;

  • A hearing has been postponed or adjourned on the application of a party.

A party or their representative should therefore make submissions that a party has acted as above and therefore a costs award should be made. This is however a high hurdle to overcome and has been cited as the reason why costs awards are the exception rather than the rule.

You should therefore be aware that unless your employer acts as above and you are successful in proving the same then you are unlikely to recover any of your costs if you are the person paying for them.

This should always be a consideration when considering a settlement agreement.

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