Costs in the Employment Tribunal

Costs in the Employment Tribunal - should the impact on the Claimant be considered?

In the recent case of Howman v Queen Elizabeth Hospital Kings Lynn, the Claimant brought a claim for unfair dismissal.  His claim was dismissed and the Respondent applied for costs.  The Tribunal granted the order because the Claimant’s claims “never had a chance of success.”  The Tribunal concluded that the Claimant had been warned about the lack of merit in his case at an early stage, having been advised to “carefully consider his position” at a Case Management Discussion.  Because the Claimant pursued his claims after he should have known that they were likely to fail, the Tribunal ordered him to pay the Respondent’s legal costs on an indemnity basis (the most generous basis upon which costs can be assessed).  Costs of £43,076 were subsequently awarded by the County Court. 

The Claimant appealed, stating that he did not believe the costs should have been assessed on the indemnity basis; and that the Tribunal had failed to take into account his ability to pay a large award (although technically he had the means to pay, he would have to sell the family home in order to do so). 

In partially upholding his appeal, the Employment Appeal Tribunal (EAT) held that the Tribunal did not appear to have considered the impact that losing his home would have on the Claimant or his family, or the possibility of capping the amount the Claimant had to pay.  The EAT remitted the case back to the Employment Tribunal to reconsider its decision.

The EAT made it clear that the Claimant could not argue that a costs award should not have been made on the indemnity basis or at all.  Further, the EAT held that the Tribunal should only consider whether its original order should be modified, if necessary substantially, to take into account the Claimant’s ability to pay any award, in practice.  The Tribunal has to carry out a balancing exercise, taking into account the costs incurred by the Respondent in the litigation on the one hand and the impact on the Claimant and his ability to pay, on the other.

This case is a reminder that, although still rare, it is possible for costs awards to be made where Claimants pursue weak cases.  Further, it highlights that although indemnity costs can be awarded, these will be rarer still and that for all cost applications, Tribunals must carry out a balancing exercise which includes assessing the impact of an award on the Claimant and by extension, his family.