£17,000 Cost Order against Employer
Author: Matthew Kilgannon
The Employment Tribunal (ET) is not known for making cost orders, in fact they are quite rare.
They can be awarded if a party or representative; "has acted vexatiously, abusively, disruptively or otherwise unreasonably in either the bringing of the proceedings (or part) or the way that the proceedings (or part) have been conducted".
In a recent Employment Appeal Tribunal (EAT) decision, the EAT upheld an ET decision that the employer (who had representation) pay the Claimant’s legal costs to the tune of £17,136.90. The case report can be read here
Sunuva Limited (Sunuva) sells fashion swimwear. Mrs M worked for Sunuva as ‘International Sales Manager’. Sunuva decided it would make Mrs M redundant. It was subsequently advised that it should undertake a selection process to include a selection pool and criteria. The advice was followed and Mrs M was selected and made redundant.
Mrs M claimed unfair dismissal (and discrimination) on the basis that the process was a sham and the outcome was predetermined. Sunuva denied this and the matter proceeded to a final hearing.
During the final hearing Sunuva’s main witness accepted that (as the ET put it) there was; “never any prospect of anyone other than the Claimant being selected for dismissal. It had been decided at the outset that she would be dismissed.”
On the back of the witness evidence, it was easy for the ET to decide that the dismissal was unfair. It also found that the dismissal was not discriminatory.
After winning, the Claimant made a costs application seeking recovery of her legal fees, which totalled £25,705.36 and which included costs incurred before Sunuva’s defence (ET3) had been received. Sunuva’s representative did not argue that costs should be limited to work undertaken after receipt of the ET3.
Sunuva’s representative accepted that its client’s case has no reasonable prospect of success. The ET decided that a cost award should be made and concluded that two thirds of the Claimant’s costs should be awarded where the discrimination claim failed, but only accounted for one third of the costs the Claimant incurred. It therefore awarded costs that Mrs M had incurred prior to Sunuva had submitted its defence.
Sunuva appealed the cost award, but the EAT found that there was nothing wrong with the ET’s decision. The appeal failed.
This case should give employers cause for concern.
Firstly, it increases the risk of costs being awarded if concessions are made by key witnesses (or the representative) that undermine your position or contradict your formal defence and highlight that you should not have defended the claims.
Secondly, most employers will have an idea as to who may (or may not) be selected for redundancy, but this case highlights the need to take (and follow) proper advice beforehand. Employers should not pre-determine the outcome until those procedures have been followed.
Thirdly, the award included costs incurred before Sunuva had submitted its defence. The ET rules say that costs can only be awarded in “…the way that the proceedings…have been conducted…”. Therefore, to award costs before Sunuva had engaged in the ET process would seem harsh.
As always, expert advice should be sought so you’re aware of the prospects of your defence and your likely exposure in terms of potential compensation, legal fees and your time.
Clients should also consider the comfort of insurance that protects against the cost of Employment Tribunal claims – which we can offer. This is more so now that Tribunal fees have been abolished and Tribunal claims are reportedly increasing. Further, many of your staff will have insurance on their home insurance policies and if you have the same, it creates a level playing field in the litigation.
To find out more about our employment law insurance options, contact the author, Matthew Kilgannon on 01483 411517 or firstname.lastname@example.org or another member of our employment team.