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Can poor claimants bring weak Employment Tribunal claims without risking costs consequences due to their limited financial means?

Since July 2013, claimants have been required to pay a fee to bring a claim in the employment tribunal (ET). Whilst ET fees were introduced to help fund the cost of running the ET service, they have also had the effect of discouraging some weaker or more vexatious claims.

However, the fee remission scheme means that some claimants are eligible for total or partial remission (i.e. they do not have to pay some or any of the ET fees), depending on their disposable capital income and gross monthly income.

This scheme, therefore, allows poorer claimants to bring an ET claim, however weak that claim is, without having to dip into their back pocket. Of course, claimants with greater financial means can also bring unmeritorious claims, so the fee remission scheme simply puts all claimants on an equal footing. However, does this also have an adverse effect on respondents to claims? Can a poorer claimant bring an unmeritorious claim or conduct that claim unreasonably without any costs risk, simply because the claimant has no means to pay any costs?  A couple of recent ET cases have explored this question.

The first case related to deposit orders, which can be issued by the ET where they consider that an allegation(s) in a claim (or response) has little reasonable prospect of succeeding. The effect of a deposit order is that the claimant must pay a “deposit” of up to £1,000 in order to proceed with that particular allegation (although the ET should take into account a claimant’s ability to pay). Multiple deposits can be ordered where a claimant has multiple weak allegations.

If the claimant pays the deposit(s) and then goes on to lose that particular allegation(s), the ET may order the claimant to pay some or all of the respondent’s legal costs on the grounds that the claimant was unreasonable to have continued with that allegation(s).

In this first ET case, the claimant was a victim of trafficking who brought various ET claims against her former employers. She was receiving benefits and had a weekly income of £125. As the ET considered three of these claims very weak, they ordered her to pay deposits of £75 per claim, which she appealed. The Employment Appeal Tribunal reduced 2 of the deposit orders to £1, as the claimant could not realistically afford the £75 deposits and they did not want to prevent access to justice. However, they made clear that the potential costs risk would still apply if she lost the allegation(s).

The second ET case related to over £110,000 of costs being ordered against an unsuccessful claimant who had acted unreasonably in bringing and pursuing ET proceedings and had ignored clear advice about the weakness of his claims and costs warnings. The ET ordered the claimant to pay all of the respondent’s legal costs (over £110,000), despite the fact that he currently had no money and was unfit for work, as the ET believed that he would be able to resume an active working life in due course.

The claimant in the second case successfully appealed the costs order, as the Employment Appeal Tribunal found that the ET had not properly explained why the claimant should pay 100% of the respondent’s legal costs, rather than a proportion of this or a capped sum, and/or that the ET had not properly considered his means to pay the costs. The question of costs was, therefore, sent back to the same ET to consider again.

This does not mean, of course, that the claimant in the second case will “escape” the costs order, or that he will not have to pay a very substantial sum in relation to costs. It simply means that the ET need to re-consider their reasoning.

What does this mean for you or your business?

Whilst the above two ET cases may, at first sight, appear claimant- friendly, they demonstrate that even claimants with limited financial means can still face cost consequences in the ET if they bring unreasonable claims or conduct those claims unreasonably.

Whilst a £1 deposit order against a claimant may seem pointless, it has the same potential costs consequences for a claimant as a £1,000 deposit, namely that if the claimant goes on to lose that particular allegation, they may be ordered to pay some or all of the respondent’s legal costs.

In addition, even claimants with limited financial means may be ordered to pay very substantial legal costs, provided that the ET give a proper explanation of the costs decision they reach. It is also worth highlighting that an ET is not obliged to consider a claimant’s means to pay when determining a costs award, they simply have a discretion to do so. However, if they exercise that discretion, they must do so properly.

What do you need to be doing now?

Get us involved as early as possible if you are faced with an ET claim, so that we can get you in the strongest tactical position and increase your chances of recovering some/all of your costs, whatever the financial means of the claimant.

 

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.

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