In Ladak v DRC Locums Ltd UKEAT/0488/13/LA the Employment Appeal Tribunal (EAT) has held that the definition of costs, in rule 38(3) of the Employment Tribunals Rules of Procedure 2004, is wide enough to enable an employer to recover costs associated with the time spent by a legally qualified in-house representative.

Background

The definition of costs in rule 38(3) of the Employment Tribunals Rules of Procedure 2004 (the 2004 Rules) is “fees, charges, disbursements or expenses incurred by or on behalf of a party, in relation to the proceedings” and legal representation for the purposes of costs orders includes qualified legal representatives employed by the employer.  This position is replicated in the Employment Tribunals Rules of Procedure 2013 (the 2013 Rules), which replaced the 2004 Rules.

Facts

The claimant brought a claim against his former employer, DRC Locums Ltd (DRC), on 12 August 2011.  The claimant’s claim was struck out on 2 July 2012 as a result of his non-compliance with tribunal directions.

DRC argued that by the time the claim was struck out it had already undertaken significant work to prepare for the five day hearing that was due to commence on 9 July 2012, including delivering counsel’s brief.  On 20 July 2012 DRC applied for costs against the claimant.

Employment tribunal decision

The tribunal ordered the claimant to pay all of DRC’s costs of the proceedings from 21 January 2012 onwards, to be assessed by the county court.

The claimant appealed on the grounds that (a) the tribunal ought not to have taken into account the costs incurred in-house by DRC’s employed solicitor when assessing whether to order assessment of costs by the county court and (b) the tribunal had not properly addressed the question of whether it was proportionate to award the whole of the costs.

EAT decision

The EAT dismissed the claimant’s appeal. It held that it had long been the position that costs of legally qualified in-house representatives were recoverable as per the decision in Wiggins Alloys Ltd v Jenkins [1981] IRLR 275 and that the 2004 Rules did not change the position. The judge’s view was that it was plain that the 2004 Rules envisaged that an order for costs might be made in favour of a party who is legally represented by an employee, given the definition of legal representation and that the costs of an in-house legal department could permissibly be described as a charge or expense of the employer.

The EAT also held that the tribunal had properly addressed the question of whether it was proportionate to award the whole of the costs.

Comment

The definitions of 'costs' and 'legally represented' in the 2013 Rules are materially the same as the definitions in the 2004 Rules, and the same analysis should apply in respect of costs applications under the 2013 Rules.

This case will be good news for organisations employing in-house lawyers, who are involved with employment tribunal claims.  If they have not already been doing so, they should include time incurred by in-house legal representatives defending employment tribunal claims in any application for costs.

However, such applications will only be successful if there is a clear record of time spent on the case.

This means that in-house lawyers working on employment tribunal claims will need to keep detailed records of the time they spend on each claim and may therefore need to follow similar time recording practices to lawyers in private practice.  Additionally, the employer will need to decide what hourly rate they will use when seeking to recover costs.  One potential option may be to use the guideline hourly rates used when assessing costs in civil proceedings.  Additionally, in-house legal departments may find it easier to claim costs if other business units are charged for their time as part of internal accounting processes.