This month it transpired that Lord Sugar has applied to the Employment Tribunal to recover the costs of defending a claim for constructive dismissal brought by the former winner of the Apprentice, Stella English. Ms English lost the claim and the Employment Judge stated that the claim was misconceived and should never have been brought.
I have previously reported on recovering costs in Employment Tribunal claims and I made the point that in general the Employment Tribunal is reluctant to award costs to the successful party in an Employment Tribunal claim. The Employment Tribunal has a discretion to make an award though where hearings have been postponed on the application of one party; or where a party has failed to comply with an order; or where the Tribunal is of the opinion that the party or their representative has acted vexatiously, abusively, disruptively or otherwise unreasonably or if the bringing or conducting of proceedings has been misconceived.
The latest statistics for Employment Tribunals published by the Ministry of Justice covers the period from April 2011 to March 2012. These statistics show that costs were awarded on 1,411 occasions. These statistics are though skewed by the fact that in one case 800 claimants were ordered to share the liability of one costs award. If this anomaly is removed, there were 612 cases in which costs were awarded. This is a drop in the ocean compared to the 186,300 claims raised during this time. That said our feeling within the Employment Team at Morton Fraser is that Judges are more willing than ever before to make costs awards in appropriate cases.
At present the Employment Tribunal can award up to £20,000 of costs. It is possible for a higher award to be made but this requires the matter to be remitted to either the County Court (for costs awards in England & Wales) or to the Sheriff Court (in Scotland). The Employment Tribunal rules are about to change with effect from 29 July 2013 and one of the changes will be that costs awards above £20,000 will no longer require to be referred in this way but rather the Employment Judge can carry out the more detailed calculation if they wish to do so.
Despite the possibility of very high costs awards, the median costs award, having regard to the Employment Tribunal statistics, is only £1,730. That said, very high awards can be made - for example there is a costs award of £36,466 referred to in the ET statistics. In addition, in the recent case of Vaughan v London Borough of Lewisham the Claimant brought three sets of hearings against several respondents, which culminated in a 20 day hearing. The Tribunal ordered the Claimant to pay a third of the respondents' costs, which amounted to £260,000, on the basis that the claims were misconceived. As such the costs award came to approximately £87,000. The Employment Appeal Tribunal (the "EAT") upheld this award on appeal and stated that it did not matter that the unemployed claimant might find it difficult to pay the costs and that it might take them several years to do so. It was stated by the EAT that the Tribunal had been entitled to find that there was a realistic prospect of the Claimant returning to employment and making a payment of costs.
It will be interesting to see whether Lord Sugar is successful with his application for costs against Stella English. In light of the comments made by the Employment Judge it appears likely that some form of costs awards will be made and the only question may be at what level they are assessed at.