Can Costs Be Awarded in Tribunal Cases?

Employment tribunals are judicial bodies that resolve workplace disputes such as unfair dismissal, discrimination and wrongful deduction of wages. Unlike many courts, tribunals do not automatically award costs - meaning that even if you win, you generally remain responsible for your own legal expenses. However, tribunals have specific powers to award costs or preparation time orders in limited circumstances. This article explains when costs can be awarded, the legal framework, how applications work, and practical guidance for claimants and respondents.

The General Rule on Costs

The default position in employment tribunals is that each party bears their own costs regardless of who wins or loses. This differs from the usual civil court rule that costs “follow the event”, meaning the losing party pays the winner's legal costs. The tribunal's approach is intended to protect access to justice and avoid discouraging claimants from pursuing valid workplace rights.

Legal Framework for Costs Orders

Costs and fee awards in employment tribunals are governed by the Employment Tribunal Procedure Rules 2024. These rules give tribunals the power to make a costs order (paying party covers some or all of another party's costs) or a preparation time order (compensation for preparation time where the party was not legally represented).

Under these rules, a costs order may be made:

• by the tribunal on its own initiative; or
• on application by a party or a witness who was ordered to attend and gave evidence.

Tribunals must consider whether to make a cost or preparation time order if they think a party or their representative has acted unreasonably, including bringing or conducting proceedings vexatiously or pursuing claims or defences with no reasonable prospect of success.

When Costs Orders May Be Made

Unreasonable or Abusive Conduct

Tribunals have discretion to award costs where conduct during the case is unreasonable. Examples include:

• pursuing a claim or defence that clearly has no reasonable prospect of success;
• acting vexatiously, abusively, disruptively or otherwise unreasonably in relation to the case or the conduct of the proceedings;
• failing to comply with tribunal rules or orders without good reason;
• causing adjournments or postponements without sufficient justification.

These tests do not apply to all weak claims. A claim that is arguable and brought in good faith is generally not considered unreasonable simply because it ultimately fails.

No Reasonable Prospect of Success

If a claim or defence is so weak that it lacked reasonable prospects when pursued, tribunals may regard it as unreasonable to continue. This is a high threshold, and tribunals are cautious about penalising litigants in person or discouraging access to justice.

Postponements and Breach of Orders

Where a hearing is postponed because of late applications by a party, or a party repeatedly fails to comply with case management orders, tribunals must consider whether a costs or preparation time order is appropriate.

Costs Orders vs Preparation Time Orders

Costs Orders

A costs order compensates for expenses incurred while represented, including legal fees and lay representative fees, subject to certain caps and assessment principles. A costs order can require the paying party to:

• pay a specified sum up to £20,000;
• pay the whole or part of the receiving party's costs, with the amount assessed by the tribunal or a county court applying civil procedure rules;
• reimburse a witness's necessary and reasonably incurred expenses.

Costs orders are rare and typically arise only in cases of significant unreasonable conduct.

Preparation Time Orders

When the receiving party was not legally represented, tribunals may make a preparation time order instead of a costs order. This awards compensation for reasonable time spent preparing the case, at an hourly rate set by the rules (for example, £44 per hour for the 2024/25 period).

A costs order and a preparation time order cannot both be made in favour of the same party in the same proceedings.

How to Apply for a Costs Order

Timing and Procedure

A party seeking a costs or preparation time order may apply at any time during the proceedings up to 28 days after the final judgment determining the relevant issue is sent to the parties.

Tribunals must not make an order unless the party against whom it is sought has had a reasonable opportunity to respond, either in writing or at a hearing.

What to Include

Applications should set out:

• why the costs or preparation time order is justified (for example, unreasonable conduct or no reasonable prospect of success);
• details of costs incurred or time spent preparing the case;
• any relevant procedural history (such as adjournments or breaches of orders).

Tribunal judges will consider submissions from both sides before deciding whether to make an order.

Frequency and Practical Context

Costs orders are rare in employment tribunals. Most claims do not result in any costs award for either party, and the majority of litigants bear their own legal costs regardless of the outcome.

Tribunals are cautious about awarding costs because routine costs awards could deter individuals from bringing legitimate claims or defendants from defending their position. Instead, costs powers are reserved for clear cases of unreasonable or objectionable conduct.

Case law from the Employment Appeal Tribunal confirms that while tribunals have discretion to award costs on different bases (including indemnity in rare extreme cases), they must articulate clear reasoning to justify such awards.

Amounts and Assessment

Caps and Assessment

• Costs orders may specify an amount up to £20,000 or direct an assessment of the full costs using principles similar to civil courts.
• Preparation time orders are calculated by multiplying the assessed reasonable hours by the rule‑specified hourly rate.

Tribunals may consider the paying party's ability to pay when determining amounts, especially where large sums are sought, though this is not an automatic adjustment.

Strategic Considerations

Threats and Warnings

Parties sometimes receive “without prejudice save as to costs” letters threatening costs if they pursue a claim without merit. These warnings are common but should be assessed carefully, since costs awards are uncommon and require unreasonable conduct or clear lack of merit. Responding professionally to such warnings and avoiding unsubstantiated threats is important.

Risks of Vexatious Labels

A claim brought in good faith is unlikely to be considered vexatious simply because it turns out to be weak. Tribunal conduct rulings focus on conduct and reasonableness, not merely case outcomes.

Key Takeaways

In employment tribunal cases in England and Wales, the general rule is that each party bears its own costs, and costs awards are the exception rather than the norm. Tribunals may award costs or preparation time orders in limited circumstances, particularly where a party has acted unreasonably or pursued claims or defences without reasonable prospects of success. Applications must be made within 28 days of judgment and the other party must be given a fair opportunity to respond. While costs awards are rare, understanding when they arise and how to apply for them is important for managing risk and expectations in tribunal proceedings.