This guide is maintained as a current resource for September 2026 and covers only the laws of England and Wales. Information is for general guidance, not legal advice. Consult a qualified solicitor for advice specific to your situation.
Comprehensive guide to costs orders in workplace discrimination cases in England and Wales. Explains how employment tribunals handle legal costs, when costs orders are made, preparation time orders, procedural rules, risks and practical guidance for claimants and employers.
In workplace discrimination claims heard by an employment tribunal, costs orders can determine whether one party is required to pay some or all of the other party's legal expenses. Unlike the civil courts, where the losing party typically pays costs, in employment tribunals the general rule is that each party bears their own legal costs, regardless of the outcome. Costs orders in discrimination cases are unusual and only made in limited circumstances. This article explains how costs orders work, the rules and tribunal procedures that apply, what types of costs can be recovered, common risks and strategic considerations for claimants and respondents, and answers frequently asked questions.
The Starting Point: Costs in Employment Tribunals
Each Party Bears Their Own Costs
In employment tribunals, including discrimination claims under the Equality Act 2010, the default position is that each side pays its own legal costs. Even if a claimant wins a discrimination claim, the tribunal does not automatically order the employer to pay the claimant's solicitor or barrister fees. Likewise, a claimant who loses does not automatically have to pay the employer's legal costs. This approach reflects policy decisions designed to encourage access to justice without a prohibitive cost risk.
When Can a Tribunal Make a Costs Order?
Although rare, tribunals have statutory and rule‑based powers to make costs orders against a party that has acted unreasonably or behaved improperly in the way they brought or conducted the proceedings.
Threshold: Acting Unreasonably or Misconduct
Under Employment Tribunal Rules, a cost order may be justified where a party's conduct was so poor that it caused unnecessary expense to the other side. This can occur when a claim or response is:
- Vexatious, abusive or disruptive;
- Unreasonably pursued when it had no real prospect of success;
- Misconceived or brought in bad faith;
- In breach of tribunal orders or directions (such as refusing to comply with pre‑hearing directions).
Tribunals apply a two‑stage test: first determining whether the conduct crosses the relevant threshold, and then exercising discretion on whether to make an order and in what amount, taking the totality of circumstances into account.
Case Law Guidance
Case law confirms that tribunal costs orders should be exceptional, not routine, and that behaviour must go beyond mere loss of a case. For example, the Employment Appeal Tribunal has emphasised that unreasonable conduct needs to be considered in context and that litigants in person should not be judged by professional standards.
What Costs Can Be Ordered?
Legal Representation Costs
If a party was represented by a solicitor (solicitor, barrister or other paid representative), the tribunal may order the paying party to cover reasonable legal costs and expenses incurred by the successful side. These can include solicitor and counsel fees, expert witness fees and other disbursements reasonably connected to the proceedings.
Preparation Time Orders
Where the winning party was unrepresented, the tribunal cannot award legal costs but may make a preparation time order. This compensates for the time spent preparing the case at a fixed hourly rate set by statute (for example, around £45 per hour at present). Only one type of order - either a costs order or a preparation time order - may be made, not both.
Limits and Detailed Assessment
Tribunals can award costs up to £20,000 directly; orders above this threshold may require detailed assessment either by an employment judge or by a county court under Civil Procedure Rules procedures. The tribunal may also take into account the ability to pay when deciding both whether to make an order and the amount.
How and When to Apply for a Costs Order
Timing and Procedure
A costs application can usually be made after the tribunal judgment, but before the deadline set by the tribunal (often within 28 days). The party requesting costs must give the other side a reasonable opportunity to respond before the tribunal decides.
Grounds for Costs Orders
Applications should set out specific examples of unreasonable conduct, such as:
- Pursuing claims despite being notified they had no realistic prospect of success;
- Failing to follow tribunal directions or deadlines;
- Withholding evidence without justification;
- Making serious allegations without a reasonable evidential basis.
The tribunal will consider the overall conduct, including whether a litigant in person was unrepresented and the complexity of the issues.
Practical Considerations and Risks
Rare in Discrimination Cases
Costs orders in discrimination cases are unusual. Tribunals exercise discretion carefully because discrimination claims often involve complex factual issues and evidence where early assessment of merits can be difficult. Employers frequently use costs threats as a settlement tactic, but in most discrimination disputes a claimant will not be ordered to pay costs simply for pursuing a claim that is reasonable in its circumstances.
Respondent Costs Against Claimants
If a claimant's case is clearly without merit or has been pursued unreasonably, a tribunal may order that the claimant pays the employer's costs. A recent case example involved a substantial costs order against a claimant whose behaviour was found to be unreasonable. However, these orders remain exceptional.
Employer Costs Ordered Against Respondent
Tribunals can also award costs in favour of claimants where an employer's conduct has been unreasonable, such as failing to comply with tribunal orders or behaving improperly. In one discrimination case dating from 2022, a tribunal ordered an employer to pay around £20,000 in costs due to unreasonable conduct during proceedings.
Common Questions
Will I have to pay costs if I lose my discrimination claim?
Generally no. Each party usually pays their own costs, and costs orders are the exception. As long as a claimant acts reasonably and pursues a claim with genuine grounds, costs orders against them are unlikely.
Can an employer threaten costs to force settlement?
Employers often threaten costs as negotiation leverage, but such threats alone do not mean a tribunal will award costs. Unwarranted costs threats may themselves be considered unreasonable conduct.
What if I was unrepresented?
If unrepresented, you cannot recover legal fees, but you may apply for a preparation time order to compensate for your time spent preparing the case at a statutory rate.
Is there a maximum a tribunal can award?
Tribunals can order up to £20,000 without detailed assessment, and above this amount through detailed assessment procedures. They may consider ability to pay.
Final Thoughts
Costs orders in workplace discrimination cases heard by employment tribunals are significantly different from costs in civil court litigation. The default rule is that each party bears their own costs, regardless of whether they win or lose. Tribunal costs orders are rare and only made where a party's conduct has been unreasonable, vexatious, or otherwise unjustified. Cost orders may cover legal expenses for represented parties or, for unrepresented parties, a preparation time order. Understanding the limited circumstances in which costs can be awarded and the procedural requirements helps claimants and employers manage risk, respond to costs threats appropriately, and consider settlement options where appropriate.
