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.
Explanation of deposit orders in UK Employment Tribunals, including meaning, legal rules, when they are used, payment requirements, strike-out differences, and how tribunals assess weak claims under Rule 39.
A deposit order is a procedural mechanism used in Employment Tribunals in England and Wales to require a party to pay a sum of money as a condition of continuing with all or part of their claim or response.
Deposit orders are designed to discourage weak, speculative, or unmeritorious claims or defences without restricting access to justice for genuine cases. They are governed by the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013.
This article explains what a deposit order is, when it is made, how it works in practice, and its impact on Employment Tribunal proceedings.
What Is a Deposit Order in an Employment Tribunal?
A deposit order is a direction requiring a party to pay a specified sum (usually up to £1,000 per allegation or argument) as a condition of proceeding with that part of the case.
If the party does not pay the deposit:
- The relevant claim or response may be struck out
- The party may be prevented from relying on that part of their case
If the party proceeds and later loses, the deposit may be used to contribute towards costs awarded against them.
If the party succeeds, the deposit is usually refunded.
Legal Basis for Deposit Orders
Deposit orders are governed by Rule 39 of the Employment Tribunal Rules of Procedure 2013.
A tribunal may make a deposit order where it considers that:
- A claim or allegation has little reasonable prospect of success
- A response or defence is weak or unmeritorious
- Continuing with that part of the case would be disproportionate
The tribunal must provide reasons and ensure procedural fairness before imposing a deposit order.
Purpose of Deposit Orders
Deposit orders serve several functions:
- Filtering out weak or speculative claims early
- Encouraging parties to reassess the strength of their case
- Reducing unnecessary hearing time and costs
- Promoting efficient use of tribunal resources
They are not intended to punish claimants or respondents but to manage case quality and progression.
When Do Employment Tribunals Make Deposit Orders?
Deposit orders are typically considered at preliminary hearings, especially where:
1. Weak legal arguments are identified
The tribunal may find that certain claims lack legal foundation.
2. Insufficient evidence is presented
Where allegations are not supported by documents or witness evidence.
3. Speculative or exaggerated claims
Where the tribunal considers the claim unlikely to succeed based on available material.
4. Complex multi-issue claims
Where only part of a claim appears weak, a deposit order may apply to specific allegations.
How Much Is a Deposit Order?
The tribunal has discretion over the amount but:
- The maximum is usually £1,000 per claim or allegation
- Smaller amounts are often ordered where appropriate
- Multiple deposit orders may be made in one case
The amount must be proportionate to the issue and the financial position of the party.
Effect of Not Paying a Deposit Order
If a party does not pay the deposit:
- The relevant claim or defence may be struck out
- The party cannot proceed with that part of the case
- The tribunal may treat the claim as withdrawn
This makes deposit orders a significant procedural safeguard.
What Happens If the Party Pays the Deposit?
If the deposit is paid:
- The claim or defence continues to a full hearing
- The deposit is held by the tribunal
- The outcome depends on the final judgment
At the end of the case:
- If the party wins, the deposit is usually returned
- If the party loses, the deposit may be used towards costs
Factors Considered by Tribunals
When deciding whether to make a deposit order, tribunals consider:
1. Merits of the case
Whether there is a realistic prospect of success.
2. Strength of evidence
Documentary and witness support for the allegations.
3. Legal complexity
Whether the issue is legally arguable but uncertain.
4. Financial circumstances
The tribunal must consider the party's ability to pay.
5. Fairness and proportionality
Whether the order would unjustly prevent access to justice.
Deposit Orders vs Strike-Out Orders
Deposit orders are often confused with strike-out orders, but they are different:
Deposit Order
- Allows case to continue if deposit is paid
- Used for weak but arguable claims
- Financial condition attached
Strike-Out Order
- Removes claim entirely
- Used for very weak, abusive, or procedurally defective cases
- No option to continue
Deposit orders are considered a less severe alternative to strike-out.
Use in Multi-Claim Cases
In cases involving multiple allegations, tribunals may:
- Apply deposit orders to specific claims only
- Allow stronger claims to proceed without restriction
- Separate allegations into different procedural categories
This ensures weaker claims do not undermine stronger ones.
Appeals and Challenges
Deposit orders can be challenged but:
- Appeals are limited and must show legal error or procedural unfairness
- Applications can be made for reconsideration in some circumstances
- Tribunals have wide discretion, making challenges difficult
Practical Impact on Employment Tribunal Claims
Deposit orders can significantly affect litigation strategy.
For claimants or respondents, they may:
- Require early reassessment of case strength
- Encourage settlement discussions
- Limit pursuit of speculative allegations
- Increase financial pressure to proceed
They are often used as a case management tool to streamline proceedings.
Common Misconceptions
“Deposit orders mean the tribunal thinks you will lose”
Not necessarily. They indicate low prospects of success, not certainty of failure.
“Deposit orders are the same as costs penalties”
Incorrect. They are procedural safeguards, not punishment.
“Only claimants receive deposit orders”
Incorrect. Either party can be subject to a deposit order.
Key Takeaways
A deposit order in Employment Tribunals is a procedural requirement to pay a sum of money before continuing with a claim or defence considered to have little reasonable prospect of success. It is governed by Rule 39 of the Employment Tribunal Rules and is designed to manage weak or speculative claims while preserving access to justice.
Deposit orders are discretionary, proportionate, and often used in preliminary hearings. They differ from strike-out orders because the case can continue if the deposit is paid. Their purpose is to ensure fairness, efficiency, and proper use of tribunal resources.
