Employment Tribunal Costs Order Application Rules

In Employment Tribunal proceedings in England and Wales, each party is generally expected to bear their own legal costs, regardless of whether they win or lose. This is a key difference from civil courts. However, in limited circumstances, the Tribunal can make a costs order requiring one party to pay the other party's legal costs or expenses.

A costs order is not automatic. It is only granted where specific legal tests are met and where the Tribunal considers it just and appropriate. Applications for costs orders are therefore strictly controlled and relatively uncommon.

This guide explains the rules governing Employment Tribunal costs order applications, including when they can be made, the legal thresholds, procedures, and practical considerations.

What a Costs Order Is in an Employment Tribunal

A costs order is a formal decision by the Employment Tribunal requiring one party to pay all or part of the other party's costs.

Costs may include:

• Solicitors' fees
• Counsel (barrister) fees
• Expert witness fees
• Reasonable preparation expenses
• Travel and accommodation costs (in limited cases)

Unlike civil litigation, costs in Employment Tribunals are not the default outcome. The system is designed to reduce financial risk for individuals bringing claims.

General Rule: Each Party Bears Their Own Costs

The starting point in Employment Tribunal cases is:

• Each party pays their own legal costs
• Costs shifting is exceptional
• The Tribunal focuses on resolving employment disputes rather than punishing losing parties

This principle is intended to ensure access to justice, particularly for employees bringing claims against employers.

Legal Framework for Costs Orders

Costs orders are governed by the Employment Tribunals (Constitution and Rules of Procedure) 2013 (as amended).

The Tribunal has discretion to award costs where it considers:

• A party has acted unreasonably
• A claim or defence has no reasonable prospect of success
• A party has conducted proceedings vexatiously, abusively, or otherwise unreasonably
• A party has not complied with Tribunal orders

The key test is whether it is “in the interests of justice” to make a costs order.

Grounds for Making a Costs Order Application

1. Unreasonable conduct

This is the most common basis for costs applications.

Examples include:

• Ignoring Tribunal orders
• Refusing to engage in settlement discussions unreasonably
• Pursuing clearly weak arguments without merit
• Causing unnecessary delay or expense

2. Vexatious or abusive conduct

This refers to conduct that is:

• Intended to harass or pressure the other party
• Persistent and without merit
• An abuse of Tribunal process

3. No reasonable prospect of success

A costs order may be made where a party:

• Pursued a claim or defence that was clearly unarguable
• Continued a case after it became obvious it could not succeed

4. Non-compliance with Tribunal orders

Costs may be awarded where a party:

• Fails to comply with disclosure orders
• Misses deadlines without justification
• Ignores case management directions

5. Wasted costs

In some cases, costs can be awarded for specific wasted expenses caused by procedural failures, such as:

• Adjourned hearings
• Failure to attend hearings
• Late evidence submissions

When a Costs Order Application Can Be Made

A costs application may be made:

• At the end of the final hearing
• During proceedings (in limited cases)
• After judgment has been issued

Most commonly, applications are made immediately after the Tribunal has delivered its judgment.

The Tribunal may:

• Hear the application immediately
• Request written submissions
• List a separate hearing for costs determination

Procedure for Making a Costs Order Application

Step 1: Identify the basis for the application

The applicant must specify:

• The legal ground relied upon
• The conduct complained of
• The costs incurred

Step 2: Provide evidence of costs

Evidence may include:

• Solicitors' invoices
• Barrister fee notes
• Time records
• Receipts for expenses

The Tribunal will assess whether costs claimed are reasonable.

Step 3: Submit the application to the Tribunal

Applications can be made:

• Orally at the hearing
• In writing after the hearing
• Through legal representatives

The Tribunal may set a deadline for submissions.

Step 4: Response from the other party

The opposing party will usually be given an opportunity to respond, including:

• Contesting the application
• Challenging the amount claimed
• Arguing conduct was reasonable

How the Tribunal Decides Costs Applications

The Tribunal applies a discretionary test based on fairness and reasonableness.

Key considerations include:

• Whether conduct was objectively unreasonable
• Whether the party knew or should have known their case was weak
• Whether costs were proportionate
• Whether making a costs order would be just
• The financial position of the parties (in some cases)

The Tribunal does not automatically award costs even if a party loses the case.

Types of Costs Orders

1. Standard costs order

Requires payment of identified legal costs or expenses.

2. Preparation time order

Used where a party is not legally represented, allowing recovery of time spent preparing the case.

3. Wasted costs order

Targets costs caused by improper, unreasonable, or negligent conduct by legal representatives.

Costs Caps and Limitations

Employment Tribunals do not generally operate fixed costs caps, but:

• Costs must be reasonable and proportionate
• Excessive or unnecessary legal expenditure may not be recoverable
• The Tribunal has discretion to reduce amounts claimed

Common Situations Leading to Costs Applications

Costs applications are often considered in cases involving:

• Persistent refusal to settle despite weak claims
• Failure to comply with multiple Tribunal orders
• Bringing claims with no legal foundation
• Conduct causing repeated adjournments
• Abuse of process or misleading conduct

Defending a Costs Application

A party facing a costs application may argue:

• Their conduct was reasonable
• The case had merit and was properly arguable
• Any procedural failures were accidental or unavoidable
• Costs claimed are excessive or unsupported
• The application is disproportionate

Risks of Costs Orders

Although rare, costs orders can have significant consequences:

• Financial liability for legal fees
• Enforcement through County Court if unpaid
• Impact on settlement negotiations
• Reputational consequences in ongoing disputes

Practical Steps to Minimise Costs Risk

• Comply with all Tribunal orders promptly
• Maintain reasonable settlement conduct
• Avoid pursuing weak claims or defences
• Ensure evidence and disclosure deadlines are met
• Keep legal costs proportionate to the claim value
• Engage constructively in case management

Key Differences from Civil Court Costs Rules

Employment Tribunal costs rules differ from civil courts in important ways:

• Costs are not automatically awarded to the winner
• Threshold for costs is significantly higher
• Focus is on conduct, not outcome
• Greater protection for claimants bringing employment claims

Final Thoughts

Employment Tribunal costs order applications are governed by strict rules and limited to situations where a party has acted unreasonably, vexatiously, or in breach of Tribunal orders. The default position is that each party bears their own costs, making costs orders an exceptional remedy.

When costs are awarded, the Tribunal exercises discretion based on fairness, proportionality, and the conduct of the parties throughout the proceedings. Understanding these principles is essential for managing litigation risk and ensuring compliance with Tribunal procedures.