Employment Tribunal Deposit Order Application Guide

A deposit order in the Employment Tribunal is a procedural mechanism used 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. It is designed to discourage weak or speculative arguments while still allowing access to justice.

Deposit orders are governed by the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013. They are typically made where a judge considers that a specific allegation or argument has little reasonable prospect of success but is not so weak that it should be struck out entirely.

This guide explains how deposit order applications work, when they are used, the legal test, and the practical consequences for Employment Tribunal litigation.

What a Deposit Order Is

A deposit order is a direction from the tribunal requiring a party to pay a specified amount (usually up to a statutory maximum per allegation) as a condition of continuing with that part of their case.

Key features include:

• It applies to specific allegations or arguments, not necessarily the entire case
• It is a financial threshold that must be paid to proceed
• It is intended as a warning that the claim or defence may lack merit

If the party later succeeds on that issue, the deposit is usually refunded.

Purpose of Deposit Orders

Deposit orders serve several procedural functions:

• Filtering weak or speculative claims or defences
• Reducing wasted tribunal time on unmeritorious issues
• Encouraging parties to review and refine their case
• Supporting efficient case management

They are part of the tribunal's wider duty to deal with cases fairly and proportionately.

Legal Basis for Deposit Orders

Deposit orders are made under Rule 39 of the Employment Tribunal Rules of Procedure 2013.

The tribunal may make a deposit order where it considers that:

• A specific allegation or argument has little reasonable prospect of success

The threshold is lower than strike out, meaning the case is not hopeless, but still weak.

Difference Between Deposit Orders and Strike Out Orders

Deposit orders and strike out orders are often confused but serve different purposes:

Deposit Order

• Case can continue if payment is made
• Used where claim is weak but arguable
• Acts as a financial deterrent rather than termination

Strike Out Order

• Ends the claim or part of it
• Used where there is no reasonable prospect of success or serious procedural failure
• Much more severe

When Deposit Order Applications Are Made

Deposit order applications are commonly made:

• After case management hearings
• During preliminary hearings
• Following review of pleadings and documents
• Where legal arguments appear weak on their face

They may be made by either party or considered by the tribunal on its own initiative.

How a Deposit Order Application Works

1. Application or Judicial Proposal

A party may apply for a deposit order, or the Employment Judge may raise the issue during a preliminary hearing.

The applicant typically argues that:

• Specific allegations lack evidential support
• Legal arguments are unlikely to succeed
• Time and cost should not be spent on weak claims

2. Identification of Weak Allegations

Deposit orders are targeted. The tribunal must identify:

• The specific claim or allegation affected
• Why it is considered weak
• Whether it still has some arguable basis

3. Opportunity to Respond

The opposing party must be given an opportunity to:

• Explain why the allegation is arguable
• Provide supporting evidence or legal argument
• Challenge the necessity of a deposit order

4. Tribunal Decision

The Employment Judge will decide whether:

• A deposit order should be made
• Which allegations it should apply to
• The amount of the deposit

Amount of Deposit Orders

The tribunal has discretion to set the amount, but:

• The maximum is generally £1,000 per allegation or argument
• The amount should be proportionate to the claim and party's means
• The tribunal may reduce the amount where appropriate

The judge may also take into account:

• Financial circumstances of the party
• Number of allegations affected
• Complexity and seriousness of the case

Consequences of a Deposit Order

If a deposit order is made:

1. Payment Requirement

The party must pay the deposit by the deadline set by the tribunal.

2. Failure to Pay

If the deposit is not paid:

• The relevant allegation is struck out
• The party cannot rely on it at the final hearing

3. Effect on Case Strategy

Deposit orders often:

• Narrow the issues in dispute
• Influence settlement discussions
• Signal judicial scepticism about part of a case

Recovery of Deposit

If the party succeeds on the issue covered by the deposit order:

• The deposit is normally refunded
• If unsuccessful, the deposit may be retained and paid to the other party

This creates a financial risk assessment for continuing with weaker arguments.

Factors the Tribunal Considers

When deciding whether to make a deposit order, the tribunal considers:

• Strength of the legal and factual basis of the allegation
• Whether the argument is realistically arguable
• Proportionality of making the order
• Access to justice considerations
• The overriding objective of fairness and efficiency

The tribunal avoids using deposit orders as a punishment; they are procedural tools.

Deposit Order Hearings

Deposit order issues are often dealt with at preliminary hearings, where:

• Evidence is usually limited
• Legal arguments are considered in outline form
• The tribunal does not make final findings of fact
• The focus is on whether the claim has reasonable prospects of success

These hearings are typically shorter and more procedural than final hearings.

Challenging or Avoiding a Deposit Order

A party may resist a deposit order by:

• Demonstrating legal arguability of the claim
• Providing supporting documents or case law
• Clarifying factual disputes that require a full hearing
• Showing that the claim is not speculative

The key argument is that the issue should be determined at a full hearing rather than filtered out early.

Common Situations Leading to Deposit Orders

Deposit orders are commonly considered in:

• Discrimination claims with limited supporting evidence
• Unfair dismissal arguments lacking factual detail
• Whistleblowing allegations with unclear protected disclosures
• Claims based on disputed interpretation of events

They are particularly relevant where allegations appear borderline but not hopeless.

Practical Impact on Employment Tribunal Claims

Deposit orders significantly affect litigation strategy because they:

• Introduce financial risk for continuing weak claims
• Encourage early case review and narrowing of issues
• Influence settlement negotiations
• Signal judicial assessment of claim strength

They are an important tool in managing complex or multi-issue claims.

Key Takeaways

Employment Tribunal deposit orders are financial conditions imposed on parties pursuing allegations considered to have little reasonable prospect of success. They are governed by Rule 39 of the Tribunal Rules and are used to filter weak claims without striking them out entirely. If paid, the case can continue; if not, the affected allegation is removed. Deposit orders play a key role in managing case complexity, encouraging proportionate litigation, and focusing tribunal resources on arguable issues.