How Employment Tribunal Costs Are Decided

Understanding how employment tribunal costs are decided is essential for both employees and employers involved in workplace disputes in England and Wales. Unlike many civil courts, employment tribunals operate under distinctive rules about costs and legal fees. This article explains how tribunal costs are treated, when cost awards can be made, how expense recovery works, and practical considerations for claimants and respondents. The explanations use clear language and include contextual examples to help readers with no prior legal knowledge as well as solicitors.

The Starting Point: Each Party Bears Their Own Costs

In most employment tribunal proceedings, the default rule is that each party pays their own legal costs and expenses, regardless of whether they win or lose. This differs from many other courts where the losing party is typically ordered to cover the winner's legal costs. The rationale is that tribunals aim to remain accessible so that employees can enforce statutory workplace rights without the fear of being liable for opponent costs if they lose.

This general rule means that:

• Both claimants and respondents normally pay their own solicitor fees, barrister fees, expert reports, travel, and any other related expenses;
• Even a successful claimant will not automatically recover full legal costs from their employer; and
• A respondent employer, even if successful, does not automatically recover costs from the claimant.

When Can a Tribunal Order Costs?

Although the usual rule is that each side pays its own costs, employment tribunals do have the power to make costs orders in limited and specific circumstances. These are designed to discourage unreasonable behaviour and ensure fairness in the conduct of proceedings.

1. Unreasonable or Vexatious Conduct

A tribunal can order one party to pay some or all of the other side's costs if it considers that the party (or their representative) has behaved vexatiously, abusively, disruptively, or otherwise unreasonably in bringing or conducting the proceedings. For example:

• Persistently ignoring tribunal directions;
• Unnecessary applications causing delay; or
• Conduct that wastes tribunal time.

The concept of unreasonable conduct is interpreted strictly, and tribunals must consider if the conduct truly merits such a cost order.

2. Claims or Defences With No Reasonable Prospect of Success

Tribunals also have discretion to award costs where a claim or defence was clearly misconceived or had no reasonable prospect of success. This means the tribunal can decide that a party should not have pursued a hopeless case or defence.

3. Tribunal Rule Compliance

Non‑compliance with tribunal orders - for instance, repeatedly missing deadlines for document disclosure - can also lead to costs orders.

4. Conduct of Representatives

New regulations may extend the tribunal's power to make awards against legal representatives in extreme cases of misconduct, meaning that representatives themselves might lose the right to recover fees from their clients or be ordered to pay other parties' costs.

Costs Orders: Preparation Time Orders

Employment tribunals can also make preparation time orders. These are separate from “costs orders” and allow a party to recover a set amount per hour for time spent preparing the case. Under current arrangements, the standard rate applied by tribunals is around £45 per hour, though this amount is subject to periodic adjustment.

Preparation time orders are intended to compensate for time invested, not full legal fees, and are usually modest compared with the overall costs of professional representation.

Tribunal Fees and Access to Justice

At present, there are no fees to bring an employment tribunal claim. This is because the UK Supreme Court ruled that charging fees was unlawful, as it impeded access to justice (in R (UNISON) v Lord Chancellor).

However, government consultations have considered introducing fees again to contribute to the running costs of the tribunal system. Under proposals, fees would be calibrated to protect access to justice, and exemptions or remission schemes would be available for those who cannot afford them.

Despite these consultations, the current position remains that making a claim is free, and costs decisions focus on legal conduct rather than claim fees.

Tribunal Considerations When Deciding Costs

When deciding whether to award costs, tribunals will consider:

• The behaviour of the parties throughout the proceedings;
• Whether the claim or defence was well founded or realistic;
• Compliance with tribunal rules and orders; and
• The impact on access to justice, including whether awarding costs would unfairly discourage statutory rights enforcement.

Tribunals do not award costs merely because a party lost; the loss must be connected to unreasonable conduct or an unmeritorious case.

Examples and Practical Context

Example 1: Unreasonable Behaviour

If an employer repeatedly fails to disclose key documents despite explicit tribunal directions, the tribunal could conclude this behaviour was unreasonable and order them to pay some of the claimant's costs.

Example 2: Hopeless Defence

A claimant brings a claim that clearly falls outside all statutory protections, or a respondent advances a defence lacking any legal basis, the tribunal may find that the argument had no reasonable prospect of success and award costs accordingly.

Example 3: Preparation Time

A claimant spends significant hours preparing statements and evidence and can document around 10 hours of preparation. They may apply for a preparation time order for 10 x £45, equalling £450, which the tribunal may award if justified.

Mitigating Cost Risks

Because costs orders are discretionary and not automatic, parties should:

• Act reasonably in all aspects of the tribunal process;
• Comply promptly with directions and deadlines;
• Avoid frivolous claims or defences without legal basis;
• Communicate clearly with the tribunal and opponent; and
• Seek legal or advisory support early to frame realistic claims. These steps reduce the likelihood of cost sanctions.

Tribunals may also consider a party's ability to pay when making a cost order, particularly where the order relates to preparation time or modest awards.

Time Limits for Cost Applications

Applications for a costs order or a preparation time order can be made during proceedings or within 28 days of the judgment, giving parties a clear window to seek recovery of costs or time spent.

Common Questions

Can you recover full legal fees if you win?
No. Recovering full solicitor or counsel fees is rare. Tribunals most often award modest amounts related to preparation time or in exceptional cases of unreasonable conduct.

Does losing automatically mean you pay your opponent's costs?
No. The usual rule is that each party pays their own costs. You will only pay opponent costs if the tribunal specifically orders it due to unreasonable behaviour or a hopeless case.

Can claimants be deterred by cost threats?
Threats about costs are sometimes used tactically, but genuine cost orders are uncommon and only granted in limited circumstances. Responding reasonably and with counsel reduces risk.

Key Takeaways

Decisions about costs in employment tribunals in England and Wales are governed by specific rules that differ from other civil courts. The default position is that each party pays its own costs - including legal fees and expenses - regardless of the outcome of the claim. Tribunals only award costs in limited cases involving unreasonable conduct, vexatious behaviour, or claims or defences with no reasonable prospects of success. In addition, tribunals can award preparation time orders to compensate for time spent preparing a case. Claimants and respondents should conduct proceedings responsibly, comply with tribunal directions, and seek appropriate advice to reduce the risk of adverse cost decisions.