Employment tribunal claims – costs warning

In the past making an employment tribunal claim has been relatively risk free for the applicant – especially if they instruct the solicitor under a no win no fee employment tribunal agreement. Indeed, many of those people applying to the employment tribunal probably don’t realize that they could have costs orders awarded against them if they lose. Hidden in the small print of the employment tribunal regulations is a provision which permits tribunals to award legal costs – but this is usually restricted to a maximum of £10k. What’s more, tribunals only make such awards on very, very rare occasions. In the 2 years ending March 31, 2011, there were more than 450,000 compensation claims to tribunals. Over a very similar period, however, cost awards will be made in just 324 cases – and the average cost order limited to just £1k.

However, in a recent case where the applicant’s claim failed [and where the case was bluntly described by the tribunal itself as “a waste of time”], the employment tribunal went much further and awarded a staggering £100,000 in legal costs against the applicant. Tribunals are able, in exceptional circumstances, to exceed the £10k limit for cost awards in cases where the application is felt to be false or malicious i.e. it’s clear as crystal that the employee is trying it on and lying through their back teeth in attempt to wrestle some compensation from their former employer.

The advice of our employment tribunal solicitors? This case should never discourage any genuine applicant for employment tribunal compensation – it’s clearly not meant to do that, and there’s no indication that this is anything but a very exceptional case. But some people do make fraudulent claims – and it’s those people, who of course bring genuine claimants a bad name, who are vulnerable to really substantial costs orders and you need to think twice before making a fraudulent application.