A few years ago the answer to this question was definitely "no". At present, the answer is "unlikely". Soon the answer will be "maybe". There will be an increasing willingness to order costs, particularly where the tribunal believe that the case should never have come to the tribunal at all: costs orders are on the increase and this will continue in the light of the Employment Act 2002.
The current employment tribunal rules (introduced in July 2001) give a wider "costs" discretion to employment tribunals than had previously been the case. In particular the opportunity of making an application for costs where a claim has been "misconceived" was introduced (replacing the former requirement that a claim was "frivolous"). "Misconceived" is defined as having "no reasonable prospect of success", and the difference between "misconceived" and the other grounds upon which costs can be sought is that a claim can be misconceived even though made in good faith. However, it is in practice hard to imagine a costs order being willingly made where a genuine claim, when finally heard, turns out to be a weak one.
Clearly employers are advised not to defend claims where there is no substance in the defence. An employment tribunal is going to be far more likely to make a costs order against an employer in such circumstances, and this award can be up to 10,000 pounds. Of concern to many employers, however, are spurious claims, and those claimants who continue to pursue a claim despite a reasonable offer of settlement. It has been difficult to know how to best deal with these up to now, in view of (for instance) limited opportunities to obtain costs from the applicant, and the current bar from seeking costs from the applicant's solicitor or any third party to the proceedings - for example, where the Commission for Racial Equality may be supporting what the employer considers to be an unfounded claim. The usual tactics of sending a letter "without prejudice save as to costs" can be adopted, but this is fairly toothless, and the changes to the costs regime in the Employment Act 2002 are designed to go some way to remedy the concern of many employers that there is insufficient incentive to persuade an opportunistic applicant to withdraw. This concern is obviously mirrored by many applicants in respect of employers who insist on "defending the indefensible".
New more extensive costs orders
The new costs orders are likely to be implemented shortly, at the same time as proposed changes to dispute resolution. These changes will include minimum disciplinary and grievance procedures with the particular aim of limiting the number of employment tribunal complaints by allowing an exploration of the issues, possible conciliation, and even an extension of time for making a claim, in order to try and avoid a claim being presented in the first place. It is no accident that this is aimed primarily at small employers who may not have a comprehensive disciplinary/grievance procedure in place. There is still some uncertainty as to how the new costs regime will take effect, but it is likely that section 22 of the Employment Act 2002 will incorporate dramatic changes, as far as costs orders are concerned, into section 13 of the Employment Tribunals Act 1996, allowing employment tribunals to consider much more extensive costs awards.
Costs against representatives
Currently an order for costs can only be directed against a party to the proceedings. However, an order of costs will shortly be possible against the representative, e.g. the applicant's solicitor who bullies the applicant into pursuing a lost cause. There is to be a new "wasted costs" jurisdiction allowing both the employment tribunal and the Employment Appeals Tribunal to make an award of costs against a party's representative. They may do this either by disallowing costs or expenses of a representative, or by ordering a representative to pay costs incurred by a particular party, or both. There is even power to allow a payment for "preparation time" - for example by in-house solicitors - and the power to order a representative to meet allowances that may otherwise have been paid by the government in respect of a person's attendance at the hearing. As at present, any order of costs must be the result of the conduct of the representative (in other words, an order for costs cannot be made solely on a punitive basis).
Increasingly mirroring civil procedures
A cost order is going to be difficult to measure. In many cases, in my experience as a part-time chairman of an employment tribunal, you see very poor representation, where perhaps the representative is not acting in the interests of the party whom they represent. But how "poor" does it need to be? I believe there will be a "show cause" provision, giving the representative a reasonable opportunity to indicate why the tribunal should not make an order for costs. In this way, as in many other areas, notwithstanding the informality of the employment tribunal proceedings, the tribunal then starts to mirror the civil procedure rules.
As far as the representative's conduct is concerned, it may be that the current threshold for costs ("vexatious, abusive, disruptive or unreasonable" behaviour) is used. In the civil court proceedings, where representatives' conduct is "improper, unreasonable or negligent" such that the court considers it "unreasonable to expect" the adversely affected party to pay the relevant costs, then an order for costs may be made. Once again it is likely that similar tests will be applied in the employment tribunal along with relevant case law.
Costs orders, if considered, are likely to be left until after the end of the hearing and care will be taken in considering how a costs order may be made. However, the overriding objective of the employment tribunal does expressly require the tribunal, so far as is practicable, to save expense; any long winded application is likely to get short shrift. Representatives are advised to consider their position carefully in this respect. For instance, as a practitioner I know from experience there have been a number of occasions where clients (sometimes respondents and sometimes applicants) have insisted on pursuing a hopeless case. The advice in these circumstances may have been not to do so, but ultimately we can only recommend or give advice: clients may still insist that their cases are litigated. In order to avoid being blamed for such litigation at a later date, it is therefore just as important for a solicitor to explain the position clearly to a client (and have a clear file note), as it is to give advice to a client on how to maximise the chance of obtaining an order of costs against the other side where the other side's case is particularly poor.
More expensive for all
All in all, employment tribunal claims are now going to cost even successful parties a lot. Though costs orders may still be rare, the chance of falling foul of the tribunal and getting a costs penalty has now increased, and in any event employment tribunal claims will continue to cost much more than the parties realise. In part this is because, even if successful, costs orders are still unlikely (even if less unlikely than before) and also because, even when made, such orders will not cover all the costs that have been incurred. In addition the costs have also increased with the formality of the proceedings, as it takes longer to prepare and fight the case. Equally, a considerable amount of management time will be incurred through tribunal proceedings, which are by their very nature full of delays; for anyone giving evidence there are the further irritations of being under cross-examination and subject to the employment tribunal's timetable.
The applicant who is determined to proceed with an employment tribunal will rarely come out the other side without feeling bruised, bloody and perhaps surprised at the level of compensation even if successful. Despite publicity for the occasional large City awards, average awards for unfair dismissal claims are still less than 10,000 pounds, and even with discrimination claims (where the amount for damages are uncapped) large awards are rare.
Interest on compensation between dismissal and an employment tribunal decision in favour of the applicant is not available for unfair dismissal claims. Some attendance costs may be available at the employment tribunal but these are most unlikely to cover the actual cost. Orders allowing an individual to recover the costs of lost wages by being in the employment tribunal are almost never made, and any media publicity is, in my experience, invariably inaccurate (partly because it is clearly designed to tell an interesting story).
It is clear that litigation is on the increase: the employment tribunal has gained jurisdiction for many new areas over the past few years, ranging from disability discrimination through to claims based upon the refusal to adequately consider an application for flexible working. Many rights now apply to "workers" as well as employees, and the target of reducing the number of claims is going to be a tough one for the employment tribunal system. The weapon of a "costs order" may be difficult to use but is now going to be much more available. It is certainly worth brandishing (in a sensible way) during the lead-up to any employment tribunal hearing. More costs orders will be made, with some inevitably made against individuals, firms or organisations who are not party to proceedings. There are obvious advantages to those who are aware of how the new rules operate in practice.