Michelmores, Law, Employment, Solicitor, Lawyer
Rachael Lloyd
Posted on 27 Apr 2015

Costs award & dismissal

Costs Award Justified Despite Claimant's Current Inability to Pay

Chadburn v Doncaster & Bassetlaw Hospital NHS Foundation Trust and another [UKEAT/0259/14]

Background

Unlike in the civil courts, costs do not 'follow the event' in Employment Tribunals. However, Tribunals have a broad discretion to make costs awards in certain circumstances.

A Tribunal may make a costs award where, in its opinion, 'a party has acted vexatiously, abusively, disruptively or otherwise unreasonably in either the bringing of the proceedings or the way that the proceedings have been conducted'.

A costs award can be made for up to £20,000 or, alternatively, for the whole or a specified part of the receiving party's costs to be determined on detailed assessment. When making a costs award, the Tribunal may take into account a paying party's means to pay, but it is not obliged to do so.

Facts

The Claimant brought an unfair dismissal claim against her employer, which the Tribunal considered was 'tenable and reasonably pursued'. However, she also brought a number of false race discrimination claims against the Trust, all of which were dismissed by the Tribunal. The Tribunal held that the Claimant had fabricated the allegations of discrimination in order to bring her claims of harassment within the Tribunal's jurisdiction, and considered this to be unreasonable conduct, which gave the Tribunal discretion to make a costs award against the Claimant.

The Tribunal made a costs award of £10,000 against the Claimant; however, the evidence before the Tribunal was that the Claimant had limited means to pay due to debts of £600. The Tribunal made a costs award in spite of this, considering that the Claimant was 39 years old and would be likely to improve her financial position in her future years of work.

The Claimant applied to the Tribunal to reconsider the costs award because her debts were, in fact, over £4,000, not £600 as originally represented to the Tribunal.

The Tribunal declined to change the award, and the Claimant appealed to the Employment Appeal Tribunal ('EAT').

Judgment

The EAT upheld the Tribunal's costs award, indicating that the Tribunal was entitled to rely on the conclusion that the Claimant's financial position was likely to improve in the future, as she was only 39 and had plenty of working years left ahead of her.

The EAT held that the Tribunal had not failed to take account of the Claimant's higher debt liability. The Tribunal did not have to take the Claimant's financial means into account at all and, where a paying party's means are taken into account, this does not have to be in reference solely to their financial means at the time the costs award is made.

Tips for Employers

Although the case does not establish new principles, it is a useful example of how Tribunals may exercise their broad discretion to make costs awards. When considering the paying party's ability to pay, Tribunals can make a broad-brush assessment rather than a precise estimate of what they can afford. This approach will be useful for employers, where an employee Claimant has acted unreasonably in the bringing of proceedings.


Dismissals following Bad Faith Warnings

Way v Spectrum Property Care Limited [2015] CA

Facts

The Claimant was given a final written warning by his employer for breaching company policy on recruitment. He was later dismissed for misconduct for sending inappropriate emails in breach of the employer's email policy.

The Claimant sought to argue that the final written warning was not given in good faith, asserting that the breach had been sanctioned by the person who investigated it.

At the first instance Tribunal, the Judge dismissed the Claimant's arguments and went on to find that the dismissal was fair in the light of the final written warning.

On appeal to the EAT, the Judge decided that the employer ought to have investigated the Claimant's complaints about the warning. However, the EAT dismissed the appeal because it would have made no difference to the finding that the Claimant had been fairly dismissed.

The Claimant appealed to the Court of Appeal.

Judgment

The Court of Appeal found that an employer who took into account a warning given in bad faith would not be acting reasonably. The Court remitted the hearing to a fresh Tribunal to consider whether the warning was given in bad faith, and the fairness of the dismissal in the light of that.

Tips for Employers

The Judgment does not mean that employers will have to reconsider all previous warnings when relying on them, particularly if the employee is merely saying that the sanction was too harsh. However, where the employee is alleging some impropriety, the employer should investigate exactly what is being alleged.

Although it will be unlikely that the investigating officer will deem a historic warning to be given in bad faith, or inappropriate, it will provide the employer with an opportunity to look into what the employee has raised and establish if any risk exists should the employee claim unfair dismissal.