New ET rules – Levelling the playing field for employers in the Employment Tribunal? – HSJ
Published in HSJ 20.09.2012 www.hsj.co.uk
Any NHS employer which has successfully defended an Employment Tribunal claim knows that victory is normally bitter sweet because, unlike in the civil courts, neither the Employment Tribunal nor Employment Appeal Tribunal routinely award costs against unsuccessful Claimants. At a time of stretched budgets, NHS Trusts are looking to cut back on the wasted expense and management time which ET claims can represent.
The coalition government has said it wishes to free up burdens on employers and has therefore increased the maximum costs that Employment Tribunals can award against unsuccessful Claimants after April 2012 from £10,000 to £20,000. The increased exposure to costs is designed to encourage individuals pursuing weak claims to have second thoughts before issuing proceedings. But will it work?
Until a change to the ET rules in 2004 widened the foregrounds for making awards of costs it was exceptional for employers to recover costs. However, even the combined effect of the 2004 rule change and the new costs limit may not discourage misguided Claimants unless Employment Judges are prepared to take a more robust approach.
Employment Tribunal statistics for the period to 31st March 2011 show that only 355 awards of costs were made to Respondents (employers) out of the 382,400 claims lodged. There were only four cases in which the maximum of £10,000 was awarded. The average award of costs was £2,830.
This leaves NHS employers wondering what has to happen before it can succeed in recovering at least some of its costs. It is clear that dishonest Claimants are at high risk of having costs orders made against them. In Dellside Nursing Home v Matthew the Employment Tribunal decided that the employee had not, as she had claimed, been subjected to racial abuse by her manager. Although the Employment Tribunal rejected the employer’s application for costs, the Employment Appeal Tribunal decided she had lied. This was a fundamental part of the case, and it said that the Employment Tribunal had been wrong to reject the employer’s application for costs.
In Barnsley Metropolitan Borough Council v Yerrakalava the employee withdrew a disability discrimination claim part way through a pre-hearing review. The employer claimed that the Claimant’s evidence was dishonest. The Tribunal agreed with the employer that the Claimant had lied and ordered her to pay all of the employer’s costs of £92,500. The case eventually came before the Court of Appeal which said costs incurred prior to the unreasonable conduct (dishonest evidence) would not be allowed. This still left the employee facing a substantial award against her.
Preparatory steps should be taken by any NHS employer intending to pursue a costs award. It is important if a costs award is to be sought, that notice is given to the Claimant to warn them that there will be a costs application. An early costs warning allows the Tribunal to see that the unsuccessful party had the opportunity to withdraw but that they then pressed on despite the warning.
Unreasonable behaviour in the conduct of the claim exposes a Claimant to the risk of a costs award. In a case we conducted this year, an employee failed to turn up on the day of the hearing, having made unsupported, vague claims to be feeling unwell two days before the hearing. When she did not appear at the hearing, the Employment Judge made a substantial costs order against her after we produced a string of email correspondence with the Claimant about her purported illness.
In another case Hempsons defended, a consultant surgeon brought claims against two NHS Trusts which he withdrew only days before the hearing. The Employment Tribunal made the maximum order for of £10,000 against the Claimant in favour of each NHS employer. The correspondence with the Claimant in the run up to the withdrawal was instrumental in persuading the Employment Judge to make the order.
If an NHS employer wishes to maximise its chances of recovering costs in unmeritorious cases, then there are certain obvious steps it can take. The first is clearly warning the Claimant in advance that the employer will be make a costs application, and the likely amount of the costs that will be incurred. Secondly, if there is any issue about the Claimant’s behaviour being dishonest, that should be brought to the Tribunal’s attention within the Tribunal documentation and evidence should be brought forward on that point.
If there is to be a claim for costs based on the unreasonable behaviour of a Claimant, it is important careful notes are made at the time of the way that the Claimant is conducting the case so that this behaviour can be brought to the attention of the Employment Judge.
A further option for NHS employers, frustrated by unmeritorious claims, is to make an application compelling a Claimant to pay a deposit as a condition of being allowed to continue with proceedings on the basis that the claim has little or reasonable prospect of success. The amount that the Tribunal can order by way of a deposit rose from April 2012 to £1,000.
NHS employers need not feel helpless in the face of unjustified claims, and may find a more ready ear will be given to costs applications provided that the appropriate preparatory steps have been taken to pave the way. What may eventually have more effect in discouraging ET claims against the NHS is the introduction of fees on the issuing of claims, which will be compulsory from 2013. Although the fees will be refundable if the claim succeeds’ having to pay a three figure sum to bring a claim may cause employees to pause for thought, even though the fees will be refunded if they succeed in the claim.