This week’s case is a reminder that Employment Tribunals do have the power to award costs.
It is also a reminder that if an Employment Tribunal throws the book at a party to proceedings, the book can be hard, heavy and cause a substantial financial bruise.
The questions posed by this week’s case are:
- In what circumstances can an Employment Tribunal award costs?
- How are costs determined?
In the case of Mr Radia v Jefferies International Limited Mr Radia an equity analyst at a global investment business firm brought 3 claims for disability discrimination, relying on incidents dating back to 2010.
Interesting facts to note:
- The City always seem to enjoy a good legal punch up – many employers based in the City fight discrimination cases.
- It was never disputed by the employer that the Claimant was disabled. Employers often argue points that aren’t worth arguing about, particular whether an employee is disabled. The disability here was leukaemia, a form of cancer.
- The Claimant was offered a fair package to go in 2015, a payment in lieu of notice of £90k and a sum equivalent to an unfair dismissal compensation award. At the meeting he said the package was insufficient as he had disability claims. It is not clear whether the meeting was without prejudice but in any event the Employment Tribunal did not make any adverse findings about the employer based on having a discussion with the employee about an amicable exit. In fact what happened in the meeting was an adverse fact for the employee in the Employment’ Tribunal’s judgment.
- The Claimant’s wife is an Employment Solicitor. At the time of some of the alleged discriminatory incidents in 2010 she was employed by Herbert Smith, who eventually represented the employer. No doubt any advice given was spousal.
- The Claimant brought 3 claims. Some of the claims dated back to 2010.
- Mrs Radia had advised her husband as far back as 2010 that he might have a case of disability discrimination.
- The claims were dismissed by the Employment Tribunal.
- Costs were applied for by the employer at the Employment Tribunal.
- The costs of defending one of the claims was put at £700,000.
- The application for costs was put on three basis:
a. That the Claimant had been found to have lied and exaggerated his evidence on oath. That such conduct is unreasonable.
b. That the Claimant’s claim had no reasonable prospects of success.
c. That the Claimant had acted unreasonably in bringing and persisting with the claim when they had no reasonable prospects. The Claimant had received a costs warning letter which was ignored and which stated that the claim had no reasonable prospects and the Claimant was at risk of costs.
12. The Employment Tribunal accepted the Employer’s submission and awarded costs subject to assessment of all of the employers’ legal costs in defending the claim. The Employment Tribunal did not accept that just because the employee’s legal insurer had accepted that the claim had reasonable prospects that it did in fact have reasonable prospects. Whether an insurer grants indemnity is subject to a prospects test which can only be assessed by the insurer by what the insured tells them. In our experience most legal expenses insurance for employment matters cap the indemnity at between £50,000 and £100,000.00 and that will have been eaten up by the employee’s own legal costs, which means he will have to find a large sum to meet the employer’s assessed costs that he has to pay.
13. The employee appealed to the EAT and the EAT accepted that the costs award was appropriate and there was no legal basis for overturning it.
To answer the questions the takeaway points are:
- Yes an Employment Tribunal can award costs if a Claimant acts unreasonably in bringing or continuing proceedings. In this case the employee had lied in evidence and had exaggerated his own evidence. That amounted to unreasonable conduct. Furthermore the Claimant had no evidence that his disability played a part in the incidents he complained about. The incidents which he complained about were all part and parcel of working in the City where long hours, interrupted holidays and a robust workplace and management style are part and parcel of the culture. Disability played no part in his treatment and there was no evidence that it played a part. On a side note splatter gun litigation which relies on many incidents in our view is unfocused, adds to cost, and hides and obscures any good points. Employment Solicitors should encourage their clients to focus, then focus, again, then re-focus and stick to key, strong points, not try to knit a narrative together based on a string of unrelated incidents.
- In any costs award the Employment Tribunal can take account the financial means of the employee. Here the employee had worked in the City and had means. How much of those means are left, given he has to pay a substantial sum in legal costs for his failed claim against his employer and has High Court litigation ongoing is open to question.