We will in due course see the effects of the changes to the costs regime in the Employment Tribunal, following the review by Mr Justice Underhill, which is due to come into force this summer. Whilst cases on this issue will take a while to filter through, the aim was to simplify the rules on costs and allow the ET to assess costs up to £20,000 without referring the matter to the County Court for assessment.
There is also speculation amongst practitioners that the use of costs awards will increase further as we have already seen a rise in their use before the ET. The ET statistics still only show costs are awarded in 1% of cases but there was a 25% rise in the number of costs awards made in the year 2011-2012 over the previous year.
The EAT has also recently considered whether a Tribunal rightly awarded costs against a Claimant on an indemnity basis and whether a cap should have been imposed on the award in the case of Howman v Queen Elizabeth Hopsital Kings Lynn UKEAT/0509/12. In this case, the EAT held that only rarely should an ET award costs on an indemnity basis to be assessed by the County Court. Nevertheless, the EAT did not interfere with the ET’s decision to award indemnity costs but remitted the case back to the ET as the ET had not sufficiently considered the Claimant’s ability to pay the award. Costs in the case were around £43,000. The Tribunal should have borne in mind the general rule that it is not appropriate to make a costs order that cannot be complied with and it should have considered whether to order that he pay a percentage of the costs, whether the costs should exclude part of the hearing or whether the award should be capped.
It will be interesting to see if the current year will buck the trend or whether costs orders will continue to rise year on year in the ET.