In July 2017, the Supreme Court held that the legislation which previously required employees to pay for submitting an employment claim, was unlawful. Since that time claimants do not have to pay any fees to lodge a case at an employment tribunal or to attend a final hearing, but there are other costs involved.
This guide covers:
What are the main costs of taking a case to employment tribunal?
The law used to be straightforward enough that employees would often represent themselves. But it has become increasingly complex and most people will choose legal representation to guide them expertly through the process, and to represent their interests in the tribunal.
So, when considering taking your employer to tribunal, you will have to take into account legal fees. It is very rare for any employment law practice to offer a ‘no-win no-fee’ payment agreement for a case that is going to tribunal.
As mentioned in our guide to employment tribunals and settlement agreements, if you are a member of a trade union or have legal expenses insurance (which is often an option add-on to a home insurance policy), this may cover your legal costs. Otherwise, you need to check out fees and funding options with an employment law specialist solicitor who has a strong track record of representing employees in employment tribunal cases (like Monaco Solicitors).
Who pays the legal costs associated with an employment tribunal claim?
Traditionally, in the civil court’s jurisdiction the rules regarding legal costs are that the losing party pays the winner’s legal costs. Different rules have always applied in the employment tribunal where there is generally a no-cost regime so that each party pays for their own lawyers, win, lose or draw.
This has generally helped with an individual’s right and ability to access justice, as there is no worry about having to find potentially tens of thousands of pounds to pay for the employer’s expensive solicitors and QCs if the claim is unsuccessful.
Unfortunately over the years, case-law has established that tribunals are more minded to award costs against the losing party if the conduct of the party was unreasonable, vexatious and/or misconceived. This can happen if the claim brought had no reasonable prospect of success or if a party fails to comply with tribunal’s orders or directions.
Also, this can happen if a reasonable settlement offer is made and is not accepted and later the claim is unsuccessful. This is explored in more detail below. Claimants are more likely to have costs awarded against them than respondents.
Without prejudice ‘save as to costs’ – what does it mean?
If you’ve read our articles on without prejudice letters and without prejudice meetings, you’ll understand the meaning of the phrase, and so now we can introduce you to the term ‘save as to costs’ which can be used as an extension to the rule. This term is often used in settlement offer letters from the employer to the employee, but employees can, and should, use this too.
The ‘‘without prejudice save as to costs’ means that you cannot show it to a tribunal during the proceedings but it might be relevant at the end of the case if there is an application for legal costs to be paid.
This often happens when there are offers made to settle and then the employee loses their case at tribunal or gets awarded less than their original offer. The employer would argue that the whole hearing could have been avoided had the employee accepted the offer, so the costs associated with the main hearing could have also been avoided (ie. the cost of preparing witness statements and the barrister’s fees for the hearing). This can be a significant amount. But this rule works both ways – see below for more information.
Can an employee use the rule ‘without prejudice save as to costs’?
Employees can also make use of this rule to put forward a proposal to settle the case and, if not accepted, this will support their own application for legal costs if successful (or mitigate against the employer’s cost application).
For example, the employer offers £2,500 to settle on claim worth £15,000. The employee makes an offer of £8,000 to settle ‘without prejudice save as to costs’ (just over 50% of the value of the case). The claim is successful and the employee is awarded her damages in full. Her barrister asks for the costs of trial preparation and attendance at the tribunal to be paid by the employer, as the whole hearing could have been avoided had the employer accepted the £8,000 offer made months before.
Without prejudice tactics
Without prejudice save as to costs letters are usually tactical and advice should be sought on the best approach – a strategically written without prejudice letter will put pressure on the opponent to consider settlement at an earlier stage, particularly if they take into account how they might be perceived by a judge if they do not engage in settlement discussions.
Similarly, if the prospects of a case are low then this can protect the party from having to pay the other side’s costs if they make a low and strategic offer. So, if the fortunes of the parties in the example above were reversed, and the employer wins and the employee loses, an offer £8,000 might not save the employee from an adverse costs order whereas an offer of £3,000 might.
Ultimately, the award of costs is at the discretion of the employment tribunal judge so it is worth being aware to these issues when embarking on a claim in the tribunal.
- Correspondence marked ‘without prejudice’ can only be shown to the court if both parties agree.
- Correspondence marked ‘without prejudice save as to costs’ can be referred to by all parties when tribunal proceedings have been concluded in order for the court to assess cost applications.
- So when a communication is marked as ‘without prejudice save as to costs’ it remains between the employer and the employee (and their legal representatives) but only until the case has come to a conclusion.
See our Templates on Tribunal Claim ET1 Forms for some good examples of completed claim forms. You might also find helpful the related guides below.