Facing an employment tribunal is stressful enough without the added worry of who pays the legal bill at the end. Unlike the civil courts, tribunals generally expect each side to…
Facing an employment tribunal is stressful enough without the added worry of who pays the legal bill at the end. Unlike the civil courts, tribunals generally expect each side to cover their own costs, win or lose. A costs award employment tribunal decision is the exception rather than the rule, made only in specific circumstances, such as when a party has acted unreasonably, brought a hopeless claim, or breached tribunal orders.
Understanding how these awards work matters for anyone involved in a claim, whether you are an employee pursuing unfair treatment or an employer defending your position. A costs order can run into thousands of pounds, and in some cases tens of thousands, shifting the financial stakes of the case considerably. Knowing when tribunals are likely to make an award, how they calculate the sum, and how to protect yourself against one can influence every strategic decision you make, from the wording of your claim to whether you accept a settlement offer.
What Is costs award employment tribunal?
A costs award in the employment tribunal is an order requiring one party to pay some or all of the legal costs incurred by the other party during proceedings. Unlike the civil courts, where the losing side typically pays the winner's costs, employment tribunals operate on a fundamentally different principle: each party usually bears their own costs, regardless of the outcome. Costs awards are the exception, not the rule.
The tribunal's power to make a costs order is set out in the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013. An award may be considered when a party (or their representative) has acted vexatiously, abusively, disruptively, or otherwise unreasonably in bringing or conducting the proceedings, or where a claim or response had no reasonable prospect of success. It can also arise where a party has breached an order or postponed a hearing at short notice without good reason.
The scope of what can be recovered varies. The tribunal can order costs up to £20,000 without a detailed assessment, or refer the matter for detailed assessment in the County Court for larger sums. Awards may cover legal representation fees, witness expenses, and preparation time orders where a party is unrepresented.
For claimants and respondents alike, understanding when costs might be awarded is critical. The threshold is deliberately high to protect access to justice, but pursuing a hopeless case or behaving unreasonably during litigation carries genuine financial risk that should never be underestimated.
Key Benefits of costs award employment tribunal
When you've been dragged through months of tribunal proceedings, the financial toll can feel almost as damaging as the dispute itself. A costs award employment tribunal decision offers a rare but powerful remedy - one that shifts the burden back onto the party whose conduct made the litigation unnecessarily painful, prolonged, or unreasonable.
The most obvious advantage is financial recovery. Legal fees, expert reports, and disbursements add up quickly, and a successful application can reimburse a substantial portion of what you've spent defending or pursuing your claim. For claimants on modest incomes and small employers watching every pound, that recovery isn't just useful - it can be the difference between accepting a bad outcome and seeing the matter through.
Beyond the money, costs awards serve as a genuine deterrent. Parties who might otherwise pursue weak arguments, refuse reasonable settlement offers, or behave obstructively during proceedings think twice when they know a tribunal has the power to hold them financially accountable. This encourages earlier, more sensible negotiation and often prevents disputes from escalating unnecessarily.
There's also a strong element of vindication. Tribunals rarely award costs, so when they do, it sends a clear signal about which party acted reasonably and which did not. That finding can matter enormously - professionally, personally, and in any future reference to the case.
Costs awards also promote fairness in an inherently unequal system. Employers usually have deeper pockets and in-house legal support, while employees often self-fund or rely on limited representation. The prospect of recovering costs helps level that playing field, giving individuals more confidence to challenge unfair treatment.
Finally, the process encourages procedural discipline. Knowing that unreasonable conduct - misleading evidence, missed deadlines, aggressive tactics - carries real financial consequences keeps both sides focused on the merits, not the theatrics.
How costs award employment tribunal Works
Unlike the civil courts, employment tribunals operate on the principle that each party bears its own legal costs, regardless of who wins. A costs award employment tribunal decision is the exception, not the rule, and understanding the process can help you prepare if you're on either side of an application.
Step 1: Grounds must exist. Under Rule 76 of the Employment Tribunal Rules, a tribunal may consider costs where a party (or their representative) has acted vexatiously, abusively, disruptively, or unreasonably in bringing or conducting proceedings. Costs can also arise where a claim or response had no reasonable prospect of success, or where a hearing has been postponed at a party's request.
Step 2: An application is made. Either party can apply for costs, usually at the end of the hearing or within 28 days of the judgment being sent. The application should identify the specific conduct complained of and the amount sought.
Step 3: The tribunal considers whether to make an award. This is a two-stage test. First, the tribunal decides whether the threshold conduct has occurred. Even if it has, the tribunal retains discretion - it is not obliged to award costs. Warnings issued earlier in the proceedings (such as a costs warning letter) often carry significant weight here.
Step 4: Assessing the amount. Tribunals can order costs in three ways: a specified sum up to £20,000, an amount agreed between the parties, or the whole sum subject to detailed assessment in the County Court. The paying party's ability to pay may be taken into account, though it doesn't have to be.
Step 5: Enforcement. Once made, a costs order is enforceable like any court judgment. If unpaid, the receiving party can pursue enforcement through the County Court, including charging orders or attachment of earnings.
Common Questions About costs award employment tribunal
When can a costs award employment tribunal order actually be made?
Costs orders remain relatively rare. A tribunal may make one where a party (or their representative) has acted vexatiously, abusively, disruptively, or otherwise unreasonably in bringing or conducting proceedings, or where a claim or response had no reasonable prospect of success. Failing to comply with tribunal orders or unreasonable rejection of a settlement offer can also trigger consideration.
How much can be awarded?
A tribunal can order costs up to £20,000 without a detailed assessment. Larger sums are possible, but these must go to the County Court for detailed assessment. Tribunals may also order a specified sum, agree an amount between parties, or assess costs summarily.
Does the tribunal consider ability to pay?
Yes, it can. The tribunal has discretion to take a party's means into account, though it is not obliged to. If you're worried about a potential order, be prepared to provide evidence of your financial position, including income, outgoings and any dependants.
Can I claim costs if I represented myself?
You can apply for a preparation time order instead, which compensates for time spent working on the case at a set hourly rate (currently £47). You cannot receive both a costs order and a preparation time order in the same proceedings.
How long do I have to apply?
Applications must be made within 28 days of the judgment being sent to the parties, or the date proceedings were withdrawn or dismissed.
Conclusion
Costs awards in the employment tribunal remain the exception rather than the rule. Unlike civil courts, tribunals only order costs where a party has acted unreasonably, vexatiously, or brought a claim with no reasonable prospect of success. That threshold is deliberately high, protecting genuine claimants while giving tribunals teeth against those who abuse the process.
The key points to hold onto: costs are discretionary, conduct throughout the proceedings matters, and ability to pay can be taken into account. Preparation and proportionate behaviour go a long way. Ignoring a reasonable settlement offer, pursuing hopeless arguments, or misleading the tribunal can all shift the financial risk onto you.
If you are facing a potential costs application, or considering making one, do not wait until the hearing looms. Speak to a specialist employment solicitor early. Timely advice can protect your position, strengthen your case, and help you avoid costly missteps.
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