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Little reasonable prospects of paying up? The problem with deposit orders.

KB
BY Kirstie Beattie
Employment law

A recent EAT case confirmed that the tribunal has a duty to consider the means of the party against whom it imposes a deposit order before deciding on the amount of the deposit. The tribunal must also give reasons for making the deposit order.

Employers facing an employment tribunal claim have a number of options to try to resolve it without the need for a hearing, the most common method of doing so being settlement. However, if the claim seems particularly weak, the Respondent may apply to have it struck out on the basis it has no reasonable prospects of success. Tribunals are understandably reluctant to strike out claims without hearing evidence on their merits. Therefore, an alternative approach might be to seek a deposit order under Rule 39 of the Employment Tribunal Rules of Procedure 2013. This provides that where a claim (or part thereof) has little (as opposed to “no”) reasonable prospects of success, the party advancing the claim may be required to pay a deposit of up to £1,000 as a condition of continuing to advance it. If the party fails to pay the deposit on time, the claim or the part of the claim to which the deposit relates will be struck out. The same applies in the reverse situation where the respondent to a claim advances a weak defence.

 

In Adams v Kingdom Services Group Ltd, the claimant was ordered to pay a deposit of £900, latterly reduced to £300, despite the fact that his monthly disposable income was just £30-£40. Upon appeal, the EAT held that the tribunal's duty to give reasons under Rule 39(3) includes not only the reasons for making the order but also for the amount to be paid. Even if this were not the meaning of rule 39(3), a tribunal must provide adequate reasons as a matter of general principle. In the case of a deposit order, that means explaining how a party’s means have been taken into account in fixing the amount. The EAT set the deposit amount at £25, this being an amount which the claimant would be able to raise within 28 days and would not be so great as to impede his access to justice.

 

Whilst the amount of the deposit may be low, obtaining the order can be a useful tactic to help the claimant reflect on their prospects of success and think carefully about continuing to pursue their claim.

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