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Record expenses awarded in employment tribunal claim

Employment Law & HR
BG Purple

A company chairman has been awarded record costs of £100,000 in an Employment Tribunal claim brought by a former managing director who was dismissed from her £90,000-a-year job on the grounds of poor performance.

The former employee sued on the basis of sex HR and victimisation and claimed that she had been subject to degrading and offensive treatment at the hands of her former employer, including being likened to a ‘sexy nurse’.  

The claimant’s case was thrown out by the Employment Tribunal and she was found liable for a massive £100,000 worth of expenses, a significant increase on the previous record of £67,000. Such high awards against claimants are extremely unusual and the normal rule is that each side bears the burden of their own legal costs. However, expenses may be awarded where one side has acted “vexatiously, abusively, disruptively or otherwise unreasonably”, although these expenses are usually limited to £10,000. In this case the Tribunal found that the claimant had used the legal action as a bargaining chip in order to gain a financial settlement.  As the allegations had been made in bad faith and could not be proved, Mrs Smith’s exposure to costs skyrocketed.  

Any employer who has been in the unfortunate position of paying extensive legal costs to defend an entirely unmeritorious claim from an employee will no doubt welcome the decision of the Tribunal in this case. Given that there is currently no charge to raise a claim in the Employment Tribunal it is possible that an increase in the award of expenses by Employment Judges would discourage employees from raising vexatious claims. While this could be an effective tool in the Tribunal’s arsenal in the war against tightening budgets and rising claim numbers, Judges continue to be reluctant to award expenses against unsuccessful parties.  While employers might take heart from this respondent’s extraordinary success, it must be borne in mind that, according to the latest statistics for 2010/11, expenses were awarded in a tiny minority of only 355 of a total 218,000 employment claims brought to Tribunal.

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