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Employers must remember to take tribunal fees into account when seeking settlement

23 April 2015 #Employment

In a recent employment tribunal case, the claimants were represented by UNISON appointed solicitors in a claim against three respondents for alleged failure to consult under TUPE. When their claim form was submitted, the claimants' solicitor paid the £1,000 issue fee. The claimants each entered into a loan agreement with UNISON to advance a sum to them equal to the tribunal fees. This was repayable in the event that their claim, or part of it, succeeded in the tribunal.

The claimants’ solicitors attempted to reach settlement both before incurring the issue fee and also after incurring the fee. As no settlement was reached as the hearing approached (the third respondent was not then prepared to make any offer), the claimants’ solicitor incurred the hearing fee of £1,900. The second and third respondents then offered six weeks’ gross pay per claimant but without any offer on fees. This was later increased to a final offer of eight weeks gross pay, but still with no offer in respect of fees.

No settlement was reached. The claimants’ claim succeeded but the awards made were less than the  offers made by the respondents. The third respondent sought costs against the claimants for having refused the settlement offers. The claimants, in turn, sought costs against the respondent in respect of the tribunal fees incurred.

Claimants get costs

Despite the fact that the claimants received a lower award than the amount offered in settlement, the claimants' application for costs succeeded. The tribunal ordered the third respondent to pay 75% of the total fees, and the second respondent to pay 25%. The third respondent's application for costs was refused.

The tribunal considered that there was no good reason why the claimants should not recover the tribunal fees paid by them, noting that an order of this type is not dependent on any unreasonable conduct from the losing party. The tribunal rejected the argument that the claimants had acted unreasonably in refusing the respondents' final offer for settlement. Although the claimants may have been overly optimistic as to the award they would receive, that did not mean they were acting unreasonably. There would always be an element of uncertainty as to the exact award that the tribunal would make.

Importantly, the fact that the third respondent made no offer of settlement until after the fees had already been paid, and then refused to offer an additional amount in respect of those fees, was also relevant in determining that the claimants had not acted unreasonably.

As the fees were paid by the union on the basis of a loan arrangement, The tribunal considered that the claimants' solicitor was acting as the claimants’ agent in making the payments, and that the fees could, therefore, be regarded as "paid by" the claimants.

The EAT in a case last year held that claimants cannot recover fees which have been paid for by their union. However, the facts in this case were different because of the loan arrangement.

Lesson learned  

By making a late offer of settlement, after fees had been incurred and not including tribunal fees in the offers made, the respondents prejudiced their own application for costs. The case shows that employers in this situation who are trying to encourage claimants to settle (and where the claimants may be unrealistic in the negotiations)  must take into account tribunal fees and be conscious of when the claimants will have to pay them. (Legge and others v Prestige Homecare Ltd (in administration) and others ET/2401324/14)

Clarkslegal, specialist Employment lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Employment matter please contact Clarkslegal's employment team by email at by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.
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