23 August 2012 #Employment
It has recently been reported that Rolls Royce spent £300,000 defending claims of sex discrimination from a former employee who was suing the company for £135,000. Rolls Royce was successful in its defence with the claims being emphatically dismissed by the employment tribunal judge.
Despite this, Rolls Royce only managed to recover around 3% of its costs from the claimant, the judge only being able to award maximum costs of £10,000 in accordance with the limit on cost awards imposed by tribunal rules.
Cost orders whereby the unsuccessful party is made to pay the successful party`s costs are typically quite rare in employment tribunals, unlike in the civil courts where such orders are commonplace and expected. In an employment tribunal cost orders can only be made in limited circumstances, very much at the tribunal’s discretion and where the paying party’s ability to pay may be taken into account. Such circumstances include where the employment judge is of the opinion that a party has acted vexatiously, abusively, disruptively, or otherwise unreasonably in bringing or conducting their claim.
Therefore, whilst the present case highlights the expense that can be incurred in defending these kinds of claims and the unfairness that can result from the current cost order limit, it also demonstrates willingness on the part of the tribunal to award costs where it considers it reasonable to do so.
As part of its reform of the tribunal process, the Government has increased the limit on cost orders made in tribunal to £20,000 for those cases issued after 6 April 2012, however even this does not appear to come close to reflecting the true cost of defending claims such as that incurred in the present case.
A tribunal does have the power to order that costs be assessed by the county court which could result in a higher cost order being made, as no limit applies there plus a county court has no discretion to take ability to pay into account. Such orders are extremely rare and, in this case, Rolls Royce decided to accept the £10,000.