Record breaking costs awarded by Tribunal

A hotel group has recently been awarded costs of £432,001.85 after multiple claims brought against them by an ex-employee were dismissed. This is thought to be a record costs award – as you might expect the facts of the case are pretty unusual, although it did involve covert recordings, something which we are seeing increasingly frequently (see our previous article here).

Background on costs

It is the exception rather than the rule for an Employment Tribunal to award costs. A Tribunal may make a costs order and must consider whether to do so, where it finds that:

• A party or their representative has acted vexatiously, abusively, disruptively, or otherwise unreasonably in the bringing or conducting of the proceedings, or a part of them; or
• Any claim made in the proceedings by a party had no reasonable prospect of success.

However, even when costs are awarded, the award often only amounts to a small percentage of the overall costs incurred, generally due to the requirement to take into account the other party’s means and ability to pay. Many employers therefore decide for purely commercial reasons to settle claims that may have little merit, so as to save themselves the cost, time, and burden of Employment Tribunal proceedings.

The case

Tan v Copthorne Hotels was dealt with in 2018 by an Employment Tribunal who dismissed Mr Tan’s claims of unfair dismissal, age discrimination, race discrimination, sex discrimination, victimisation, harassment, whistleblowing detriment and unfair deduction from wages, following a redundancy process.

During the proceedings it became clear that Mr Tan had covertly recorded hundreds of hours’ worth of calls with colleagues, and even with the psychiatrist whom his employer had instructed to prepare a report about him. The transcripts of those calls, along with records of various WhatsApp chats and all the other evidence in the case meant that over 3,000 pages of documents were in the bundle before the Tribunal during a 7 day hearing.

The Tribunal found that Mr Tan’s dismissal on the grounds of redundancy had been fair, but it was made clear that even if they had not done so, they would have found that Mr Tan’s “duplicitous and underhand conduct” in taking covert recordings to collect evidence for the purpose of proceedings would have eroded any trust and confidence between the parties and would have led to his dismissal in any event.

Mr Tan’s claim for discriminatory pay was described as “speculative” and he was found to have embarked on a “fishing expedition” by introducing 17 comparators with nothing to indicate the basis upon which these individuals’ pay was more than his because of race or sexual orientation. He was also said to have been using a “scattergun approach” in referring to every possible claim he could think of to strengthen his position within the redundancy exercise.

Costs Assessment

A detailed costs assessment hearing took place in August and September 2020, leading to the judgment that Mr Tan should pay £432,001.85 in costs to his former employer. It is worth adding that at the preliminary hearing, Mr Tan had been required to pay a deposit order for some of his claims, which is an order made when an Employment Judge considers that any particular allegation or argument in a claim or response has little reasonable prospect of success. He had also been given opportunities to withdraw some of his claims, but had persisted nonetheless.

Conclusion

Whilst costs orders in Employment Tribunal proceedings remain very rare, this case is a reminder that Tribunals are prepared to make them where someone pursues a case with little or no prospect of success. The award of costs in this case may serve as a deterrent to disgruntled ex-employees who seek to bring weak claims and with Employment Tribunals having an extensive backlog of cases, we may see a robust approach on costs being taken.

Although many employers understandably choose to settle claims for commercial reasons, this is a good example of an employer deciding not to accept a set of serious claims made against them and ultimately having that decision vindicated. We know that deciding on how to deal with an Employment Tribunal claim can be challenging for employers and our team can provide you with advice on your options and the best course of action to follow.