May 21, 2015

Costs award appropriate despite inability to pay

The Tribunal took into account that the Claimant’s conduct was unreasonable in inventing the discrimination because this considerably expanded the size of the case and the costs which had to be born by the Respondent in defending it. At the time the Claimant had a few hundred pounds’ worth of debt and was 39 years old. The Tribunal took into account her current ability to pay, which was nil, set against her age and the likelihood (given her age) of obtaining alternative employment, meaning her financial position would improve in the future. It also referred to divorce proceedings having a positive impact on her future finances. After the Claimant’s request for the Tribunal to reconsider its Order failed she appealed to the EAT who dismissed her appeal.

The EAT considered that it was evident the principle reason for the Tribunal’s decision was that her financial position was likely to improve in the future and the award was not made based on her ability to pay now, but to be able to do so at a later date. Her divorce proceedings were not the only basis for the decision and the EAT considered that the Tribunal was entitled to come to the conclusion it did based on the Claimant’s ability to secure future employment. The fact that the Claimant had, on appeal, increased the level of her debt to a few thousand pounds made no difference. The EAT held that the Tribunal was not obliged to consider her means at all although, having decided to do so, it needed to act judicially in exercising its discretion. However the EAT did comment that, when assessing the individual’s ability to pay, this does not have to be by reference to their ability to pay at the time the Order is made but can be at a time in the future.

This is an interesting decision evidencing the thought process of the Employment Tribunal and is encouraging to employers who face the prospect of considerable costs in defending spurious claims such as this one. It is certainly not futile to apply for costs where employers succeed.

This legal update is provided for general information purposes only and should not be applied to specific circumstances without prior consultation with us.

For further details on any of the issues covered in this update please contact Gemma Ospedale, Partner in Employment on 020 7583 2222.

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