Employment tribunals operate under a very different costs regime to civil courts. For solicitors accustomed to the principle that the losing party pays, the employment tribunal system requires a significant shift in expectations, both for you and your clients.

Understanding when a costs award can be made, what orders are available, and how legal costs are assessed is essential for managing risk, settling realistic expectations, and protecting your firm’s position.

Are Costs in Employment Tribunal Proceedings Awarded Automatically?

No. Unlike civil litigation, where costs generally follow the event, costs in the employment tribunal are not awarded as a matter of course. A tribunal will only make an order where specific conditions are met.

This principle exists to ensure that claimants are not deterred from bringing genuine claims – including unfair dismissal claims – simply by the risk of having to meet the other side’s legal fees if they lose.

When Can a Costs Order Be Made?

The circumstances in which costs in employment tribunal proceedings can be awarded are set out in the Employment Tribunal Rules 2013. Under Rule 76, a costs order or a preparation time order may be made where a party, or their legal representative, has acted vexatiously, abusively, disruptively or otherwise unreasonably in either the bringing of the proceedings or the way they have been conducted.

Beyond unreasonable conduct, a costs award may also follow where:

• A claim or response had no reasonable prospect of success at the point it was brought or pursued
• A party has been in breach of any order or practice direction made by the tribunal
• A hearing has been postponed or adjourned on the application of a party, and it is just to make an order in those circumstances

It is important to note that simply losing a case does not, in itself, amount to unreasonable conduct. The tribunal will look at how the proceedings were conducted overall.

Types of Costs Orders in Employment Proceedings

There are three principal orders available

Costs Order – A costs order requires one party to pay another’s legal costs. It is available where the receiving party has been legally represented. The tribunal can order a specific sum up to £20,000 without requiring a detailed assessment in the county court where the sum is higher, or the tribunal considers it appropriate.

Preparation Time Order (PTO) – Where a party has not been legally represented, the tribunal may make a preparation time order instead. A PTO compensates for the time spent on preparation rather than actual legal fees incurred. The hourly rate applied is a fixed amount set by the Secretary of State and updated annually – it is not the hourly rate the party would otherwise charge or claim.

A tribunal cannot make both a costs order and a preparation time order in favour of the same party within the same proceedings.

Wasted Costs Order – A wasted costs order is tribunal-ordered costs directed against a legal representative personally. These arise where the conduct of the representative – rather than the party themselves – has caused unnecessary costs to be incurred. They are relatively uncommon but carry serious professional and financial implications.

Ability to Pay: A Key Consideration

When deciding whether to make an order and how much to award, the tribunal must have regard to the paying party’s ability to pay. This is a meaningful difference from civil proceedings, where ability to pay at the costs stage is rarely a central consideration.

Even where unreasonable conduct is clearly established, a tribunal may reduce or decline to make an award if it considers the paying party genuinely cannot meet it.

What Solicitors Should Consider

Costs in employment proceedings should never be an afterthought. If the opposing party is acting in a way that could be characterised as unreasonable – pursuing a claim with no reasonable prospect of success, for example, or repeatedly breaching tribunal orders – it is worth maintaining a clear record from an early stage.

Equally, keeping your own client’s conduct proportionate and compliant reduces the risk of a costs application being made against them.

Where a detailed assessment of costs becomes necessary following a tribunal order, instructing a specialist costs draftsman at the right time will significantly affect the outcome.

How Greener Costs Can Help

At Greener Costs, we support law firms across England and Wales with legal costs in both civil and employment proceedings. Whether you need a bill of costs prepared, assistance with a detailed assessment, or guidance on costs strategy in a complex employment matter, our experienced team can help.

We provide clear, upfront rates with no hidden fees and a straightforward instruction process.

Get in touch today at 01204 263047 or email info@greenercosts.co.uk to discuss your requirements.

Frequently Asked Questions

Can you recover legal costs if you win an employment tribunal case? Not automatically. Employment tribunals only award costs in limited circumstances – typically where the other party has acted unreasonably, had no reasonable prospect of success, or has been in breach of a tribunal order. Winning alone is not sufficient.

What is a preparation time order? A preparation time order compensates an unrepresented party for the time spent preparing their case. It is calculated using a prescribed hourly rate set annually by the Secretary of State. A preparation time order cannot be awarded alongside a costs order in favour of the same party.’

Can an employment tribunal make a costs order against a solicitor personally? Yes. A wasted costs order can be made against a legal representative personally where their conduct has caused unnecessary expense. These are distinct from costs orders made against a party and carry significant professional implications.

Is there a cap on costs awards in employment tribunals? Tribunals can award costs up to £20,000 without referring the matter for detailed assessment. Where the sum is greater, a detailed assessment in the county court or the High Court may be required.