Employees and employers who behave unreasonably during tribunal proceedings can be ordered to pay up to £10,000 as a punishment – even if they ultimately win their case, the Royal Court has ruled.
A recently published judgment has clarified the purpose of new powers granted to the Employment and Discrimination Tribunal last year.
Under rules introduced last year, the tribunal can award costs where a party or their representative has acted “vexatiously, abusively, disruptively or otherwise unreasonably” when bringing or conducting proceedings.
The Royal Court ruling followed an appeal by the States Employment Board against an earlier tribunal decision concerning former employee Erika Francioso.
Both parties had sought costs after the tribunal ruled on Ms Francioso’s unfair dismissal and discrimination claims.
However, the tribunal rejected both applications, describing the new regime as “compensatory and not punitive” and ruling that anyone seeking costs had to show that specific “wasted costs” had been incurred.
Deputy Bailiff Mark Temple found that both conclusions were legally incorrect.
He said the powers were intended to “deter and sanction” unreasonable behaviour, rather than simply compensate whichever party won a case.
The judgment stated: “The tribunal’s power to award costs can be made against a winning party if that party had acted vexatiously, abusively, disruptively or otherwise unreasonably.”
However, the court stressed that costs must genuinely have been incurred and the Tribunal cannot impose a separate fine.
Any award remains capped at £10,000, while the person’s ability to pay – including any compensation they have also been ordered to provide – must be considered.
The Deputy Bailiff said the tribunal should take a “broader view” of costs and consider the seriousness of the behaviour it wished to deter.
It must also scrutinise any schedule of legal costs submitted, although it can ask the parties for further explanations.
Ms Francioso and the States Employment Board reached a settlement covering her appeal against the substantive tribunal decisions and their dispute over costs.
However, the States Employment Board continued its appeal on the interpretation of the costs rules because, as Jersey’s largest employer, it considered the issue to be of “general importance”.
The Royal Court upheld both of its grounds of appeal, but the costs application will not return to the tribunal because that element of the dispute has been settled.
