Employment Tribunal Costs

Employers use costs threats to frighten claimants into withdrawing. The truth: costs orders are made in fewer than 1% of tribunal cases (MOJ Tribunal Statistics, 2024).

What is the difference between costs and wasted costs?

Costs cover a party's legal costs (solicitor, barrister fees). Wasted costs are costs incurred by the other side as a result of a party's unnecessary conduct—these can only be awarded against a representative (lawyer), not the party themselves.

Can I get costs ordered against me if I'm on benefits?

The tribunal can consider your means (ability to pay) when deciding whether to order costs against you. Being on benefits, having limited savings, or being unemployed are factors that may influence the judge's decision. They won't order costs you genuinely cannot pay, though they may order a smaller sum.

What is a deposit order and how does it work?

If your claim or defence has little reasonable prospect of success, the judge can order you to pay a deposit (up to £1,000) as a condition of continuing. If you lose the relevant issue at the hearing, the deposit is forfeited and you become liable for the other side's costs on that issue.

Can my employer apply for costs during the hearing if I'm losing?

No. Costs applications are not decided on the day based on the outcome. Your employer must make a formal costs application in advance (usually at case management), or argue it should be reserved to the remedy hearing. If the tribunal thinks costs might be relevant, it will give you notice.

What if my employer threatens costs to pressure me into withdrawing?

Do not panic. If you believe your claim has reasonable prospects of success, continuing to prepare and conduct your case reasonably is your best defence. Costs are rarely awarded. A costs threat alone is not a reason to withdraw—seek legal advice before making this decision.

When can I get costs ordered against my employer?

You can only get costs if your employer has acted vexatiously, abusively, or unreasonably in defending the claim. Simply winning your case is not enough. You must show unreasonable conduct—for example, making false statements knowingly, refusing to negotiate when settlement was possible, or pursuing hopeless applications.

What is the hourly rate for preparation time orders (PTOs)?

The current rate is £43 per hour (adjusted annually). A PTO is an alternative to costs and covers an unrepresented party's own time spent preparing the case. The same unreasonableness threshold applies—your conduct must have been unreasonable for a PTO to be awarded.

Employment Tribunal Costs

of cases result in costs orders (MOJ, 2024)

maximum without assessment

What are tribunal costs?

Unlike civil courts, employment tribunals do NOT have a loser-pays default. Each side normally pays their own costs. Costs can only be awarded in specific circumstances under Rule 76 of the Employment Tribunal Rules of Procedure 2013.

This means that even if you lose your case, you will not automatically have to pay your employer's legal fees. You are only at risk of costs if you have behaved unreasonably.

When Costs CAN Be Ordered (Rule 76)

1. Vexatious, abusive, disruptive or unreasonable conduct

A party has acted in this way in bringing or conducting the proceedings. This requires evidence of genuinely unreasonable behaviour, not just losing a case.

2. No reasonable prospect of success

A claim or response had no reasonable prospect of succeeding at the time it was brought or lodged. The party must have known, or ought to have known, this at the outset.

3. Breach of an order or practice direction

A party has breached an order made by the tribunal or a practice direction, causing unreasonable conduct.

4. Late postponement application

A postponement application is made late, without proper reason, causing unnecessary delay or expense.

Costs Against Claimants

If you are a claimant (the person bringing the case), the employer must show unreasonable conduct. Simply having a case that fails is not enough.

The tribunal will consider factors such as whether your claim had any reasonable prospect of success when brought, whether you have continued to pursue a claim you knew to be hopeless, whether you have made false statements to the tribunal, and whether you have ignored tribunal orders.

The tribunal can also take your financial means into account. If you are on a low income, unemployed, or receiving benefits, the judge may decide not to order costs against you, even if there has been unreasonable conduct, because you cannot afford to pay them.

If your claim (or part of it) has little reasonable prospect of success, the tribunal can order you to pay a deposit as a condition of being allowed to continue.

Deposit orders are usually made at case management stage and the amount is normally up to £1,000 (though it can be less). If you pay the deposit and continue with your case, and then lose on that issue at the hearing, the deposit is forfeited. You then become liable for the employer's costs on that issue.

If you refuse to pay the deposit, your claim (or that part of it) is struck out and you cannot proceed. You can appeal a deposit order, and you can request it be refunded if circumstances change.

Preparation Time Orders (PTOs)

PTOs are an alternative to costs and are available to unrepresented parties (ie. those not represented by a lawyer).

A PTO covers the unrepresented party's own preparation time at a fixed hourly rate (currently £43 per hour). This can include time spent gathering evidence, preparing documents, and preparing for the hearing.

PTOs are subject to the same unreasonableness threshold as costs orders. Your conduct must have been unreasonable for a PTO to be awarded. If you are represented by a lawyer, your lawyer is the one who can face costs or wasted costs orders, not you directly.

How to Respond to a Costs Threat Letter

If your employer's solicitor writes threatening costs, do not panic. This is a common intimidation tactic. Here's what to do:

Costs are rarely awarded in practice.

Respond in writing noting that you believe your claim has reasonable prospects of success and that you will continue to conduct the case reasonably and in compliance with all tribunal orders.

Keep preparing your case professionally. Gather evidence, comply with deadlines, and respond to requests proportionately.

Keep conduct impeccable.

At all stages of the tribunal process—in correspondence, at meetings, and at the hearing—conduct yourself professionally and reasonably. Do not make false statements, ignore orders, or become aggressive.

If costs are genuinely a concern, take legal advice from a solicitor or free employment law clinic. Many offer free consultations.

Frequently Asked Questions

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Employment Rights Act 1996

GOV.UK Employment Tribunals