Calderbank offer

Employment tribunals don't use the formal cost-shifting offers you might have heard of from civil court claims. A Calderbank offer is the quieter, more limited tool tribunals actually work with.

Is a Calderbank offer the same as a Part 36 offer?

No. CPR Part 36 offers, used in ordinary civil litigation, carry formal and largely automatic costs consequences if they are not beaten at trial. The Employment Appeal Tribunal has confirmed that the Part 36 regime has no place in Employment Tribunal procedure. A Calderbank offer is more modest: it is simply evidence the tribunal can consider, among other factors, when deciding whether to make a costs order — not a mechanism that triggers automatic consequences on its own.

Does rejecting a Calderbank offer and losing automatically mean I pay costs?

No. Costs orders in the Employment Tribunal remain the exception, not the rule. The tribunal must first find that one of the grounds in the costs rules is met — typically that a party, or their representative, has acted vexatiously, abusively, disruptively or otherwise unreasonably in how the proceedings were conducted, or that a claim or response had no reasonable prospect of success. Only once that threshold is met can a rejected Calderbank offer be weighed as one discretionary factor in deciding whether, and how much, to award.

How do I make sure a Calderbank offer can actually be used on costs?

Mark it clearly as being made "without prejudice save as to costs." An offer letter that does not carry this label risks being treated as an ordinary without-prejudice communication, which cannot be referred to at all, including at the costs stage — tribunals have found against parties who tried to rely on an unmarked offer for exactly this reason.

If the other side rejects my Calderbank offer and then does worse at the hearing, is that always unreasonable?

Not necessarily. The tribunal looks at the context of the offer and the rejection, not simple arithmetic. An offer that bundled financial terms with other conditions — an apology, a reference, a non-disclosure term — may be reasonably rejected even if the financial figure in it exceeds what was eventually awarded, because the rejecting party was not simply turning down money.

Who can make a Calderbank offer — only the respondent, or also the claimant?

Either party can make one. A claimant might make a Calderbank offer to settle for a figure below their maximum potential award, to protect their position on costs if the respondent later contests the claim unreasonably; a respondent might make one to protect their position if the claimant pursues a weak claim to a hearing and loses.

A costs tool built around a rule the Employment Tribunal doesn't have

In ordinary civil litigation, a CPR Part 36 offer carries automatic costs consequences if the party who rejected it fails to do better at trial — it is a formal, rule-based mechanism designed to pressure early settlement. Employment tribunals do not have an equivalent rule. The Employment Appeal Tribunal confirmed this directly in Kopel v Safeway Stores, holding that the Part 36 regime has no place in tribunal procedure.

Into that gap steps the Calderbank offer, named after the 1976 family law case Calderbank v Calderbank. The device is simple: a party writes to the other side with a settlement offer, marks the letter “without prejudice save as to costs,” and keeps a copy. During the case, the offer cannot be mentioned to the tribunal — that is the ordinary without-prejudice protection, which exists so that settlement negotiations do not prejudice a party at the substantive hearing. Once the tribunal has decided the claim and moves on to the separate question of costs, the offer can then be disclosed and relied on.

What a Calderbank offer does not do is create an automatic costs consequence. Costs in the Employment Tribunal are famously the exception, not the rule, and remain governed by Rule 74 of the Employment Tribunal Procedure Rules 2024 (SI 2024/1155) — the renumbered successor to rule 76 of the earlier 2013 Rules, which many older judgments and practitioner materials still refer to by the old number. A tribunal must first find that a party, or their representative, acted vexatiously, abusively, disruptively or otherwise unreasonably, or that a claim or response had no reasonable prospect of success. Only once that threshold is crossed does a rejected Calderbank offer come into play, as one discretionary factor among others — not as a trigger in its own right.

Tribunals have also made clear that beating or failing to beat the figure in a Calderbank offer is not simple arithmetic. In Raggett v John Lewis, the EAT confirmed a rejected offer is weighed in context, and in Yakap v DA Baillie, a tribunal found a rejection reasonable precisely because the offer bundled non-financial terms with the money on the table, making a straight comparison to the final award misleading.

A respondent believes a claimant's unfair dismissal claim is weak but not hopeless. Six weeks before the final hearing, it sends a letter marked “without prejudice save as to costs,” offering £3,000 to settle. The claimant rejects it and proceeds to a full hearing, where the tribunal finds the dismissal was fair and dismisses the claim entirely.

£3,000, marked without prejudice save as to costs

Claim dismissed — claimant recovers nothing

Automatic costs consequence?

No — none exists in ET procedure

What the respondent must still show

That the claimant acted unreasonably in pursuing the claim, with the rejected offer as supporting evidence

The respondent cannot simply point to the gap between £3,000 and nothing and claim costs. It must still satisfy the tribunal that the claimant's conduct in pursuing or continuing the claim met the Rule 74 threshold — for example, that continuing after receiving clear evidence the claim was weak was unreasonable — and the rejected offer is then one piece of evidence supporting that argument, not the whole case for it.

Settlement agreement

Employment Tribunal Procedure Rules 2024, Rule 74

Employment tribunal procedure rules

Costs in the employment tribunal

Calderbank Offer — Employment Tribunal Glossary

What a Calderbank offer is, how it differs from a CPR Part 36 offer, and how rejecting one can affect costs in an Employment Tribunal claim.