Employment tribunal costs orders are rare, and the tribunal starts from the position that each side pays its own legal bills whatever the outcome. An order shifting costs from one party to the other is only made when conduct or the strength of the case crosses specific thresholds set out in the Employment Tribunal Procedure Rules 2024, which took effect on 6 January 2025.1legislation.gov.uk. The Employment Tribunal Procedure Rules 2024 In the 2023/24 reporting year, only 192 costs awards were made across all employment tribunal cases, with a median award of just £3,000.
The Default: No Costs Follow the Event
Unlike the civil courts, where a losing party routinely pays the winner’s legal fees, the employment tribunal assumes nobody owes anyone else for their legal costs. You can bring a claim for unfair dismissal, discrimination, or unpaid wages and lose without owing a penny toward the other side’s solicitor bills. The same protection applies to respondent employers who successfully defend a claim.
This default keeps the tribunal accessible. Most claimants are individuals taking on employers with far deeper pockets, and if losing always meant paying the employer’s legal team, few workers would risk enforcing their rights. Costs orders are the exception, and a judge will only consider one when something has gone genuinely wrong with how a party ran their case.
When the Tribunal Can Make a Costs Order
Under Rule 74 of the 2024 Procedure Rules, the tribunal can make a costs order or preparation time order when a party or their representative has acted vexatiously, abusively, disruptively, or otherwise unreasonably in bringing or conducting proceedings. The tribunal must also consider making an order where a claim or response had no reasonable prospect of success.2legislation.gov.uk. The Employment Tribunal Procedure Rules 2024 – Part 13
“Unreasonable conduct” is where most costs arguments land. It can include ignoring tribunal directions, failing to disclose documents on time, pursuing allegations that have already been struck out, or continuing a claim after receiving clear evidence that the legal position is hopeless. The bar is high. Simply losing your case, even badly, is not unreasonable conduct. The tribunal asks whether the conduct fell below what a reasonable litigant would do in the same circumstances.
The “no reasonable prospect of success” ground targets claims or defences that were fundamentally flawed from the start. A discrimination claim with no evidence that the protected characteristic played any role, or a response that amounts to bare denial without any factual basis, can fall into this category. The tribunal assesses prospects as they stood when the claim was brought or continued, not with the benefit of hindsight after a full hearing.
Vexatious or Abusive Conduct
Vexatious conduct goes beyond poor judgment. It implies that proceedings were brought or continued primarily to harass, annoy, or burden the other side rather than to resolve a genuine dispute. Filing repeated claims on the same facts after earlier claims have been dismissed is a classic example. Abusive conduct covers behaviour such as unfounded personal attacks in witness statements or deliberately misleading the tribunal about material facts.
Warnings Along the Way
A party who has been warned that their case is weak and presses on regardless faces a much higher risk. Warnings come in several forms: a deposit order from the tribunal, a formal unless order threatening strike-out for non-compliance, or a detailed letter from the other side setting out why the claim cannot succeed. None of these guarantees a costs order, but ignoring them makes it much harder to argue that continuing was reasonable.
Deposit Orders and Costs Risk
Before a case reaches a full hearing, the tribunal can make a deposit order under Rule 39 if it concludes that a particular claim, response, or allegation has “little reasonable prospect of success.” This is a lower bar than the strike-out test of “no reasonable prospect.” The deposit can be set at up to £1,000, and the amount is calibrated to the party’s ability to pay.
Deposit orders work as an early warning. If you pay the deposit, proceed to a hearing, and lose on the point the deposit covered, two things happen: you forfeit the deposit, and you face an elevated risk of a costs order. The tribunal treats the deposit order as strong evidence that continuing was unreasonable unless you can show that new material emerged after the order was made. If you cannot pay the deposit within the time allowed, the relevant claim or response is struck out entirely.
Types of Award
The 2024 rules maintain three distinct financial awards, each aimed at a different situation. You cannot receive more than one type for the same proceedings, so the form of representation determines which category applies.
- Costs orders are available when the receiving party was legally represented by a solicitor, barrister, or other professional adviser. The order reimburses fees actually charged.
- Preparation time orders are available to parties who represented themselves. These compensate for time spent preparing the case, calculated by multiplying assessed hours by a fixed hourly rate set in the rules. The rate increases by £1 each year.2legislation.gov.uk. The Employment Tribunal Procedure Rules 2024 – Part 13
- Wasted costs orders target the legal representative personally, not the client. They apply when a representative’s improper, unreasonable, or negligent conduct caused unnecessary costs for the other side. The representative must be given a reasonable opportunity to respond before any order is made, and their client must be notified in writing.3legislation.gov.uk. The Employment Tribunal Procedure Rules 2024 – Rule 80
The bar on combining a costs order with a preparation time order prevents double recovery. If you started the case representing yourself and instructed a solicitor midway through, the tribunal will decide which type is appropriate based on how the case was conducted overall.
How the Amount Is Worked Out
Once the tribunal decides a costs order is justified, it has two routes for calculating the amount. Which route applies depends on the size and complexity of the claim.
Summary Assessment
For straightforward cases, the judge fixes the amount at the hearing itself. Under Rule 76(1)(a) of the 2024 rules, a summary assessment is capped at £20,000.4legislation.gov.uk. The Employment Tribunal Procedure Rules 2024 – Rule 76 The judge reviews the schedule of costs, considers whether the hours and rates are reasonable, and sets a figure on the spot. This is the faster and cheaper option for both sides.
Detailed Assessment
When costs exceed £20,000 or the billing is complicated, the tribunal can order a detailed assessment. In England and Wales, the matter goes to a county court for a line-by-line audit under the Civil Procedure Rules, or the tribunal itself applies the same principles. In Scotland, the equivalent process is taxation by the auditor of court. There is no cap on a detailed assessment, so the final amount can be substantially higher than £20,000.4legislation.gov.uk. The Employment Tribunal Procedure Rules 2024 – Rule 76
Agreed Amounts
The parties can agree the amount between themselves, and the tribunal will make an order in that figure. This avoids both assessment routes and is more common than people expect, particularly when liability for costs is clear and both sides want to draw a line under the case.
Ability to Pay
The tribunal has discretion to consider the paying party’s financial resources before setting the final amount. This is not a mandatory step. The rules say the tribunal “may have regard to” ability to pay, not that it must.5legislation.gov.uk. The Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013 – Costs Orders, Preparation Time Orders and Wasted Costs Orders In practice, most tribunals do take financial circumstances into account, especially when the paying party is an individual rather than a corporate employer.
If you are asked to pay costs and lack the means, put evidence of your financial position before the tribunal: payslips, bank statements, benefit entitlement letters, and details of debts and outgoings. Evidence of genuine hardship often leads to a reduced figure. A party who is unemployed or on state benefits may see the order scaled back considerably. That said, the tribunal is not required to reduce the order to a nominal amount simply because money is tight. It balances your circumstances against the other side’s right to recover costs that should never have been incurred.
How to Apply for a Costs Order
You can apply for a costs order at any point during proceedings, but the deadline is 28 days after the date on which the judgment finally determining the case was sent to the parties.6legislation.gov.uk. The Employment Tribunal Procedure Rules 2024 – Rule 75 Miss that window and you lose the right to apply. The tribunal can also make a costs order on its own initiative, though this is uncommon.
Your application should set out the specific grounds you rely on, tied to the conduct or prospects thresholds in Rule 74. Attach a detailed schedule of costs showing the work done, hours spent, and rates charged. Vague assertions that the other side behaved badly will not be enough. The other party must have a reasonable opportunity to respond, and the tribunal may list a separate hearing to deal with the application if the issues are complex.
Appealing a Costs Order
A costs order can be appealed to the Employment Appeal Tribunal, but only on a point of law.7GOV.UK. Appeal to the Employment Appeal Tribunal (EAT) – Overview You cannot appeal simply because you disagree with the amount or think the judge weighed the factors incorrectly. Viable grounds include the tribunal applying the wrong legal test, failing to give adequate reasons, or ignoring relevant evidence about ability to pay. The notice of appeal must generally be filed within 42 days of the date the written reasons for the costs order were sent to you.
Appeals against costs orders succeed occasionally, but the EAT gives considerable deference to the original tribunal’s assessment. If the tribunal identified the correct legal framework, considered the right factors, and explained its reasoning, the EAT is unlikely to intervene even if a different judge might have reached a different figure. The strongest grounds tend to involve procedural unfairness, such as a party not being given a proper opportunity to make representations on costs before the order was made.