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Costs in the Employment Tribunal

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Can an employment tribunal make a costs award in relation to a period of time even when the Claimants have a Damages Based Agreement (setting their costs at 10% of an award)?

Yes, held the EAT, in Swissport Limited v Exley & Others.

The Claimants worked for Servisair on their luggage services at Manchester Airport. When Servisair lost the contract to Swissport, they alleged that their employment transferred under the TUPE. Swissport claimed there had been no transfer; if there was then the Claimants had been fairly dismissed for an economic, technical or organisational reason, and that they would have been dismissed in any event under a fair process (Polkey). When Swissport acquired Servisair, they agreed that TUPE applied.

The employment tribunal upheld the claims, and a group of the Claimants applied for costs against Swissport on the basis that the various defences had no reasonable prospect of success. The employment tribunal awarded costs from the date the Response was submitted to the date of the hearing. Swissport appealed on the basis that the 'period' costs award was inappropriate as the Claimants had entered into Damages Based Agreements, and their costs were set at 10% of the amount of compensation awarded.

The EAT rejected the appeal. The Claimant's liability for costs would always be 10% of the award, and Swissport's success or failure on the various issues had no effect on the amount of costs they were obliged to pay. However, the EAT held that:

(1) it was wrong to attribute the Claimant's liability for costs across the entirety of the proceedings. An award over a period of time would be in the employment tribunal's discretion.

(2) whether there had been reasonable grounds for a Response was to be judged on all the information available to the employment tribunal at the time of the costs decision, rather than what the Respondent reasonably knew at the time the Response was submitted.

Thanks to James English of Hempsons solicitors for preparing this case summary