Peat & Ors v Birmingham City Council

An Employment Tribunal may find unreasonable conduct under rule 40(3) where a represented party continues a costly claim after a reasoned costs warning without properly engaging with the material point raised. The respondent need not prove that the claim had no reasonable prospect of success.

In assessing dismissal fairness, post-dismissal events are ordinarily irrelevant. They may be considered where they bear upon the employer’s real reason for dismissal through a qualifying appeal process. An appeal against job evaluation was not, on the facts, an appeal against dismissal and did not fall within that exception.

Ten test claimants, representative of approximately 300 employees, brought unfair-dismissal claims after Birmingham City Council dismissed and re-engaged them on new terms to implement a Single Status Agreement. The claims centred on whether individual consultation was required despite extensive collective consultation.

After the claims failed, the Birmingham Employment Tribunal made costs orders under rules 40(2) and 40(3) of the Employment Tribunals Rules of Procedure 2004. It held that the claimants had acted unreasonably by continuing after a costs warning letter, and that their contention that post-termination events were relevant was misconceived.

The claimants appealed the costs order. The central questions were whether their conduct was unreasonable and whether a job-evaluation appeal made post-dismissal events relevant to fairness.

1. Appeal dismissed. The Employment Tribunal made no error of law and its exercise of discretion to award costs should not be disturbed.

2. Under rules 40(2) and 40(3) of the Employment Tribunals Rules of Procedure 2004, the Tribunal was entitled to find unreasonable conduct. The costs warning identified, on a reasoned basis, that the extensive collective consultation was central to whether individual consultation was necessary. The claimants’ solicitors did not engage with that point and treated collective consultation as immaterial. A proper engagement would probably have shown that any prospect of success was too slight to justify continuing the hearing.

3. It was unnecessary to establish that the claims were misconceived or doomed to fail. The costs award for unreasonable conduct rested on the failure to reassess the merits after the warning. The Tribunal was also entitled, having upheld that basis, not to decide the alternative allegation that the whole claim was misconceived.

4. The Tribunal correctly treated post-dismissal matters as irrelevant on the facts. Devis v Atkins establishes that conduct unrelated to the employer’s real reason cannot affect dismissal fairness. Under West Midlands Co-Operative Society v Tipton, post-dismissal material may be relevant where an appeal process gives the employer an opportunity to consider evidence bearing on the strength of that real reason.

5. The job-evaluation appeal had a different purpose and consequence from an appeal against dismissal. It did not challenge the dismissal, could be pursued by employees who accepted the new contract, and could not affect continued employment. There was therefore no sufficient nexus to make it part of the dismissal process or to engage the Tipton exception. Advancing the contrary contention was misconceived, and the separate costs order was neither perverse nor inadequately reasoned.

• Employment Appeal Tribunal: Dismissed the appeal and upheld the costs order: [2012] UKEAT 0503_11_1004.
• Employment Tribunal: Birmingham Employment Tribunal, chaired by Employment Judge Goodier, upheld the respondent’s costs application in a judgment promulgated on 20 May 2011. Citation not stated in the judgment.