Swissport Ltd v Exley

An Employment Tribunal may make a period-based costs order under the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013 where the receiving party is funded by a damages-based agreement. Detailed assessment under the Civil Procedure Rules 1998 and the indemnity principle determine the recoverable amount.

Whether a response had no reasonable prospect of success is assessed at the conclusion of proceedings, using all material then available. The Tribunal may consider whether the defence was reasonably raised and maintained. A Polkey assessment must address the possibility that employment would not have continued indefinitely and the terms on which it might have continued. Future loss cannot be fixed by tariff; each claimant’s circumstances require individual consideration and adequate reasons.

Former Servisair employees brought unfair dismissal claims against Swissport after the loss of an airport ground-handling contract. Swissport initially disputed the application of TUPE, relied on an economic, technical or organisational reason, and advanced a Polkey case. The assignment issue was later conceded, the ordinary unfair dismissal defence was struck out, and the ETO issue was not tried.

The Employment Tribunal found no basis for a Polkey reduction, awarded future loss to several claimants on a two-year basis, and ordered costs from service of the ET3 to the end of the Polkey hearing under rule 76(1)(b) of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013. Swissport appealed against the costs order and the remedy awards.

1. Costs and damages-based agreements. The appeal against the period costs order succeeded only to the extent that costs required reconsideration on remittal. A period order is permissible under rule 78(1)(b) of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013. The process is two-stage: costs are first assessed under Civil Procedure Rules 1998 principles, then limited by the indemnity principle to the amount payable under the damages-based agreement. The absence of the civil-proceedings set-off provision for employment agreements did not prevent such an order. [47]-[51]
2. Reasonable prospects of success. The relevant question under rule 76(1)(b) is retrospective. The Tribunal may consider all evidence and argument available when the costs application is decided, including material from the hearings. It did not err in finding that the assignment and ETO defences had no reasonable prospect of success. The failure to strike out the ETO defence earlier did not determine the later costs question. [64]-[78], [89]-[100]
3. Polkey. The Tribunal erred by treating the absence of a redundancy situation, and the employer’s previous failure to follow fair procedures, as sufficient to dispose of the Polkey defence. It had to consider whether employment would have continued indefinitely and, if not, when and on what terms. That omission affected both the assessment of reasonable prospects and the period of compensation. [101]-[108]
4. Future loss. The Tribunal impermissibly applied a two-year tariff. It failed to explain adequately why the same period was appropriate for claimants with different ages, earnings, employment prospects and personal circumstances. Mr Exley’s award also relied on a factor not advanced by him. The future-loss awards and costs order were set aside and remitted to a differently constituted Employment Tribunal. [111]-[127]

• Employment Appeal Tribunal: The costs order and specified future-loss awards were set aside. The matters were remitted to a differently constituted Employment Tribunal for rehearing and determination.
• Employment Tribunal: The Tribunal ordered costs under rule 76(1)(b) and awarded two years’ future loss to the relevant claimants.