Haydar v Pennine Acute NHS Trust

Under Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013, Rule 76 requires a three-stage approach to costs. First, the tribunal must decide whether the Rule 76 threshold is met. Secondly, it must exercise its broad discretion judicially, considering the whole picture and giving reasons for whether costs are appropriate. Thirdly, if costs are appropriate, it must determine their amount.

The applicant bears the burden of establishing the Rule 76 trigger. Once that jurisdiction exists, it is for the tribunal, not the paying party, to decide whether an order is appropriate in all the circumstances. Relevant matters may include costs warnings, representation, the nature of discrimination or whistleblowing claims, the parties’ conduct, and ability to pay.

The claimant, a doctor dismissed by the respondent NHS Trust, brought wide-ranging Employment Tribunal claims. His unfair-dismissal claim succeeded, subject to a 50% reduction for contributory fault, but his other claims failed. The respondent subsequently sought costs relating both to an earlier unsuccessful strike-out application and to the substantive liability hearing.

The Manchester Employment Tribunal, in a judgment promulgated on 21 July 2016, ordered the claimant to pay 80% of the respondent’s strike-out costs and 60% of its substantive-hearing costs. It found unreasonable or vexatious conduct and claims with no reasonable prospect of success. The claimant appealed, principally contending that the Tribunal had reversed the proper costs stages and wrongly required him to show why costs should not be ordered.

1. Appeal allowed. The costs orders could not stand and the applications were remitted to the same Employment Tribunal.

2. Rule 76 of Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013 involves three distinct stages. The tribunal must first determine whether conduct within Rule 76, or a claim with no reasonable prospect of success, engages the costs jurisdiction. That threshold is necessary but does not make costs automatic. It must then decide, by exercising a broad and unfettered discretion judicially, whether an order is appropriate in all the circumstances. Only then does it determine the amount, under Rule 78.

3. The Tribunal erred by deciding at its paragraph 137 that the claimant had not shown why costs should not be ordered before resolving whether the Rule 76 threshold had been met. It also wrongly placed a burden on the claimant at the discretionary stage. Once the respondent establishes jurisdiction, the tribunal must itself decide whether costs are appropriate; no burden lies on the claimant to demonstrate that they should not be ordered.

4. The correct discretionary exercise requires consideration of the whole picture. It includes the nature and gravity of any unreasonable conduct and its effect on the proceedings and costs. Depending on the facts, relevant matters may include costs warnings or their absence, the nature of discrimination or whistleblowing claims, lack of representation or legal advice, and conduct by the other party affecting the length of the proceedings. A warning is not a precondition to a costs order. Ability to pay may be considered both when deciding whether to order costs and when fixing the amount under Rule 84.

5. The Appeal Tribunal could not be confident that the same result would have followed had the Tribunal adopted that approach. Although it was unnecessary to determine the separate challenge to the strike-out costs, the reasons did not explain why 80% of the costs of the unsuccessful strike-out application should be borne by the claimant. On remission, stage one need not be reopened; the Tribunal must decide at stage two whether to award costs and, if so, in what amount, without imposing a burden on the claimant.

• Employment Appeal Tribunal: Allowed the claimant’s appeal and remitted the respondent’s costs applications to the same Employment Tribunal.
• Manchester Employment Tribunal: In a judgment promulgated on 21 July 2016, ordered the claimant to pay 80% of the respondent’s costs of an earlier strike-out application and 60% of its substantive liability-hearing costs.