Adams v Kingdom Services Group Ltd

An Employment Tribunal may make a deposit order only where it has a proper evidential basis for considering that the relevant allegation has little reasonable prospect of success. The order must be set at an amount which takes proper account of the paying party’s means and remains realistically capable of compliance.

The duty under rule 39(3) of the Employment Tribunal Rules of Procedure to give reasons for making a deposit order includes reasons for the particular sum required. A tribunal must explain how it assessed the party’s ability to pay. An unexplained amount may amount to a material error of law and require the deposit order, and any consequent strike-out for non-payment, to be set aside.

The Claimant, who lacked the ordinary qualifying period for unfair dismissal, alleged that he had been automatically unfairly dismissed under section 104 of the Employment Rights Act 1996 after asserting a right to take annual leave.

The Employment Tribunal reinstated that claim after an earlier strike-out, but made a deposit order. On reconsideration it reduced the deposit from £900 to £300. The Claimant did not pay, and his unfair-dismissal claim was struck out. He appealed. The Respondent cross-appealed, contending that the claim should instead have been struck out as having no reasonable prospect of success.

The central issues were whether a deposit order was justified, whether adequate reasons had been given for its amount, and whether the Notice of Appeal could be amended to challenge the operative reconsidered order.

1. Appeal allowed; cross-appeal dismissed. The Employment Tribunal was entitled to refuse strike-out and to make a deposit order. Taken at its highest, the Claimant’s case was that, before the dismissal email, he told his manager that requiring him to work during authorised leave breached his right to take that holiday. It could not be said that this allegation, or the contention that it was the principal reason for dismissal later that day, had no reasonable prospect of success.

2. The Tribunal had a proper evidential basis for considering that the claim had little reasonable prospect of success. The Claimant’s own ET1 and the dismissal email identified performance, communication, a warning, and an already scheduled hearing before he made the alleged protected assertion. Those matters could legitimately cause doubt whether the protected allegation was the reason or principal reason for dismissal.

3. However, the Tribunal gave no reasons for fixing either £900 or, on reconsideration, £300. Rule 39(3) of the Employment Tribunal Rules of Procedure requires reasons both for making a deposit order and for the amount selected. This is particularly necessary where the evidence showed only about £30 to £40 monthly income after living expenses. The reasons did not disclose the Tribunal’s assessment of means or why the required sum could realistically be paid within the stipulated period.

4. That omission was a material error of law. The operative £300 deposit order and the consequential strike-out for non-payment were set aside. By agreement, the EAT exercised the discretion afresh. A £25 deposit, payable within 28 days, was likely to be affordable and would not impede access to justice; the rule 39(5) costs warning remained the principal protection for the Respondent.

5. In the exceptional circumstances, the Claimant could amend his Notice of Appeal to challenge the later, operative order. A reconsidered order with materially different terms is not ordinarily brought within an appeal against the original order; a fresh appeal or amendment is required.

• Employment Appeal Tribunal: Allowed the Claimant’s appeal, dismissed the Respondent’s cross-appeal, set aside the operative deposit order and consequential strike-out, and substituted a £25 deposit order.
• Employment Tribunal, Birmingham: Reinstated the section 104 unfair-dismissal claim, made a £900 deposit order, later varied it on reconsideration to £300, and struck out the claim when that sum was not paid.