Keighley v Age UK Leeds

For costs under Rule 76(1)(b), no reasonable prospect of success is a high threshold. The tribunal must assess the overall picture known at the outset, without hindsight. A claim’s ultimate failure does not establish that threshold.

Where protected disclosures, the decision-maker’s knowledge and close timing give an arguable causal case, those matters must be weighed against the employer’s competing explanation before awarding costs from the outset.

Under Rule 39(5), where an allegation fails for substantially the reasons given in a deposit order, continued pursuit is presumed unreasonable unless the paying party shows otherwise. A tribunal may infer that the presumption was not rebutted from the deposit-order reasons, subsequent case-management steps and a costs warning.

The claimant, a support worker dismissed during probation, brought claims for automatic unfair dismissal for making protected disclosures and for notice pay. The Employment Tribunal found that she had made one protected disclosure, assumed a second in her favour, and found that the dismissing manager knew of at least one. It nevertheless held that performance and conduct concerns were the reason for dismissal.

The Employment Tribunal dismissed the claims and ordered the claimant to pay all the respondent’s costs. It held both that the claims had had no reasonable prospect of success from the outset and, alternatively, that the claimant had acted unreasonably after the due date for a deposit order.

The appeal concerned whether those two costs bases were lawfully available and the proper temporal scope of any costs order.

1. Appeal allowed in part. The Employment Tribunal erred in awarding the respondent’s costs from the outset under Rule 76(1)(b) of the Employment Tribunals Rules of Procedure 2013.

2. The question under Rule 76(1)(b) was whether the unfair-dismissal claim had no reasonable prospect of success at the outset, not whether it ultimately failed. That is a very high threshold. At the discretionary stage, what the claimant knew or ought reasonably to have known about the prospects at that time was highly relevant.

3. The claimant knew of substantial performance and conduct concerns. She also knew, or should have known, that she had to establish that protected disclosures were the reason or principal reason for dismissal. However, the tribunal had found or assumed that she made protected disclosures, that the dismissing manager knew of them, and that dismissal followed shortly afterwards. The causal issue therefore required assessment of the competing explanations. The Employment Tribunal did not sufficiently weigh the factors supporting an arguable claim against the respondent’s evidence of other reasons. It could not properly conclude that the claim had no reasonable prospect of success from the outset.

4. The alternative costs basis under Rule 39(5) was sound. The claim failed for substantially the reasons stated in the deposit order. The claimant was therefore presumed to have acted unreasonably in continuing it unless she showed otherwise. Although the Employment Tribunal’s reasoning was compressed, it had regard to the deposit-order reasons, the narrowed claim, the respondent’s case and the costs-warning letter. It was entitled to infer that the presumption had not been rebutted.

5. The order for all costs of £9,365.20 was quashed and replaced with an order for costs incurred from 31 July 2018, when the deposit fell due. The matter was remitted to the Employment Tribunal solely to determine that amount.

• Employment Appeal Tribunal: Allowed the appeal in part. It set aside the award of costs from the outset, upheld the alternative award of costs from 31 July 2018, and remitted assessment of that sum to the Employment Tribunal.

• Employment Tribunal: Dismissed the claimant’s protected-disclosure unfair-dismissal and notice-pay claims. It ordered her to pay the respondent’s full costs, relying both on Rule 76 and, alternatively, Rule 39(5) of the Employment Tribunals Rules of Procedure 2013.