CIPD: Tribunals can now order deposits for any part of a claim with ‘little prospect of success’. Tribunals can order employees or employers to pay a deposit into the court where it looks like the claim, or the employer’s defence, has little prospect of success. When deciding whether to make a deposit order, and how much that order should be for, a judge also has to consider the claimant’s, or respondent’s ability to pay (for claimants, this would include salary, other sources of income and financial commitments such as mortgages).
In the case of Wright v Nipponkoa Insurance, the Employment Appeal Tribunal (EAT) had to consider the effect of the new employment tribunal rules on deposit orders.
Wright was employed by Nipponkoa as a marine underwriter. He brought tribunal claims for race discrimination and whistleblowing. At a preliminary hearing, it emerged that Wright’s claim was made up of 11 individual allegations.
The employment judge decided that seven of these allegations had little reasonable prospect of success, giving him the option of ordering Wright to pay a deposit to continue with them. The judge took into account Wright’s ability to pay, including his salary of £58,000 and that he was due a bonus of 5 per cent at the end of the year. He also had a mortgage on his property. The judge decided that he was “not a man without means”.
Under the old 2004 tribunal rules, only one deposit order of up to £1,000 could be made in respect of a claim or an employer’s response to it. However, under the new rules, a tribunal can make an order of up to £1,000 in respect of ‘any specific allegation or argument in a claim or response’.
The tribunal judge in this case considered that, in principle, he could award a maximum deposit order of £7,000 (£1,000 for each of the seven allegations). However, taking into account the claimant’s means, the judge decided this figure was not appropriate and instead ordered Wright to pay a deposit of £2,100 (£300 per allegation) to continue with those aspects of his claim. Wright appealed.
The Employment Appeal Tribunal agreed with the tribunal judge, noting that tribunals have a broad discretion in deciding whether to make deposit orders and also the financial level of them. They can consider not only whether the claim can be proven legally, but also whether the facts can be established.
The EAT said that tribunals should look at the total sum they intend to order to check it is proportionate. In this case, the judge had looked at the individual’s means, and the level of the order was appropriate.
This case is a confirmation that from now on, we could see deposit orders for sums significantly more than £1,000. There is still little guidance on what exactly amounts to ‘little reasonable prospect of success’ – but it is clear that tribunals have a wide discretion, and are likely to make use of it.
When defending a claim, given that a deposit order can be made on each allegation, it is worth employers taking time to separate out individual allegations and considering an application for deposit orders on each of them. Employers should also bear in mind that a deposit order can be made for a defence where a tribunal considers the arguments have little reasonable prospect of success.