CIPD: “Reimbursement rules do not apply where employees’ legal fees are paid. The Employment Appeal Tribunal has made a significant decision on employment tribunal fees in a recent case called Goldwater v Sellafield.If an appeal to the EAT is successful, the general expectation is that those making the appeal (here, the employees) will be entitled to recover any fees they have paid from the respondent to the appeal (in this case, Sellafield) if that respondent actively tried to resist the appeal (EAT rule 34A(2A). The EAT would make a costs order against the respondent which would include fees “incurred by or on behalf of a party … in relation to the proceedings”. Almost identical rules apply in employment tribunals.
The claims and the appeal in this case were supported by the GMB trade union which paid the fees necessary to take the claim to the tribunal and the appeal to the EAT. A provision in the GMB’s rulebook indicated that its members did not have to pay any legal costs, provided they followed the union’s rules.
Following a successful appeal to the EAT, the employees’ representatives applied for a costs order for the sum of £1,600 (covering the £400 fee to issue the claim and a £1,200 hearing fee). The employer raised a number of points against the EAT making a costs order. The EAT employment judge accepted some the respondent’s arguments but indicated that he would, nevertheless, have been inclined to exercise his discretion to make a costs order in favour of the employees in this case, especially since the employment tribunal had been in error in the first instance and the claimants had to bring the appeal to a hearing in order to correct that error. He was also persuaded by the matter being potentially financially important for the claimants; that both sides were represented; and there were no other factors pointing against making an order.
Significantly, however, the employer also argued that no award could be made under Rule 34, as the fees were not paid by the employees but by their trade union.
The EAT agreed. The judge held that a successful appellant can only recover the fees for issuing an EAT appeal or for a hearing from the respondent if the fee was actually paid by the appellant. So if, as here, a union pays an EAT appeal fee for its members, no order for reimbursement can be made against the employer under that rule.
The EAT judge seems to have considered it significant that there was, in this case, no obligation on the employees to reimburse or indemnify the union in respect of the fees the union had paid out, suggesting that employees may still be able to argue that a fee has been ‘paid by’ them if it has been paid on their behalf by someone whom they have to pay back.
The approach taken by the EAT in this case will also apply to costs orders in employment tribunals.
Naeema Choudry is a partner at Eversheds