The Real Cost of a Deposit Order

In the recent Employment Tribunal decision Zigah v St Teresas Catholic Primary School and The Rosary Trust (2023) the claimant was ordered to pay the employer £7,805 after she was unsuccessful in her claims.

The claims that were made were complaints of automatic unfair dismissal, race discrimination and victimisation. The claimant’s dismissal/resignation (which of the two it was was a point of contention) was before the claimant had been employed for two years which is presumably why there was no claim of ordinary unfair dismissal. After the claim had been submitted the employer applied for the claimant’s case to be struck out or, alternatively, for the claimant to be required to pay a deposit order in order to be permitted to continue to argue the case.

Rule 39 of the Employment Tribunal Rules of Procedure 2013 set out that if the tribunal considers that a case has little prospect of success it can order the claimant (or Respondent) to pay up to £1,000 in order to be allowed to continue to argue a case to full trial. If payment is not made then the case is dismissed.

That was the type of order that was made to Ms Zigah at a preliminary hearing. Specifically, if Ms Zigah wished to proceed with her case to a full merits hearing she had to pay a £20 deposit order. At £20 it is not hard to imagine that a claimant would take a view that the price was not insurmountable and that she should ‘roll the dice’ and see whether she would get lucky at trial.

At the end of the trial the tribunal did find serious errors by the employer and had there been a finding that there was a dismissal and had she been employed for two years it is conceivable that there would have been an unfair dismissal finding so it is hard not to feel some sympathy with the claimant and her sense of injustice.

In the event, the employment tribunal found for the employer on all the claims for the same reasons as the deposit order was made in the first place. It is here that the real cost of the deposit order was apparent. The £20 gamble was sorely lost (especially when one considers the employer made a settlement offer of £500 to the claimant on a without prejudice save as to costs basis after the order was made).

After the claim was unsuccessful the employer made an application for a costs order to be made against the claimant of £15,610 because the claimant had acted unreasonably in pursuing the claim to trial and this reflected the costs that the claimant had been put to in defending that case.

Generally, the employment tribunal is a ‘no costs’ jurisdiction meaning that the losing party does not need to pay the legal costs of a successful party. Rule 76 of the 2013 Rules of Procedure provides that the ET may (but does not have to) order the losing party to pay legal costs if it considers that the losing party had no reasonable prospects of succeeding in their case. Rule 39(5) of the Rules of Procedure adds some context to this test by saying that where a party in receipt of a deposit order loses the final case for substantially the same reason as that for which the deposit order is made then the tribunal is required to find that the case had “no reasonable prospect for success” and, therefore the first stage of the test for whether a case is suitable for a costs order is met.

It is that rule that came out to bite the claimant in this case and was the gateway through which the Tribunal found it could impose a £7k+ costs order on a claimant, even though there was an acknowledgement the claimant had been treated unfairly by her employer prior to the termination of her employment.

The decision is just an ordinary employment tribunal decision so has no real precedential value. It is, however, a good case to highlight that the real cost of a party being imposed a deposit order is not necessarily the amount of an order itself but how that order will often (and I would say almost invariably) be followed by an unsuccessful claim at final hearing and being placed at a very real risk of a much more substantial costs risk at the end of the trial.

Paying a £20 deposit order may have seemed a small cost at the time but, in reality, the cost to the claimant was much higher. If there is a deposit order made (and here I mean actually ordered, not just threatened by the other side) that should normally be a red flag to a claimant that perhaps the claims to which the order relates should be discontinued or only proceeded in the light of having received expert advice first.

___

If you have found this post helpful, would you consider donating £3 (or any other amount) to me help cover website fees and keep my head above water. Absolutely no pressure intended though, whether you can or not thanks for reading! Payments can be made at https://ko-fi.com/employmentwrite or by Paypal.

Want to stay updated? 

This blog is specifically for the benefit of trade union reps and members. If you are not a union member then now is a good time to put that right. If you work for central government or a NDPB please join the PCS union today. Otherwise, the TUC offers help selecting the right union to join (although feel free to message me if you’re unsure about what’s best).

If you are among the number of employment law solicitors and paralegals who work in the legal sector following this blog why not join the Legal Sector Workers United (LSWU)?

If you have found  this post or site helpful please think about subscribing to the email list by entering your email address below, liking the blog on Facebook, or following on Twitter @employmentwrite.