In what circumstances can an employment tribunal order one of the parties to pay the legal costs of the other party?

The general position for employment tribunal claims is that each party pays its own legal costs. However, employment tribunals can make awards for costs where a party, or their representative, has acted "vexatiously, abusively, disruptively, or otherwise unreasonably" or if the claim is "misconceived". This could be, for example, where a party has failed to comply with tribunal orders, behaved badly at the hearing or brought what is obviously a hopeless case. Costs can also be awarded where a party has caused unnecessary adjournments or postponements through poor preparation.

Costs are awarded only in a small percentage of cases and the full costs of the "receiving party" are rarely awarded. When considering a costs order, the tribunal may have regard to the party's ability to pay.

As an alternative to a costs order, a "preparation time order" can be made in favour of a party that is not legally represented and has therefore not incurred legal costs. A "wasted costs order" can be made against a representative (rather than the claimant or employer) if the other party has incurred unnecessary costs due to the "improper, unreasonable or negligent act or omission" of that representative.