Costs in the Employment Tribunal: how rare rule 76 orders really are, and what actually triggers them

The myth that cuts both ways

In the ordinary civil courts, costs follow the event: the loser contributes to the winner’s legal bill. The employment tribunal is built differently. As the Court of Appeal put it in Barnsley Metropolitan Borough Council v Yerrakalva, the tribunal’s power to order costs is more sparingly exercised and more circumscribed than that of the ordinary courts: costs orders are the exception rather than the rule, and in most cases no order for costs is made at all. Each side ordinarily bears its own costs, win or lose.

The shorthand — “there are no costs in the tribunal” — is where the trouble starts. Claimants over-fear the power: a costs-warning letter can feel like a reason to abandon a strong claim, when in law it is nothing of the sort. Respondents over-threaten it, and an overblown threat tends to collapse on contact with the tribunal. The truth is narrower than either version of the myth: the power is real, it is used, and it has a defined shape.

What the 2024 Rules actually say

The Employment Tribunal Procedure Rules 2024 came into force on 6 January 2025, replacing the procedure rules that had sat in Schedules 1 to 3 of the 2013 Regulations. Under the 2013 Rules the gateway to a costs order was rule 76; in the 2024 Rules it has moved to rule 74, and rule 76 now deals with the amount. Costs live in Part 13, which provides for three orders. A costs order compensates a party for costs incurred while represented by a legal or lay representative; a preparation time order compensates an unrepresented party for time spent working on the case; the two cannot both be made in favour of the same party in the same proceedings. The third, a wasted costs order, is made against a representative personally — not the party — where costs have been wasted by the representative’s improper, unreasonable or negligent act or omission.

The gateway, rule 74(2), obliges the tribunal to consider making an order where a party, or its representative, has acted vexatiously, abusively, disruptively or otherwise unreasonably in bringing or conducting the proceedings; where any claim, response or reply had no reasonable prospect of success; or where a hearing was postponed or adjourned on a party’s application made less than seven days before the hearing. Rule 74(3) adds a power to order costs where a party has breached any order, rule or practice direction, or where a hearing has been postponed or adjourned. There is one mandatory scenario too: in unfair dismissal proceedings where reinstatement or re-engagement is sought and a postponement is caused by the respondent’s failure to adduce evidence of job availability, rule 74(4) says the tribunal must order the respondent to pay the resulting costs.

The thresholds in practice: jurisdiction, then discretion

Passing the rule 74 gateway is only the first stage. In Yerrakalva the Court of Appeal described the exercise as looking at the whole picture of what happened in the case: the tribunal must identify the conduct, what was unreasonable about it, and what effects it had, before deciding whether to exercise its discretion at all. Unreasonable conduct gives the tribunal jurisdiction; it does not oblige it to make any order, still less an order for everything the other side has spent.

The tribunal found the claimant untruthful on matters material to her claim — plainly unreasonable conduct — but it had also criticised the council for overdone, disproportionate defence work and failed to factor that into its discretion. The Court of Appeal cut the order from 100 per cent of the council’s costs to 50 per cent of one phase only. The discretion is real, and the other side’s conduct is part of the picture too.

One further point: the President of Employment Tribunals publishes guidance on practice and procedure, but the current list of practice directions and presidential guidance — updated as recently as September 2026 — contains nothing devoted to costs. Practice here is led by the rule text and the decided cases, not by a presidential playbook.

How much can be ordered

Where the tribunal orders costs, rule 76 gives three routes to the figure: a specified amount of up to £20,000 decided by the tribunal itself; the whole or a specified part of the receiving party’s costs, sent for detailed assessment on county court principles (or assessed by the tribunal applying the same principles); or an agreed amount. Only the first route is capped — assessed and agreed amounts can exceed £20,000, which is why a serious costs application should never be waved through.

For unrepresented parties the preparation time order works on a fixed hourly rate: £44 an hour under the rules as made, rising by £1 each 6 April, which makes £46 an hour for preparation time spent in the year beginning 6 April 2026. The tribunal assesses the hours, weighing the time actually spent against what it considers reasonable and proportionate.

Two protections matter to litigants in person. First, under rule 82 the tribunal may have regard to the paying party’s ability to pay, both in deciding whether to make an order and in fixing the amount — so accurate evidence of means is not an admission but a legitimate part of the argument. Second, under rule 75 an application can be made at any stage up to 28 days after the judgment finally determining the proceedings is sent to the parties, and the tribunal must not make an order unless the party against whom it would be made has had a reasonable opportunity to make representations. A costs order is not something a tribunal can spring on you without a chance to answer.

How rare is rare? What the statistics can and cannot say

Scale first. In the most recent published quarter, April to June 2026, the employment tribunal received 14,000 single claims and disposed of 6,100, and the open single-claim caseload reached 70,000 — the highest in the published time series, up 51 per cent on the same period a year earlier. Against volumes like that, even a few hundred costs orders a year would be a rounding error.

But an honest article has to say what the official series no longer says. The annual tables recording representation and the compensation and costs awarded by the tribunal have been suspended since the tribunal migrated to a new case-management system, and the most recent annual data published, for 2023/24, covered only cases on the legacy system. There is currently no official, complete count of costs orders made each year; treat any precise percentage you see quoted — in either direction — with caution.

What can be said responsibly is this: the rules confine the power to specified circumstances, and the Court of Appeal calls the orders the exception rather than the rule. The statistical gap matters because it is the space in which both versions of the myth flourish.

What actually triggers orders

The grounds in the rule cluster around the same families of conduct: pressing on when a claim, response or reply has no reasonable prospect of success; vexatious, abusive, disruptive or otherwise unreasonable conduct in bringing or running the case; breaches of orders; and very late applications to postpone. Untruthful evidence on a matter material to the case is the decided-case exemplar of unreasonable conduct founding the tribunal’s jurisdiction. Each is a choice made in the litigation — the power is a discipline on behaviour, not a tax on losing.

There is also an early-warning mechanism built into the rules. Under rule 40, where the tribunal considers at a preliminary hearing that a specific allegation or argument has little reasonable prospect of success, it may order the party advancing it to pay a deposit of up to £1,000 as a condition of continuing — after making reasonable enquiries into that party’s ability to pay. A deposit order is not a costs order, but it is the clearest signal that a point is in difficulty — and if the tribunal then decides the point against the depositor for substantially the reasons given in the order, the depositor must be treated as having acted unreasonably in pursuing it for the purposes of rule 74, unless the contrary is shown.

Staying on the right side of rule 74

Almost everything the tribunal punishes under rule 74 is visible in the correspondence file long before a costs application.

The same discipline answers the over-anxious claimant. If you have complied with orders, kept your evidence straight and reassessed as the case developed, you have a real answer to a costs threat: the other side must still establish a rule 74 ground and then win the discretion. The merits matter. But in costs, conduct is the merits.