Tribunal costs awards will take account of ability to pay

The government has announced that it is to amend the law to make it clear that tribunals can take account of an individual's ability to pay when making costs awards (these are orders that one side should pay the other side's legal costs).

The change comes after a controversial tribunal ruling earlier this year. Dr Kovacs had been employed by Queen Mary & Westfield College and claimed that she had been unfairly dismissed. She also took a discrimination claim against both the college and The Royal Hospitals NHS Trust. A tribunal found that her claim against the Trust was vexatious and made a costs award against her amounting to £62,000. Kovacs took her case to the Employment Appeal Tribunal (EAT) arguing that she did not have the financial resources to pay such a large sum but her claim was rejected. The EAT ruled that the inability of an individual to pay was not a defence to a costs award.

Had this ruling survived unchallenged it would have acted as a serious deterrent to applicants taking tribunal claims. It meant that even if someone was unemployed and had no income or other financial support they could still face an enormous financial debt.

* Kovacs v Queen Mary & Westfield College [2002] Industrial Relations Law Reports 414