Cost of a lie

Introduction

It is a question nearly as old as employment litigation itself: If as an employer, I win at Employment Tribunal will I be able to recover my costs, from the employee who brought the claim against me? As you may be aware the general rule is no. The reason behind this is that when the legislation was set up it was thought that an employee would be put off taking action against the employer if they had liability for not only their own legal case but also that of the employer. But is this now always the case?

The law

Three recent cases have suggested that this hard and fast rule is being eroded in certain circumstances, they are "Daleside Nursing Home v Matthew", "Dunedin Canmore Housing Association v Donaldson" and "Nicholson Highlandwear Ltd v Gordon Nicolson".

Daleside was a case for race discrimination in which the central allegation was found to be untrue. The Employment Appeal Tribunal held that on the finding that the main plank of the claimants case was a lie it followed that their behaviour was unreasonable and costs should be awarded.

In Dunedin the claimant brought a claim for breach of a compromise agreement. The tribunal found that this was indeed untrue but did not award costs. The Employment Appeal Tribunal found that as the claimant had not been either reasonable or honest then costs should be awarded.

Finally in Nicholson Highlandwear one of the tribunal explicitly stated that the claimant was unreasonable and dishonest, and once again costs were awarded.

Conclusion

The common theme in all the cases was that the employee was lying. It is true that, generally, most employers are left with the cost of an Employment Tribunal and, unfortunately, nothing can be done, as they had no option but to defend the claim. But if the employee lies on the ET1 and then lies to the tribunal, the cost to the employee could be a whole lot more than simply their time.

Employers in these circumstances and where there is evidence should defend any claim brought against them vigorously. Who knows the threat of costs may even be enough to persuade the employee to drop the case at an early stage

If you would like to talk through these issues then please do not hesitate to contactalex.lyttle@wards.uk.com