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01/09/2009
The claimant did not wait until she had received the money before she broke the confidentiality agreement. When the employer realised that the news was 'out' and that the claimant had divulged the terms of the agreement it refused to pay the claimant. The claimant's response was to apply to a tribunal to enforce the agreement where it emerged that she had informed several people of the details of the compromise agreement despite her denials under oath that she had done so. The employer then applied for costs under Rule 40(2) and (3) of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 but the tribunal found that the claimant had not acted unreasonably, no doubt having some sympathy for the hapless claimant, that losing around £10,000 under the compromise agreement was enough 'reward' for her efforts. The EAT however disagreed and quoted the 2004 Rules: Rule 40 (2) and (3) : "(2) ………the tribunal or chairman may make a costs order against the paying party if it or he considers it appropriate to do so. (3) The circumstances referred to in paragraph (2) are where the paying party has in bringing the proceedings, or he or his representative has in conducting the proceedings, acted vexatiously, abusively, disruptively or otherwise unreasonably, or the bringing or conducting of the proceedings by the paying party has been misconceived." The employment tribunal must first decide whether the offending party is culpable under Rule 40(3) and if so, must determine whether or not it is appropriate to make an award of costs. Under Rule 41 the tribunal can award up to £10,000. Wilkie J from Daleside Nursing Home Ltd v Mathew UKEAT/0519/08 was quoted where costs were awarded against a claimant who to bolster her tribunal claim falsely alleged that her employer called her a 'black bitch': "In our judgment, in a case such as this, where there is such a clear-cut finding that the central allegation of racial abuse was a lie, it is perverse for the Tribunal to fail to conclude that the making of such a false allegation at the heart of the claim does not constitute a person acting unreasonably." The EAT ruled that even though an ET take into account the ability of a party to pay costs when making an award could (in the second stage of the decision), the ability to pay is not relevant at the first stage whereby liability for an award of costs is judged.
The EAT substituted the finding of the second judgment of the Tribunal so that the respondents be awarded costs. The EAT returned the case to an ET to assess the amount of the costs.
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