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Costs of Employment Tribunals to Businesses

May 03, 2023 | By: Jade Galvin

There is nothing we can do to prevent Employment Tribunal claims being made, and there is unfortunately an unavoidable cost for the employer in defending any such claims.  Even if the employer / the Respondent is successful in defending the claim, it is very rare that they will be able to recover their costs, unless for example, they can evidence that the claim has been made either maliciously or vexatiously by the Claimant.  This is extremely difficult to prove, and that is why it is believed to be less than 1% of cases where costs are awarded to the Respondent.

How Much do Employment Tribunals Cost?

In 2017 Employment Tribunal fees were abolished, as it was believed that they restricted access to justice for a number of people.  Therefore, the Claimant no longer has to pay any fees to make an Employment Tribunal claim.

Legal fees

When it comes to defending a Tribunal claim; hopefully our clients will have taken and followed advice throughout the process, from our Advice team.   We will then do everything we can to keep any costs to a minimum and assist our client in successfully defending any claims that arise from that process.  Once we receive Tribunal papers, we review the claim and the advice taken and confirm any cover in place.


That said, there are hidden costs in defending a Tribunal claim, not just the costs for representation.  These hidden costs, such as the time and energy involved in defending the claim, often have the biggest impact on the Respondent’s business.  A significant and considerable amount of time is required from all those that have been involved in the dispute in assisting with the preparation of the case.  It is also necessary for those witnesses to attend the Tribunal hearing to give evidence.  This can have both a physical and mental impact on those witnesses, as going through a Tribunal process can be stressful and time consuming.   Tribunals can be lengthy and drawn-out processes and in some cases, it can take years for them to be heard in Tribunal.

What is the Process to Defend a Tribunal claim?

Before a Claimant can pursue a claim in the Employment Tribunal, they must first go through Early Conciliation, which is overseen by ACAS (The Advisory, Conciliation and Arbitration Service).  If you receive such a notification, our Tribunal Department are available to assist all our clients through this process.  If a settlement is not reached, the Early Conciliation certificate will be issued to the Claimant.  The issuing of this certificate enables the Claimant to proceed and lodge a claim in the Employment Tribunal. 

If the Claimant pursues a claim in the Employment Tribunal, the Respondent will receive a copy of the ET1 (claim form) along with a notice of a claim letter.   Upon receipt of the Tribunal Papers, we will review the claim alongside, all the relevant documentation and speak with all relevant witnesses to prepare the ET3 response, which is the Respondent’s opportunity to put their version of events forward.

Case Management

Once the ET3 response is filed and accepted by the Tribunal, the Tribunal will set case management orders to prepare the case for a final hearing (if not already listed).  Sometimes, the Tribunal may list a Preliminary hearing, to clarify the issues of the case, and make case management orders. The Tribunal will set dates by which the following orders must be complied with:

  • Schedule of loss - a document setting out how much compensation the Claimant is claiming and how this has been calculated.  
  • Disclosure - the parties must disclose to one another all evidence which they have in their possession or control which are relevant to the claim.
  • Bundle - the parties must agree the documents which should be included in the hearing bundle. 
  • Witness statements - All necessary witnesses must provide and exchange a witness statement prior to the hearing.  Please note that this is not a requirement in Scottish cases.

Attendance – Do Employers Have to Attend?

Yes, they do.  In fact, all those that have been involved in the process will be necessary to attend and give evidence.  For example, in a typical unfair dismissal claim, as a minimum you will need two witnesses:  the dismissing officer and the appeal officer, however, there may be more witnesses than that, and ideally the investigation officer.  Witness evidence given during the Tribunal hearing is vital.  Giving evidence can be challenging and witnesses will be cross examined on their evidence.  Poor witness evidence and conduct can lead to a negative outcome.

What Compensation can an Employer Expect to Pay?

The below table provides some data from 2019/2020, to give you an idea of the levels of compensation which can be awarded. 

2019/2020 Tribunal ClaimsHighest AwardMean AwardMedian Award 
Unfair Dismissal
 £118,842 £10,812 £6,646
Race Discrimination
 £30,330 £9,801 £8,040
Sex Discrimination £73,619 £17,420 £14,073
Disability Discrimination £265,719 £27,043 £13,000
Sexual Orientation Discrimination £96,645 £27,936 £9,245
Age Discrimination £243,636 £38,794 £11,791

Can the Employment Tribunal Award be Reduced or Even Avoided?

In the event the Tribunal is lost, there are steps and arguments, the Respondent can run to limit the damage.  The first, and quite a common argument relates to mitigation.  The Claimant is expected to take all reasonable steps to gain sufficient alternative employment.  Any money they earned can be subtracted from any award they may get.

There are other arguments the Respondent can run to reduce any award made to the Claimant:

  1. The Polkey deduction - Should the Tribunal find that the procedure in dismissing the Claimant was unfair, the Respondent can argue that any compensation should be reduced by up to 100% to reflect the fact that the Claimant would have been dismissed in any event.  This is known as Polkey deduction following the case of Polkey v AE Dayton Services Ltd [1987] ICR 142
  • Contributory fault - If the Tribunal finds that the dismissal was unfair, the Respondent can argue that any compensation awarded should be reduced considering the Claimant’s conduct.  That is if the Claimant contributed to his/her own dismissal.

Whilst the above look at reducing the costs/awards incurred by the Respondent, the Respondent is unfortunately limited in ways in which they can avoid costs entirely.

There are certain circumstances in which the Respondent can make an application to the Tribunal to have the Claimant’s case struck out/dismissed.  However, this is extremely rare as it is considered a draconian step to make an order against a party preventing them to pursue a claim.  A Respondent would have to argue and demonstrate that the claim is:

  1. Scandalous, vexatious or has no reasonable prospect of success.
  2. The manner or conduct of the Claimant is scandalous, vexatious or unreasonable.
  3. For non-compliance with the Tribunal’s rules.
  4. That the claim is not being actively pursued
  5. That a fair hearing is no longer possible.

The above are extremely difficult to prove, and often require a hearing for the Judge to consider making such an order.  Therefore, even in the unlikely situation the Respondent was successful, it would be unlikely to avoid any costs completely. 

The other option to avoid Tribunal costs, which is far more common, is settlement.

Throughout the Tribunal process ACAS remain on hand to assist parties who want to consider settlement.  Reaching a settlement brings the Tribunal proceedings to a close and prevents the parties having to attend a hearing. 


This is obviously a very brief insight into the Tribunal process and the impact and cost this can have on businesses, and there is a lot that is not covered in this article.  If you do receive either an Early Conciliation notification or receive Tribunal papers notifying you of a claim, then please get in touch with our Tribunal Department at as a matter of importance so that we can assist you with this.

About the Author
Jade Galvin
Jade Galvin
Jade Galvin - Paralegal

Jade completed her Law degree and since qualifying, she has worked solely in Employment Law. Jade started her career at a consultancy firm as a Senior Litigation Executive, working in their Tribunal Department. She joined the Wirehouse HR team in 2017. In her current role at Wirehouse, she assists and guides clients through the early conciliation process by reviewing the specific facts of the potential claim, and any relevant documentation. In those cases where the dispute can be resolved and a Tribunal process avoided, Jade conducts any negotiations on the client’s behalf and drafts the necessary documents.

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