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17 August 2012
Employment Appeal Tribunal (EAT)
Slade DBE J, Ms V Branney and Mr T Stanworth
Tribunals can only award costs if they conclude that a party has acted vexatiously, abusively, disruptively or otherwise unreasonably in bringing or conducting the proceedings or that the conduct or bringing of the proceedings was misconceived. This case shows that, although rejection of a ‘Calderbank' type offer (explained below) which beats the tribunal's award does not necessarily mean that costs should be awarded, rejection of the offer can be a factor if it was unreasonable.
R was summarily dismissed for misuse of her discount card. On appeal this was reduced to a final warning. R rejected the final warning and resigned claiming she had been constructively dismissed. She also claimed her lost earnings during the period between the first dismissal and her re-engagement under a final warning and her holiday pay. The employer accepted she was entitled to that but disputed the amount.
A tribunal held that her constructive dismissal claim was misconceived: the rules of the discount card scheme were clear; and she had unreasonably refused an offer of settlement (made ‘without prejudice save as to costs' - sometimes known as a ‘Calderbank offer'. The effect is that the offer cannot be referred to in tribunal proceedings except to support an application for costs.) The tribunal therefore made an award of costs covering the costs of defending the constructive dismissal complaint and the claims for arrears of pay and holiday pay. The award was upheld by the EAT, except that the tribunal had included VAT on counsel's fees, which the EAT said it should not have. .
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