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Costs and insurance cover

View profile for Chris Dobbs
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Mardner v Gardner

The Employment Appeal Tribunal (“EAT”) held in this case that an employment tribunal, when deciding whether to award costs, should not take into account the fact the receiving party has had their legal expenses paid by an insurer.

The Claimant succeeded in her case before the employment tribunal and applied for costs. Despite the costs threshold having been crossed, one of the reasons the employment tribunal refused to award the Claimant her costs was that she was not personally out of pocket because her case was funded by her legal expenses insurers.

The EAT held that this was an error, because public policy dictates that the paying party should not avoid the costs consequences of their unreasonable conduct, merely because the receiving party prudently entered into an insurance contract. That would allow the paying party to be the one to actually benefit from the insurance, which would be wrong.

In Practice

Employment Partner Kate Fretten says, “The decision in this case must be right. The party that has acted unreasonably during the tribunal proceedings should not be able to benefit from the other party’s sensible actions in obtaining an insurance policy.” It is also a reminder to employers that, even though it is uncommon, costs can be awarded against a Respondent if they act unreasonably during the tribunal proceedings.

At Frettens, all of our solicitors offer a free initial meeting or chat on the phone to answer your questions. If this article raises issues for you or your business, please call us on 01202 499255 and Kate or Paul will be happy to discuss it with you.