At present, a party that is successful in a claim in the Employment Court is entitled to be reimbursed by the losing party. The general rule is that two-thirds of the winning party’s actual and reasonable costs incurred in the Court will be reimbursed by the losing party.
The Court has discretion to modify the application of that general rule in appropriate cases. For example, this could be by awarding “indemnity” or full costs if there has been some egregious behaviour by the losing party, or increased costs if a party has unreasonably refused an offer which was made ‘without prejudice save as to costs’ which they should have accepted.
The Court’s proposal is to adopt a “scale” which relates to costs. This would see the Court allocate a particular amount of time that each step in the proceeding should take and an associated rate relating to that step. The party would then recover costs accordingly to all steps that they have actually taken in the proceeding. It is also proposed that the Court would maintain an overarching discretion for cases where the application of costs on a “scale” basis is not appropriate. This approach is generally how the High Court deals with costs.
The intention behind the Employment Court’s proposed changes is to give parties to litigation a greater degree of certainty in their likely costs as at present, there is a high variability in the level of costs awarded.
The Court is currently working on the concept, framework and details of a scale and it is likely to involve the Court having a lead in period to the formal adoption of a scale. Until that time the general two-thirds rule will continue to apply. We will keep you updated.