Deposit order

Employers are often irritated by weak claims being made in the Employment Tribunal, especially since an employee no longer has a fee to pay to commence the claim. However, if the claim is weak, an employer can make an application to have the claim struck out on the basis that it is scandalous, vexatious or that it has no reasonable prospects of success.

On balance, Tribunals are reluctant to strike out cases at an early stage unless there is a compelling reason to do so. An alternative option is to ask the Tribunal to make a deposit order. A deposit order requires the claimant to deposit a sum of money (up to £1,000 for each head of claim) with the Tribunal as a condition of continuing with the claim. This power is much more likely to be used by a Tribunal exercising its case management powers, rather than a strike out.  If a deposit order is made, it is likely to discourage the claimant from pursuing the claim as it indicates that a Tribunal Judge takes the view that the case or elements of the case are weak.

Before a deposit order will be made, the Tribunal must be satisfied that there is little reasonable prospect of a claim succeeding. The Tribunal will order the claimant to make the payment within a set period (usually 28 days) as a condition of continuing with the claim. If the claimant fails to pay the sum by the date specified, the claim will be struck out automatically.

The Tribunal must consider the claimant’s means when deciding on how much it requires the claimant to pay. In a recent case, a Tribunal ordered a claimant to pay a deposit of £900 but did not take into account that the claimant had no assets, had a credit card debt and a disposable income of around £30 per month. In that case, the claimant failed to pay the deposit within 28 days and the claim was struck out. The claimant appealed and the Employment Appeal Tribunal allowed his appeal, noting that £900 was very close to the £1,000 maximum and represented 30 times the claimant’s monthly disposable income. The Employment Appeal Tribunal indicated that a deposit of £25, being an amount which the claimant would be able to raise in 28 days, would not impede his access to justice.

If the claimant makes the payment and the claim or claims fail, there are potential costs implications. The claimant will be treated as acting unreasonably in pursuing the claim or claims and an order for costs is likely to be made against them. If the claimant succeeds, the deposit will be refunded.

So, when an employer believes an employee or worker’s claim or claims are weak, it has the option of making an application to strike out the case and/or asking the Tribunal to make a deposit order. Often these applications are made in the alternative, so, if the Tribunal refuses to strike the case out, it has the option to make a deposit order.

If the case is not struck out but a deposit order is made, it is likely to focus the claimant’s mind as to the weaknesses of the case and risk of costs should the claim be unsuccessful.