Recording and recovering in-house legal costs in the Employment Tribunal - DAC Beachcroft

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Recording and recovering in-house legal costs in the Employment Tribunal

Published On: 24 September 2014

In Ladak v DRC Locums Ltd (UKEAT/0488/13/LA), the Employment Appeal Tribunal ("EAT") upheld the Tribunal's decision that the costs incurred by a party's in-house legal team could be recovered.

The Claimant had an award of costs made against him because of his unreasonable behaviour in bringing the claim. The Claimant had argued that the definition of costs in the Employment Tribunals Rules of Procedure 2013 did not include the costs of a legal representative employed in-house. The Claimant accepted that the case of Wiggins Alloys v Jenkins [1981] IRLR 275 was not supportive of his arguments, but said there was no definition of the term "costs" in the Rules of Procedure.

The EAT held that the words "fees, charges, disbursements or expenses" found in the Rules should not be read restrictively and that to draw a distinction between in-house lawyers and independent solicitors would be absurd, and was not the intent of the legislation. It had long been the position that such costs were recoverable and the 2004 Rules did not change the position.

The Tribunal in Ladak had some difficulty in calculating exactly which costs could be said to have been "incurred" by the in-house legal team. The EAT commented that the costs of in-house work are not to be defined by the remuneration of a particular employee, and that the same exercise which is used to assess the costs of an independent firm of solicitors should be followed. The Tribunal suggested that the exercise should involve calculating the time spent and then applying a charging rate. It is therefore imperative that in-house teams record clearly the time they spend on any particular matter and that the record is in a format which can be put before the Tribunal.

For local authorities this reinforces the long standing case law that in house legal costs may be recovered and may in some cases be reflective of those of independent solicitors, see Henderson v Merthryr Tydfil Urban District Council [1900] 1QB; and Re Eastwood (Deceased), also known as Lloyds Bank Ltd v Eastwood (CA) 12 July 1974 [1975] CH 112. However accurate records of time spent will be required in order to recover costs on an hourly rate basis.