Employers will have to tread even more carefully when they correspond with staff taking them to tribunals, a leading lawyer has warned.
Following a recent ruling, they risk having costs awarded against them, in addition to compensation and damages.
Tim Lang, partner and head of employment at Black Country firm George Green, said employers needed to be aware that tribunals could penalise them for seeking to put off employees from making claims against them.
"Employers often write letters threatening to make costs applications against employment tribunal claimants, even though they know it is rare for costs to be awarded against the losing party in either the tribunal or Employment Appeal Tribunal," said Mr Lang.
"In this way they hope to dissuade them from pursuing what could be a costly claim."
According to Mr Lang, in the last financial year, cost orders were made in only 580 cases out of a total of 109,712 tribunal applications.
"An Employment Appeal Tribunal has taken action over this and sent a message to employers who write threatening letters, by awarding costs against an employer who lost an appeal," said Mr Lang.
"In Sims Ltd v McKee, one of the main factors the EAT took into account when deciding to award costs was that the employer's response form had included a threat to apply for costs and so, as the judge held, they could hardly complain when the other side were awarded legal costs.
"This ruling does not mean that that it will never be appropriate to warn a claimant that costs will be applied for, but letters on this basis should be phrased correctly and should not be issued to all claimants in an attempt at intimidation - only to those who genuinely have no reasonable prospect of success.
"It would be better to advise a claimant to seek legal advice in the expectation that his lawyer would be able to point out the futility of pursuing a claim and indicate that a costs application will be made in the event that he does not do so, but instead pursues a hopeless case to a tribunal hearing."
