The judgment of the Tribunal is that the application to amend is refused. Introduction[1]An open preliminary hearing was arranged to determine the Claimant’s application to amend dated 31 May 2023 (which was opposed by the Respondent) and the Respondent’s application for expenses dated 14 June 2023 (which was opposed by the Claimant).[2]Both parties had the benefit of professional representation.[3]Following discussion with the parties it was agreed that no evidence would be heard because it transpired there was no dispute on the factual issues on which evidence was to be led.[4]Following discussion at the hearing it was agreed that any applications for expenses would be determined following final judgment (because there was likely to be further applications for expenses dependent upon the outcome of application to amend, the Respondent had not attended with a breakdown of costs, and the Claimant had not attended with details of the Claimant’s ability to pay).[5]Following discussion the Claimant asserted that his complaint was made within 3 months because it was part of a series of deductions (under Section 23(3) of the Employment Rights Act 1996) and he did not seek an extension of time under Section 23(3) (i.e. he did not seek to assert that it was not reasonably practicable for the claim to be presented within 3 months). The Claimant expressly accepted that if the amendment was not allowed his claim would be time barred.[6]The parties lodged a joint bundle of documents and the Claimant lodged a supplementary bundle.[7]Both parties made submissions. Procedural Background[8]On 22 February 2023 the Claimant commenced ACAS Early Conciliation which ended on 24 February 2023.[9]On 1 March 2023 the Claimant lodged a tribunal claim against the Respondent raising a complaint of unlawful deduction from wages that “I would like paid for the full month I worked - …Gross=£2,500 (and received a pay slip for)”.[10]On 31 March 2023 the Respondent lodged their response in summary that there was no unlawful deduction because they were contractually entitled to deduct training costs on 31 October 2022 and in any event the claim is time barred because the Claimant ought to have presented his complaint by 29 January 2023 but he did not contact ACAS until 22 February 2023.[11]On 4 April 2023 the Claimant was ordered to provide by 18 April the essence of his case on time limits (in response to paragraphs 14 to 16 of the grounds of resistance) and on the contractual power to deduct training costs.[12]On 14 April 2023 the Claimant sought to provide further and better particulars of claim within 7 days.[13]On 24 April 2023 the Respondent noted that the Claimant had not complied with the order of 4 April and that the Respondent is prejudiced by the lack of notice of the claimant’s position particularly on time bar and that that they are therefore unable to take proper statements from witnesses.[14]On 25 April 2023 the Claimant provided the following further and better particulars of his complaint namely his last day at work was 31 October; the time worked after 28 October was due to be paid on 28 November; he contacted ACAS within 3 months of the last of a series of deductions; the claim is therefore in time. The Claimant also gave further particulars regarding the deduction of his training costs including that the clause is an unenforceable penalty clause, the sums are not a genuine pre-estimate, failure to pay wages or respond to his queries is a repudiatory breach entitling him to resign and prohibiting enforcement of the penalty clause.[15]A final hearing was listed to determine all issues on 12 May 2023. At the hearing the Claimant asserted that the last date on which wages were due to be paid was 30 November (that there were wages, bonus and holidays due to be paid on that date) and accordingly the claim was not time barred. The Respondent objected on the basis that this assertion did not reflect the Claimant’s pleadings. The hearing was adjourned to allow the Claimant to submit any application to amend to include all and any further particulars of the claim.[16]On 31 May 2023 the Claimant provided further particulars of his existing complaint and submitted an application to amend to include complaints for failure to pay holiday pay and failure to pay bonus namely that –a. “the Claimant had accrued but untaken holiday entitlement amounting to approximately 1 full working week. The first date that sum would have been payable given the Claimant’s termination of 31st October would have been the November payroll run. The Respondent is called upon to confirm exactly the number of working days accrued but untaken holiday entitlement had accrued to 31st October 2022”.b. “the Claimant was due to be paid an annual bonus which he was told by Mr Ferguson was circa £2k and told by Mr Jon Thomson was between £2k & £5k.That bonus would have been payable (albeit potentially pro-rated) in December prior to Christmas in the usual way”.c. “Given that further sums were due to the Claimant in November and December which were never paid, it is submitted that the claim [the original complaint] is in time”.[17]On 9 June 2023 the Respondent’s payroll providers confirmed that salary payments made on the last working day of each month were for the full calendar month. The Claimant accepted this.[18]On 14 June 2023 the Respondent opposed the application to amend and submitted an application for costs (expenses). They also provided further particulars of response which stated that:a. the Claimant had accrued 23.33 days (10/12 x 28 days) and had taken 24 days in the holiday year and accordingly there were no accrued but unused holidays at the termination date.b. The Christmas bonus is entirely discretionary and is paid to staff in employment in December following a review of the financial year end accounts.[19]The Claimant did not provide a substantive response to those assertions.[20]On 20 June it was determined by the Tribunal that the final hearing listed for 27 June 2023 would be converted to an open preliminary hearing to determine the application to amend and the application for expenses. Findings of Fact[21]Following discussion it was determined that the following facts were not in dispute –[22]The Claimant was employed by the Respondent as Chartered Surveyor from 18 June 2018 until 31 October 2022.[23]He was initially employed as a Trainee Surveyor and completed his training in about May 2022.[24]His salary was £30,000 and he was paid monthly. He was in practice paid on the 28th of each month.[25]His contract of employment provided as follows:a. Salary is payable monthly in arrears on the last working day of each monthb. Salary is to be reviewed annually but there is no obligation to increasec. The respondent is entitled to claw back of some or all training costs if your employment is terminated within 2 years of completing his training.d. Except on termination, no payment of salary is made in lieu of holidays. If you take in excess of your holiday entitlement payment may be deducted from your final pay.e. The Respondent was authorised to make deductions from wages.f. Written notice was to be given of any variation to its terms[26]The Claimant was unhappy with the amount of his salary. In or around September 2022 looked for and secured alternative employment.[27]The Claimant resigned with notice on 25 October 2022 which was due to expire on 25 November 2022.[28]On or about 26 October the Respondent advised the Claimant that he was due to repay training costs amounting to £8,602.05.[29]On or about 28 October 2022 he received a pay slip stating he was due payment of gross wages in sum of £2,500 (£1,918.37 net) in respect of the month to 31 October. The Claimant did not receive payment of those wages. The Claimant was asked to enter an agreement to repay his training costs.[30]On either Friday 28 October or Monday 31 October 2022 (the exact date is in dispute) the Claimant advised the Respondent that, because he had not been paid, his last day of employment would be 31 October.[31]On 2 February 2023 the Respondent noted that the Claimant had contributed £1,918.37 from his final salary and asked the Claimant to make a proposal to settle the balance of the training costs.[32]On 15 February the Claimant wrote to the Respondent noting that he was made aware that his salary was being withheld until he signed an agreement to repay the training costs monthly for 2 years and that he was given only 48 hours to consider this proposal and noting that he had forfeited his bonus entitlement and holiday pay.[33]The Claimant did not have the benefit of professional representation when he submitted his claim. The Claimant has had the benefit of professional representation from 4 April 2023 onwards. The law[34]The Tribunal has a broad discretion under Rule 29 to allow amendments at any stage of the proceedings either on its own initiative or on the application by a party.[35]The EAT in Selkent Bus Company Ltd v Moore [1996] IRLR 6 provided the following guidance on amendment: “Whenever the discretion to grant an amendment is invoked, the Tribunal should take into account all the circumstances and should balance the injustice and hardship of allowing the amendment against the injustice and hardship of refusing it”.[36]That discretion should be exercised in a way that is consistent with the requirements of “relevance, reason, justice and fairness inherent in all judicial decisions”.[37]That discretion also should be exercised in accordance with the overriding objective of dealing with cases fairly and justly including, so far as practicable(a) ensuring that the parties are on an equal footing;(b) dealing with cases in ways which are proportionate to the complexity and importance of the issues;(c) avoiding unnecessary formality and seeking flexibility in the proceedings;(d) avoiding delay, so far as compatible with proper consideration of the issues; and(e) saving expense.[38]The following non-exhaustive factors are relevant to the exercise of that discretion: the nature of the amendment; the applicability of any time limits; the timing and manner of the application; and all the circumstances including prospects of success. The nature of the amendment[39]“Applications to amend are of many different kinds, ranging, on the one hand, from the correction of clerical and typing errors, the addition of factual details to existing allegations and the addition or substitution of other labels of facts already pleaded to, on the other hand, the making of entirely new factual allegations which change the basis of the existing claim. The Tribunal have to decide whether the amendment sought is one of a minor matter or is a substantial alteration pleading a new cause of action” (Selkent).[40]There are broadly three types of amendment: amendments which add to or alter the basis of an existing claim or defence (“minor”); amendments which add or substitute a new cause of action or defence arising out of facts already plead (“re-labelling”); and amendments which add or substitute a wholly new cause of action (“substantial”).[41]The Court of Appeal in Abercrombie & Others v Aga Rangemaster Ltd [2013] EWCA Civ 1148; [2013] IRLR 953 provided: “the approach of both the EAT and this Court in considering applications to amend which arguably raise new causes of action has been to focus not on questions of formal classification but on the extent to which the new pleading is likely to involve substantially different areas of enquiry than the old: the greater the difference between the factual and legal issues raised by the new claim and by the old, the less likely it is that it will be permitted”.[42]The fact that a claim is affected by a jurisdictional issue (e.g. time bar) is no bar to an amendment that would resolve that issue (Abercrombie). The applicability of time limits[43]“If a new complaint or cause of action is proposed to be added by way of amendment, it is essential for the Tribunal to consider whether the complaint is out of time and, if so, whether the time limit should be extended under the applicable statutory provisions” (Selkent)[44]The applicable time limits do not ordinarily affect minor amendments or re-labelling exercises. For substantial amendments the tribunal should consider whether the complaint is out of time and if so whether the time limit should be extended. This is only a factor and not wholly determinative. The timing and manner of the application[45]“An application should not be refused solely because there has been a delay in making it. There are no time limits laid down in the Rules for the making of amendments. The amendments may be made at any time – before, at, even after the hearing of the case. Delay in making the application is, however, a discretionary factor. It is relevant to consider why the application was not made earlier and why it is now being made; for example, the discovery of new facts or new information appearing from documents disclosed in discovery. Whenever taking any factors into account, paramount considerations are the relative injustice and hardship involved in refusing or granting an amendment. Questions of delay, as a result of adjournments and additional costs, particularly if they are unlikely to be recovered by the successful party, are relevant in reaching a decision.” (Selkent)[46]Consideration should be given to the effect of any delay on the quality of evidence, additional areas of enquiry, and the stage of the tribunal proceedings. All the circumstances[47]“Whenever the discretion to grant an amendment is invoked, the Tribunal should take into account all the circumstances and should balance the injustice and hardship of allowing the amendment against the injustice and hardship of refusing it” (Selkent).[48]The tribunal should take into account all the circumstances including prospects of success. The Claimant’s submissions[49]The Claimant’s submissions were in summary as follows –a. The amendment is not substantial because it is not a new type of complaintb. The Claimant resigned without notice and there was accordingly insufficient time to make payment of his accrued but unused holidays on 31 October 2022. Accordingly those holidays fell due to be paid on the next pay day which was 28 November.c. The failure to pay wages in October, holidays in November and bonus in December amounted to a series of deductions which are accordingly not time barred. The Claimant does not seek to assert that it was not reasonably practicable.d. The time limit depends upon the type of deduction. Where there is an actual deduction the time limit runs from that date. Where there is an underpayment or a complete failure to pay the time limit runs from the contractual due date for payment (Arora v Rockwell Automation Ltd EAT 0097/06)e. The Claimant did not unreasonably delay in making the application to amend because he did not have the benefit of legal representation until April 2023. An unduly technical approach should not be adopted where the Claimant is a litigant in person (Aynge v Trickett t/a Sully Club Restaurant EAT 0264/17)f. The Claimant would be entitled to pursue these complaints in the Sheriff Court but would incur additional costs in doing so.g. It would be proportionate to the issues, avoid delay and unnecessary formality, and would save expense to allow the amendment. The Respondent’s submissions[50]The Respondent’s submissions were in summary as follows –a. Notwithstanding written submissions to the contrary the Respondent accepted in oral submission that an amendment may cure an original complaint which is affected by time barb. The amendment is substantial and includes new complaints in respect of different alleged deductions for holiday pay in November and bonus in December which do not arise of facts raised in the original claim. No explanation has been given as to why these facts were not included. There was unreasonable delay in including them.c. The new complaints are made out with the statutory time limit. A claim based on a deduction on 28 November 2022 with EC notification on 22 February 2023 would require to have been brought by 24 March 2023.d. There had been an unreasonable delay in making this application which could have been made when further particulars were intimated in April and were made subsequently only with a view to resolving an issue of time bare. The application to amend has no reasonable prospects of success. The claimant’s statutory (and contractual) entitlement is to 5.6 weeks (28 days; his written contract provides that the holiday year is the calendar year; he had accrued 28.33 days and had taken 24 days holidays; and accordingly no payment for accrued but untaken holidays falls due. The Christmas bonus is discretionary and is paid to staff in employment in December.f. The new complaints taken together with the original complaint do not constitute a series of deductions and accordingly the original complaint would remain time barred. Further, if any holidays or pro rated bonus fell due it would have been due to be paid on the termination date.g. The Respondent has been put to the additional cost of attending a hearing which was aborted because of an application to amend which could have been made earlier. The amendment if allowed will put the Respondent to the substantial additional costs of defending the new complaints which are unlikely to be recovered.h. If refused the Claimant would still be able to pursue these complaints in the Sheriff Court, and whilst additional cost would be incurred by both parties, awards of expenses follow success (whereas in the Employment Tribunal they are the exception and different considerations apply)i. The Respondent is considering bringing proceedings in the Sheriff Court (in respect of the balance of the training costs) and in these circumstances these tribunal proceedings may require to be sisted pending determination.[51]Terms of amendment which seek to add a new cause of action in respect of facts not already plead may be considered substantial. That description could be applied to an application to amend to include complaints for failure to pay holiday pay on 30 November 2022 (the holiday pay amendment) and failure to pay bonus on 30 December 2022 (the bonus amendment). These complaints were not heralded in the original claim- they did not form any part of the essence of the case (per Aynge). The fact that the Claimant has already made a complaint of unlawful deduction from wages (in respect of a deduction of training costs from his wages in October 2022) does not prevent the addition of new detriments being considered substantial.[52]Formal classification is not always helpful and it is necessary to also consider whether the amendments are likely to involve substantially different areas of enquiry. His unamended claim pertains to a failure to pay wages in October 2022 because of an alleged unlawful deduction of training costs. The holiday pay amendment would involve substantially different areas of enquiry into what holidays were accrued, what holidays were taken and the due date for payment. The bonus amendment would involve substantially different areas of enquiry into what if any custom and practice there was regarding payment of bonus and whether this amounted to a contractual term which had been breached (including identification of the due date for payment). The applicability of time limits[53]For substantial amendments the tribunal should consider whether the complaint is out of time and if so whether the time limit should be extended. This a material factor but not necessarily determinative.[54]A complaint of unlawful deduction from wages must be made within 3 months (extended to allow for ACAS Early Conciliation) or where that was not reasonably practicable within such further period as the tribunal considers reasonable. The terms of amendment were intimated on 31 May 2023 (5/6 months after the alleged deduction). Accordingly the complaints of failure to pay holidays and failure to pay bonus are out with the statutory time limit unless it was not reasonably practicable to make the complaint.[55]The Claimant did not have the benefit of professional representation when he submitted his original claim on 1 March 2023 for unlawful deduction from wages but it is apparent that he was aware of his ability to make a claim to an employment tribunal for failure to pay monies due to him when he did so. The Claimant has had the benefit of professional representation from 4 April 2023 onwards and submitted further particulars on 25 April 2023 but did not submit his application to amend until 31 May 2023.[56]Having regard to the above there did not appear to be any real impediment which prevented the Claimant from including the essence of the additional complaints (that he had not been paid holidays and bonus) in his claim as lodged in March 2023. Further there did not appear to be any real impediment which prevented the Claimant from submitting his application to amend in April 2023 when he had the benefit of professional representation. It is considered that it was reasonably practicable for the Claimant to bring the additional complaints within the original time period and in any event it was not reasonable for the Claimant to delay making an application to amend until 31 May 2023. However, whilst these are important factors, they are not necessarily determinative of an application to amend a claim. The timing and manner of the application[57]Applications to amend may be made at any time. Although these proceedings were only raised in March 2023, they are at a relatively advanced procedural stage given that a final hearing commenced on 12 May 2023 which was then adjourned to allow the Claimant time to submit an application to amend. The application to amend was made shortly thereafter. There is no reason to consider that any delay has affected the quality of the evidence. Prospects of success[58]As regards the holiday pay amendment, the Claimant asserts an entitlement to “approximately 1 full working week.” (The Claimant advised in submissions that this pertained to statutory holiday pay.) The Claimant did not specify how that entitlement had been calculated but instead called upon the Respondent “to confirm exactly the number of working days accrued but untaken holiday entitlement had accrued to 31st October 2022”. The Respondent replied to that call by stating that the Claimant had accrued 23.33 days (10/12 x 28 days) and had taken 24 days in the holiday year (and accordingly there were no accrued but unused holidays at the termination date). The Claimant did not seek to challenge that calculation either by asserting having accrued more holidays or having taken less holidays as at the termination date. The Claimant has failed to set out (either in writing or verbally at a hearing) the factual basis upon which he asserts that he had accrued and untaken holidays as at the termination date. This complaint therefore appeared to have little if any reasonable prospects of success.[59]The contract expressly states that wages are paid on the last working day of the month. The contract expressly states that deduction in respect of excess holidays is deducted from final pay which therefore indicates that payment in lieu of holidays is added to final pay. The Claimant accepts that final payment of salary was due to be paid on 31 October 2022. This indicates that any failure to pay holiday pay arose on 31 October 2022 and not on 30 November 2022. It appears this complaint would be affected by, and not remedy, the time bar issue affecting the original claim.[60]As regards the bonus amendment, the Claimant asserts that he was entitled to a bonus of “between £2k and £5k”, “potentially pro-rated”, payable in December 2022. The Claimant advised in submissions that he was seeking to rely upon an implied term. The Claimant was then asked to specify the factual basis upon which this could be implied but he was unable to do so other than to state bonuses had been paid previously to staff. He accepted that this applied to staff who remained in employment in December which he had not.[61]The Claimant has failed to set out (either in writing or verbally at a hearing) a basis upon which it could reasonably inferred that there was an implied term entitling an ex-employee to a pro-rated (or full) bonus calculated and payable 2 months after termination. This complaint therefore appears to have little if any reasonable prospects of success.[62]The Claimant clarified at this hearing that he did not seek an extension of time on the basis that it was not reasonably practicable to lodge his claim. Rather he sought to assert that the original complaint was part of a series of acts the last of which was not time barred. It appeared on the face of it that the application to amend was being made primarily for the purpose of rendering the original claim within time rather than because of the merits of these new complaints. In order for there to be a series of acts there requires to be a sufficient similarity of subject matter namely a factual (and temporal) link between each deduction. There are little if any reasonable prospects of asserting such a link between a failure to pay wages and a failure to pay holiday pay and separately a failure to pay bonus. All the circumstances[63]The amendment if allowed would generate substantial new areas of enquiry in respect of an alleged failure to pay holiday pay and an alleged failure to pay bonus. Additional costs will be incurred by the Respondent in respect of complaints which appear to have little if any reasonable prospects of success. If the complaints are unsuccessful and if an award of costs is made, these costs may not be successfully recovered from the Claimant.[64]The amendment if refused would prevent the Claimant from proceeding with the existing complaint for wages, and the new complaints for holiday pay and bonus, in this forum. It would however be open to the Claimant to raise proceedings in the Sheriff Court in respect of these complaints, but with increased cost, delay and formality and with the material risk of a counterclaim in respect of the full amount of the training costs.[65]Taking into account all the circumstances including the failure to include or indicate complaints for holiday pay and bonus in the original claim albeit when he was unrepresented, the delay in making the amendments once he was represented, the prospects of success of the complaints for holiday pay and bonus, the injustice and hardship of allowing the amendment on the Respondent, the injustice and hardship of refusing the amendment on the Claimant, the application to amend is refused.
REASONS
[1]A hearing on expenses was arranged for today to determine the Respondent’s applications of 14 June and 31 July 2023 which were opposed by the Claimant.[2]The applications for expenses were in summary as follows –a. Fees of £1,500 for time spent attending the hearing on 12 May 2023 which was postponed less than 7 days before (Rule 76(2)) andb. Fees of £1,500 for time spent considering and responding to an unreasonable application to amend made 31 May 2023 which had no reasonable prospects (Rule 76(1)(a)) orc. Fees of £7,250 for entire time spent (38.11 hours x £190.25) since commencement to dismissal judgment in respect of a claim which had no reasonable prospects (Rule 76(1)(b)) and which it was unreasonable to bring (Rule 76(1)(a)) ord. Fees of £6,699 for time spent (35.21 hours x £190.25) since receipt of the Response which raised time bar and since the Claimant had professional representation such that he was aware the claim which had no reasonable prospects (Rule 76(1)(b)) and it was unreasonable to continue with the claim (Rule 76(1)(a)) ore. (following discussion with the parties at the hearing) fees of £1,446 for time spent (7.6 hours x £190.25) since 14 June following the substantive response to the application to amend such that the Claimant was aware it had no reasonable prospects (Rule 76(1)(b)) and it was unreasonable to continue with it (Rule 76(1)(a)).[3]The Claimant was represented by his father. The Respondent had professional representation.[4]The Claimant did not attend the hearing and did not provide evidence of his ability to pay (although the need for this had been previously explained). At the hearing parties helpfully agreed relevant facts and accordingly no evidence was led.[5]Both parties made oral submissions. Findings in fact[6]The Claimant was employed by the Respondent as Chartered Surveyor from 18 June 2018 until 31 October 2022.[7]He was initially employed as a Trainee Surveyor and completed his training in about May 2022. His salary was £30,000 and he was paid monthly. His contract of employment provided that he would be paid monthly in arrears on the last working day of each month. He was in practice paid on the 28th of each month.[8]The Claimant resigned with notice on 25 October 2022 which was due to expire on 25 November 2022.[9]On or about 26 October the Respondent advised the Claimant that he was due to repay training costs amounting to £8,602.05.[10]On or about 28 October 2022 he received a pay slip stating he was due payment of gross wages in sum of £2,500 (£1,918.37 net) in respect of the month to 31 October. The Claimant did not receive payment of those wages. The Claimant was asked to enter an agreement to repay his training costs.[11]On either Friday 28 October or Monday 31 October 2022 the Claimant advised the Respondent that, because he had not been paid, his last day of employment would be 31 October.[12]On 7 November 2022, the Claimant commenced alternative employment with a starting salary of £37,000. He has continued in that employment.[13]On 2 February 2023 the Respondent noted that the Claimant had contributed £1,918.37 from his final salary and asked the Claimant to make a proposal to settle the balance of the training costs.[14]On 22 February 2023 the Claimant commenced ACAS Early Conciliation which ended on 24 February 2023.[15]On 1 March 2023 the Claimant lodged a tribunal claim against the Respondent raising a complaint of unlawful deduction from wages that “I would like paid for the full month I worked - …Gross=£2,500 (and received a pay slip for)”. The Claimant did not have the benefit of professional representation when he submitted his claim.[16]On 3 March 2023 the Claimant was advised by the Tribunal that “We have noted that the claim appears to have been submitted out with the period within which claims of this type should normally be brought. Although the claim has been accepted, at the outset of the hearing the Tribunal will require to decide whether it can consider the claim as a preliminary issue”.[17]On 31 March 2023 the Respondent lodged their response in summary that there was no unlawful deduction because they were contractually entitled to deduct training costs on 31 October 2022 and in any event the claim is time barred because the Claimant ought to have presented his complaint by 29 January 2023 but he did not contact ACAS until 22 February 2023.[18]The Claimant has had the benefit of professional representation from 4 April 2023 until final judgment.[19]On 4 April 2023 the Claimant was advised by the Tribunal that his complaint was not dismissed on initial consideration. The Claimant was ordered to provide by 18 April the essence of his case on time limits (in response to the grounds of resistance) and on the contractual power to deduct training costs.[20]On 14 April 2023 the Claimant sought to provide further and better particulars of claim within 7 days.[21]On 24 April 2023 the Respondent noted that the Claimant had not complied with the order of 4 April and that the Respondent is prejudiced by the lack of notice of the claimant’s position particularly on time bar and that that they are therefore unable to take proper statements from witnesses. The Respondent applied for strike out the basis for failure to comply with a Tribunal order which was refused.[22]On 25 April 2023 the Claimant provided the following further and better particulars of his complaint namely his last day at work was 31 October; the time worked after 28 October was due to be paid on 28 November; he contacted ACAS within 3 months of the last of a series of deductions; the claim is therefore in time. The Claimant also gave further particulars regarding the deduction of his training costs including that the clause is an unenforceable penalty clause, the sums are not a genuine pre-estimate, failure to pay wages or respond to his queries is a repudiatory breach entitling him to resign and prohibiting enforcement of the penalty clause.[23]A final hearing was listed to determine all issues on 12 May 2023. At the hearing the Claimant asserted that the last date on which wages were due to be paid was 30 November (that there were wages, bonus and holidays due to be paid on that date) and accordingly the claim was not time barred. The Respondent objected on the basis that this assertion did not reflect the Claimant’s pleadings. The Claimant was given time during a break to consider whether to withdraw the claim (reserving his right to bring a claim for breach of contract in another forum which would not be affected by the same time limits but in which a counterclaim may be made by the Respondent) and/or to engage in discussions with the Respondent with a view to resolving their dispute by agreement. After the break parties advised that the dispute had not been resolved, and the Claimant advised that he would not be withdrawing his claim and that he sought to make an application to amend with a view to remedying time bar. The hearing was adjourned to allow the Claimant time to submit any application to amend to include all and any further particulars of the claim.[24]On 31 May 2023 the Claimant provided further particulars of his existing complaint and submitted an application to amend to include complaints for failure to pay holiday pay and failure to pay bonus namely that –a. “the Claimant had accrued but untaken holiday entitlement amounting to approximately 1 full working week. The first date that sum would have been payable given the Claimant’s termination of 31st October would have been the November payroll run. The Respondent is called upon to confirm exactly the number of working days accrued but untaken holiday entitlement had accrued to 31st October 2022”.b. “the Claimant was due to be paid an annual bonus which he was told by Mr Ferguson was circa £2k and told by Mr Jon Thomson was between £2k & £5k. That bonus would have been payable (albeit potentially pro-rated) in December prior to Christmas in the usual way”.c. “Given that further sums were due to the Claimant in November and December which were never paid, it is submitted that the claim [the original complaint] is in time”.[25]On 9 June 2023 the Respondent’s payroll providers confirmed that salary payments made on the last working day of each month were for the full calendar month. The Claimant accepted this.[26]On 14 June 2023 the Respondent opposed the application to amend and submitted the first application for expenses. They also provided further particulars of response which stated that:a. the Claimant had accrued 23.33 days (10/12 x 28 days) and had taken 24 days in the holiday year and accordingly there were no accrued but unused holidays at the termination date.b. The Christmas bonus is entirely discretionary and is paid to staff in employment in December following a review of the financial year end accounts.[27]The Claimant did not provide a substantive response to those assertions either in writing or at the hearing.[28]On 20 June it was determined by the Tribunal that the final hearing listed for 27 June 2023 would be converted to an open preliminary hearing to determine the application to amend and the application for expenses.[29]At the hearing on 27 June 2023 it was agreed that any applications for expenses would be determined following final judgment (because there was likely to be further applications for expenses dependent upon the outcome of application to amend, the Respondent had not attended with a breakdown of costs, and the Claimant had not attended with details of the Claimant’s ability to pay).[30]By judgment dated 5 July 2023 the application to amend was refused.[31]On 31 July 2023 the Respondent made a second application for expenses.[32]On 1 August 2023 the Claimant withdrew his claim which was then dismissed. The Claimant’s representative ceased to act for him shortly thereafter.
The law
[33]Under Rule 77 of the Employment Tribunal Rules of Procedure a party may apply for a costs order (i.e. an expenses order) at any stage up to 28 days after the date on which the judgment finally determining the proceedings was sent to the parties. Under Rule 5 the tribunal may extend or shorten anytime limit specified in these rules.[34]Under Rule 75, a costs order is an order that a party make a payment to the other party in respect of the cost incurred while legally represented.[35]Under Rule 74(1) costs includes fees incurred for the purpose of, or in connection with, attendance at a Tribunal hearing.[36]Under Rule 76 a tribunal may make a costs order, and shall consider whether to do so, in specified circumstances including where it considers that(a) a party (or that party’s representative) has acted vexatiously, abusively, disruptively or otherwise unreasonably in the bringing or conducting of proceedings (or part thereof) or(b) the claim or response has no reasonable prospect of success or(c) a hearing has been postponed or adjourned on the application of a party made less than 7 days before. A tribunal may also make such an order where a party has been in breach of any order or practice direction or where a hearing has been postponed or adjourned on the application of a party.[37]Where the grounds are established the tribunal has a duty to consider making a costs order but has discretion as to whether do so. First, a tribunal must consider whether the ground is established; if so, it must consider whether it is appropriate to exercise its discretion in favour of making a costs order; if so, it must consider the amount of the cost order. Stage 1 – Is the ground established?[38]First the tribunal must consider whether the ground of unreasonable conduct, no reasonable prospects and/or hearing has been postponed is established.[39]In determining whether a party has acted unreasonably in the bringing or conducting of proceedings (or part thereof) allowance should be made for the lack of experience and objectivity of a litigant in person. In assessing whether there has been unreasonable conduct the tribunal should take into account the nature, gravity and effect of the conduct (McPherson v BNP Paribas (London Branch) 2004 ICR 1398, Court of Appeal).[40]When determining whether the claim had no reasonable prospects of success this should be judged on the basis of what the claimant knew or ought reasonably to have known at the relevant time. Stage 2 – Should the discretion be exercised?[41]If the Tribunal considers that the ground is established, it must then consider whether it is appropriate to exercise its discretion in favour of making a costs order.[42]The following factors may be relevant but not solely determinative of that exercise of discretion: awarding a costs order is the exception – costs orders do not automatically follow the outcome and are not made in the substantial majority of tribunal cases; their purpose is to compensate the party who incurred the costs and not to punish the paying party; whether or not a party had professional representation; whether a costs warning has been issued; whether there has been unreasonable refusal of a settlement offer; and their ability to pay.[43]The vital point in exercising the discretion is to look at the whole picture of what happened in the case including consideration of the other party’s conduct (Yerrakalva v Barnsley Metropolitan Borough Council and nor 2012 ICR 420, CA). Stage 3 - The amount of the costs order?[44]If the ground is established, and if the tribunal consider it is appropriate to exercise its discretion in favour of making a costs order, the tribunal must consider the amount of the cost order. Under Rule 78 a tribunal may order payment of unassessed costs of up to £20,000; taxed (i.e. assessed) costs; or agreed costs.[45]Under Rule 84 in deciding whether to make a costs order, and if so, in what amount, the Tribunal may have regard to the paying party’s ability to pay.[46]Costs should not exceed those reasonably and necessarily incurred having regard to ability to pay and having regard to the effect of any unreasonable conduct by considering broadly what costs are attributable to the conduct in all the circumstances (Yerrakalva). Submissions[47]The Respondent’s oral submissions were in summary as follows –a. The Claimant was fully aware time bar was in issue given the terms of the Response and the notice of hearing.b. The Claimant knew, or ought reasonably to have been advised, that his application to amend to include claims of holiday and bonus pay had no reasonable prospects of success given the details provided in the response. The Claimant provided no substantive reply – he did not offer to prove facts in support of his claims. In any event payment for any accrued but unused holidays was due on termination and would not therefore resolve time bar.c. The Claimant was legally represented until after judgment was issued. He knew, or ought reasonably to have been advised, that he was at risk of an award of expenses. In any event he was expressly warned of the risks of expenses by the Respondent’s application of 14 June 2023.d. The time spent and the rate applied was reasonable but the tribunal should make its own assessment to avoid the cost of taxation.e. The Claimant earns higher than the national average wage, has no dependents and has a property share.[48]The Claimant’s oral submissions were in summary as follows –a. He is being pursued in the Sheriff Court for the balance of the training costs. He has endured threats and duress regarding repayment. All of this has had a significant impact on his mental health.b. The Claimant acted honorably by resigning rather than awaiting payment of his Christmas bonus.c. He has no savings, there is a cost of living crisis, and his parents met his legal fees for pursuing this claim (£4,400 at an hourly rate of £285). His parents purchased a flat for him of which he owns a share.d. He received advice from a number of quarters that his claim for repayment of the training costs had good prospects. His claim was not dismissed on initial consideration and was not struck out.e. If his wages from 28 to 31 October 2022 had been due to be paid on 28 November his claim would not have been time barred.f. He was not permitted to take all of his holidays and accordingly was due holiday pay. Discussion and decision[49]The application for costs was made within the time limits. Stage 1 – Is the ground established?[50]When the Claimant presented his complaint for unlawful deduction from wages he was in possession of a pay slip but no pay, he did not have the benefit of legal advice and was not necessarily aware of the time limit for doing so. Accordingly it cannot be said that the claim had no reasonable prospects judged on the basis of what the claimant knew at that time. However shortly thereafter he was receipt of the Response and of legal advice which ought to have made it clear to him that time bar was an issue. This was confirmed by notice of the hearing and explicitly discussed at the hearing on 12 May 2023.[51]Both the Claim and the Response asserted that his employment had ended on 28 October 2022. On 25 April 2023 the Claimant asserted that his last working day was in fact 31 October; the time worked after 28 October was due to be paid on 28 November and accordingly his claim was in time. At the hearing on 12 May he was advised that the entire month’s wages were due to be paid on 28 October 2022. This was confirmed on 9 June and he accepted this.[52]On 31 May the Claimant made an application to amend to include a claim for holiday pay due to be paid on 28 November 2022 and bonus due on 28 December 2022 which he asserted would render his claim in time. On 14 June the Respondent provided a substantive response in summary that he had taken all accrued holidays as at the termination date, and the Christmas bonus is only paid to staff still in employment. The Claimant made no substantive reply to those assertions either in writing or at the amendment hearing.[53]By 14 June the Claimant knew, or ought reasonably to have known, that his application to amend to include complaints of holiday pay and Christmas bonus had no reasonable prospects of success (having offered no facts in support of these complaints) and it was therefore unreasonable for him to proceed with that application. In turn he ought reasonably to have known that his complaint of unlawful deduction from wages had no reasonable prospects of success because it was dependent upon the application to amend curing the time bar defect.[54]Accordingly, by 14 June the Claimant was or ought reasonably to have been aware that his complaint had no reasonable prospects (Rule 76(1)(b) and it was unreasonable for him to continue with the application to amend (Rule 76(1)(a)) and these grounds are established.[55]The hearing on 12 May was not postponed or adjourned by application of the Claimant but instead went part heard to allow the Claimant time to make an application to amend. Accordingly this ground (Rule 76(1)(c)) is not established. Stage 2 – Should the discretion be exercised?[56]The Claimant had the benefit of professional representation shortly after the Response was lodged until after dismissal judgment was issued. The Claimant ought reasonably to have been aware of the risk of an award of costs particularly given the application for expenses made on 14 June, albeit it sought £3,000 and did not seek or warn of the entire costs and it did not contain a detailed assessment of prospects.[57]Having regard to his income he does not labour under a complete inability to pay such that this should be determinative of whether the discretion should be exercised.[58]Considering the whole picture of what happened after the hearing on 12 May, and fully cognisant that awarding costs is the exception, it is considered on balance that the discretion should be exercised in favour of making an order for costs. Stage 3 - The amount of the costs order?[59]From 14 June 2023 the Claimant knew or ought reasonably to have known that his complaint had no reasonable prospects by reason of time bar (Rule 76(1)(b)) and that it was unreasonable for him to continue with the application to amend (Rule 76(1)(a)). From 14 June 2023 until dismissal judgment was issued the Respondent incurred legal representation costs of £1,446. The time spent of 7.6 hours was not unreasonable give that it entailed preparing for and attending a hearing on amendment. A reasonable commercial rate was applied albeit which was higher than the taxed rate. Between dismissal judgment and judgment on expenses the Respondent incurred further legal costs of around £1,427 (time spent of around 7.5 hours) pursuing its application for expenses. The amount sought in the application for expenses was the entire expenses of £7,250 rather than expenses from 14 June only and the Claimant did not have the opportunity to pay the lesser amount and thereby avoid the further legal costs of £1,427 being incurred.[60]Having regard to the costs reasonably and necessarily incurred by the Respondent in defending the complaint since 14 June 2023, the nature and effect of the Claimant’s conduct in pursuing a complaint and amendment which had no reasonable prospects, having regard to the Respondent conduct in response, and the Claimant’s ability to pay given his current earnings but noting his lack of qualifying service, it is considered appropriate in the circumstances to make an award of costs of £1,000.