Challenge a deposit order in the employment tribunal
What is a deposit order?
Deposit and costs orders are two types of threats that employers use to stop you from pursuing your claim.
The employment tribunal has the power to make a deposit order under section 9(2) of the Employment Tribunals Act 1996. This provides that regulations may authorise a tribunal to order a party (either you or your employer) to pay a deposit of up to £1,000 as a condition of:
- Continuing to participate in proceedings.
- Pursuing any specified allegations or arguments.
This is repeated in Rule 39 of the Employment Tribunal Rules of procedure. The Tribunal has discretion as to whether it will make an order for any such allegation or argument. It acts as a warning to the person who is ordered to pay the deposit (the paying party) that the allegation or argument is likely to fail based on an initial assessment of the available material. The tribunal will give its reasons for the deposit order at the time of making it and warn the potential for costs to be awarded if the claim or response subject to a deposit order is unsuccessful.
What is the minimum and maximum deposit order?
A deposit order can be as little as £1 or up to £1,000 for each allegation or argument that the employment tribunal considers has little reasonable prospect of success. In H v Ishmail and another, the Employment Appeal Tribunal (EAT) said that a deposit order will be disproportionate if it is so high that it is not practically possible for the paying party to comply and substituted nominal deposit orders of only £1.
Can I be ordered to pay a substantial deposit even if I can’t afford to pay?
The tribunal will make reasonable enquiries into, and have regard to, the paying party’s ability to pay when deciding whether to make a deposit order and, if they do, how much should be paid. Whilst the amount can be up to £1,000 for each allegation or argument it considers has little reasonable prospect of success, it can also be a nominal amount. In H v Ishmail and another where the claimant was on a low income, two deposit orders of £1 were made by the EAT following a successful appeal against the original deposit order of £75 per allegation.
What happens if I don’t pay the deposit order?
The specific allegation or argument which is subject to the deposit order will be struck out if the deposit is not paid by the date specified in the order. In some cases, this may result in your entire claim being struck out.
What if my allegation or argument is successful after I have paid the deposit order?
The employment tribunal will refund the deposit to you.
What if my allegation or argument is unsuccessful?
If the argument or allegation is unsuccessful for substantially the same reasons identified by the employment tribunal on making the deposit order, you will be treated as having acted unreasonably (unless you are able to argue against it) and a costs or preparation time order will be made against you. If a costs or preparation time order is made, you will forfeit the deposit to the other side. The amount of the deposit will count towards the settlement of the costs/preparation time order.
What if I settle my claim after I have paid the deposit order?
If you settle with your employer after you’ve paid a deposit, the deposit will be refunded to you under Rule 39(5). Make sure that the settlement agreement or COT3 says that the other side consents to the refund of the deposit.
How to challenge a deposit order?
A. Apply for the deposit order to be varied, suspended or set aside
Under Rule 30 of the ET Rules, you can apply for an order to be varied, suspended or set aside on the grounds that it would be in the interests of justice to do so. The Employment Tribunal has a general power under Rule 29 to vary, suspend or set aside an earlier case management order where that is necessary in the interests of justice, and in particular where a party affected by the earlier order did not have a reasonable opportunity to make representations before it was made.
B. Apply for reconsideration
If your claim is struck out because you did not pay a deposit order, t it is a judgment and so you can apply for reconsideration of the strike out under Rules 70 – 73 of the ET Rules.
C. Appeal to the Employment Appeal Tribunal
You can appeal the deposit order in the Employment Appeal Tribunal (EAT).
Last Updated: [11/09/2022]