Articles | Deposit orders - not appropriate where the claim is unclear

Ian Machray gives guidance on how to defend unclear tribunal claims and when you can require the claimant to pay a deposit to continue their claim.

Ian Machray

Ian Machray

Where a tribunal considers that a claim has little reasonable prospect of success, they have the discretion to order the claimant to pay a deposit order of up to £1,000 to allow the claim to continue. Where this deposit is not paid, the claim will be struck out. The purpose of such orders is to act as a deterrent against the pursuit of weak claims. In the recent case the Employment Appeal Tribunal (EAT) considered whether the use of such an order was appropriate where a claimant’s case was unclear.

The case involved claims of disability discrimination on two grounds, namely direct and indirect discrimination. At a preliminary hearing, which had been scheduled to determine time limit issues, the judge considered whether a deposit order would be appropriate. He considered that the disability discrimination claims had little reasonable prospect of success and ultimately made a deposit order for the sum of £1,000. The claimant appealed the decision.

The EAT held that the tribunal had been wrong to make a deposit order in respect of the indirect disability claim and substituted this with an order for £500 in respect of the direct discrimination claim. The EAT was concerned that the tribunal had made a deposit order without first properly identifying the way the Claimant was pursuing her case.

Although the EAT agreed that the claim form was not clear, they confirmed that the very purpose of case management orders are to obtain any further information needed to clarify matters. The tribunal should have used such an order to request the additional information rather than making a deposit order. The EAT stressed that deposit orders should not be used in lieu of case management orders as they perform different functions.

The decision is unhelpful for employers as it suggests that a tribunal may not be willing to make a deposit order until the Claimant’s case has been fully clarified. This may result in a considerable delay while the Claimant is given an opportunity to state their case during which time the employer may incur further costs. Whilst a deposit order may be ordered after a Claimant has been afforded that opportunity, the sheer cost and inconvenience of repeated preliminary hearings may deter many employers from pursuing such an application. Accordingly, if an employer faces a case which is not well pleaded they should push for clarification as soon as possible, so that they can then pursue applications for deposit orders, unless orders and strike out as appropriate.