Insights- Employment & HR, Practice Area - POSTED: January 5 2017
Deposit orders and the obligation to pay them
The case in point is H v Ishmail and Al-Megraby UKEAT/0021/16 in which the EAT held that a deposit order had been wrongly imposed in circumstances where the claimant would find it difficult to comply with its terms and thus limited their access to justice.
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Employment tribunals may make deposit orders of up to £1,000 which must be paid as a condition for which a party is able to continue with a particular allegation or argument in their claim or response.
They are made on the basis of whether or not the employment judge considers that the particular allegation or argument has little reasonable prospect of success. Rule 39(2) Employment Tribunals Rules of Procedure 2013 provides that an employment tribunal ‘shall make reasonable enquiries into the paying party’s ability to pay the deposit and have regard to any such information when deciding the amount of the deposit’, thus essentially determining a proportionate order if one is made. The intended purpose of a deposit order is not to make it difficult for a party to find the sum payable but to discourage those claims with little prospect of success at an early stage. The EAT particularly noted in the case in point that the purpose of a deposit order is not ‘to make it difficult to access justice or to effect a strikeout through the back door’.
The facts of the case were as follows: Ms H was brought from Egypt to the UK by Mr Al-Megraby and Ms Ishmail in circumstances that she alleges amounted to slavery. In particular, her allegations were that she received limited salary, worked excessive hours, was denied food and her freedom of movement was restricted. In addition, she claimed that her family in Egypt were threatened. After 6 months, Ms H escaped, at which point her employment terminated and she was recognised by the Home Office as a victim of trafficking. Subsequently, she brought claims of automatic unfair dismissal, unlawful deduction from wages, race discrimination and breaches of the Working Time Regulations 1998.
Mr Al-Megraby and Ms Ishmail denied the allegations and both were acquitted at criminal trials. They, therefore, sought deposit orders in the employment tribunal proceedings as a result of these verdicts. Deposit orders of £75 each were made in respect of three separate allegations of race discrimination which the employment tribunal held had little reasonable prospect of success. The judge had initially ordered deposits of £150 for each allegation but reduced them by 50% after considering Ms H’s limited means. Ms H had 3 months to pay the sums ordered to continue her claims and sought to appeal to the EAT on the basis that the total £225 she would have to pay was irrationally high.
The EAT allowed the appeal and set aside the deposit orders as it considered she was not likely to be able to raise the full sum within 3 months. A fresh deposit order was made in respect of the two remaining allegations however for the nominal sum of £1 each.
In essence, a deposit order is made as a matter of discretion and does not automatically follow from a finding that a particular claim has little reasonable prospect of success. The power to make one must be exercised in accordance with the overriding objective and in regard to all circumstances of the case. It is mandatory to consider the paying party’s ability to pay because deposit orders are made before a claim has been considered on its merits and orders made must both pursue a legitimate aim and be proportionate.
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