Rule 20(1) of the Employment Tribunal rules gives an ET judge the power to require a party to pay a deposit:
“At a pre-hearing review if a chairman considers that the contentions put forward by any party in relation to a matter required to be determined by a tribunal have little reasonable prospect of success, the chairman may make an order against that party requiring the party to pay a deposit of an amount not exceeding £1000 as a condition of being permitted to continue to take part in the proceedings relating to that matter.”
The first thing to note is that the power is presently only available to Judges at Pre-Hearing Reviews (PHRs). This at least provides a certain minimal procedural fairness to the parties, in that most initial hearings are Case Management Discussions rather than PHRs. A party at a CMD cannot be surprised or “ambushed” into having to face a deposit application. Ordinarily, a PHR would not be ordered without some prior analysis of whether – or why – one was needed, and so litigants in person in particular are warned before they get to a deposit hearing.
Unfortunately, preliminary noises from the Underhill review of Tribunal procedure suggest that the review is likely to end the PHR/CMD distinction, removing the present warnings, and giving a judge the power to make a deposit order at any preliminary hearing.
The second point to note is that the amount of deposit orders was increased – by the Coalition government, as recently as this April, from £500 to £1000. The barely-concealed motive was to penalise workers in particular, and to discourage claims.
Rule 20(4) of the Employment Tribunal rules goes on to specify what happens in the event of non-payment:
“If a party against whom an order has been made does not pay the amount specified in the order to the Secretary either: —
(a) within the period of 21 days of the day on which the document recording the making of the order is sent to him; or
(b) within such further period, not exceeding 14 days, as the chairman may allow in the light of representations made by that party within the period of 21 days;
a chairman shall strike out the claim or response of that party or, as the case may be, the part of it to which the order relate.”
IE where a deposit order is made, and the deposit is nor paid, a claim will be struck out.
The important point – on which I want to focus here – is whether deposits are necessary at all?
As will be seen from the wording of rule 20(1) deposit orders are intended to be reserved for cases which have “little” reasonable prospect of success. But this power overlaps with the power (which is in rule 18(7)) to strike out claims as having “no” reasonable prospect of success.
The truth is that Judges routinely fail – in both categories of case – to spot the word “reasonable” or to give it sufficient weight.
What qualifies as “little” reasonable prospect of success? I have heard judges who were willing to apply it to any case where the range of reasonable responses tests applies – i.e. any unfair dismissal.
The other point to note is that the power to order deposits is directed only against parties making “contentions”. As ET claims are brought by workers (only), and unhappily, Tribunal judges interpret this provision as meaning that only a claimant can be required to pay a deposit. (Rule 20(4) above makes it clear that this is wrong; at least in theory any party should be liable for a deposit order, but in practice the law is applied against claimants only).
You might think that this was precisely the sort of procedural imbalance that the Underhill reforms would address, and especially in circumstances where whole categories of claim (eg wages claims) are won invariably by workers, the employers’ defences only rarely even being capable of being a defence to a claim.
While there have been suggestions from Underhill to the effect that the distinction between PHRs and CMDs should be abolished, i.e. it should be easier for Respondents to apply for deposit orders, there has been nothing to suggest that the assymetrical use of this power is an issue for his review.