Making a deposit
Labour & European Law Review Weekly Issue 508 22 February 2017
If a tribunal thinks a claim has little chance of success, it can require the claimant to pay a deposit order. In Hemdan v Ishmail and Al-Megraby, the Employment Appeal Tribunal (EAT) held that a deposit order must not be set so high that the claimant is denied access to justice.
Ms Hemdan alleged that she was brought to the UK from Egypt by Ms Ishmail and Mr Al-Megraby (the respondents) in 2011 under false pretences about the pay, working hours and overall working conditions that she would receive. She also alleged that, once she was in the UK, she was locked in a room and warned that if she told anyone, there would be consequences for her family in Egypt.
She then allegedly escaped in October 2011 and brought tribunal claims for automatic unfair dismissal, unlawful race discrimination and breaches of the Working Time Regulations and unlawful deduction from wages.
Following their acquittal in a criminal trial, the respondents pursued an application for deposit orders in the tribunal on the basis that Ms Hemdan’s claims had little reasonable prospect of success.
Rule 39 of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013 states that if a tribunal thinks that an allegation has little reasonable prospect of success, it can require the claimant to pay a deposit order not exceeding £1000 as a condition of allowing them to continue their claim. When deciding the amount, tribunals have to make “reasonable inquiries” into the person’s ability to pay.
Given the outcome of the criminal trial, the tribunal judge ordered Ms Hemdan to pay three deposit orders of £75 each in respect of three allegations of unlawful race discrimination.
Ms Hemdan appealed the order on the basis that she was on Employment Support Allowance of just over £125 per week which had to cover all her expenses, including rent, food and travel. If she had to pay the deposit orders, she would be unable to continue with her claims and would therefore be denied access to justice.
According to the EAT, the purpose of a deposit order is two-fold. Firstly, it singles out, at an early stage, claims with little reasonable prospect of success; and secondly, it discourages claimants from pursuing those claims by requiring them to pay a sum of money up front, thereby serving as a warning that they may have to pay the other side’s costs if their claim is ultimately not successful.
Contrary to what the employment judge had said, the purpose was “emphatically not …. to make it difficult to access justice or to effect a strike out through the back door”. That, said the EAT “was to misunderstand the purpose of a deposit order”.
The EAT concluded that, given Ms Hemdan’s very limited means and her status as a victim of trafficking, it was not realistic to expect her to comply with the deposit order made by the employment judge as she was unlikely ever to be able to raise that much money. The result of setting the deposit order that high was therefore to impede her access to justice.
The EAT set aside the order and set the deposits at £1 per allegation instead, concluding that “Although these are nominal amounts, the warning in respect of costs that is one of the consequences of a deposit Order will continue to have effect and force in relation to the two allegations if the sums are paid and the allegations are pursued but ultimately fail”.