3 Things You Need to Know About Deposit Orders

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What is a deposit order?

A deposit order is something an employment judge at an employment tribunal may make requiring a party either a claimant (employee or worker) or respondent (employer) to pay a sum of money to the tribunal, as a condition for continuing to participate in proceedings or pursuing any specified allegations or arguments.

Such orders are made at a preliminary hearing and normally on the application of a party or by the tribunal of its own volition.  The test for making a deposit order is that an employment judge considers that any specific allegation or argument in a claim or response has little reasonable prospect of success.

Deposit orders are set out in rule 39 of the Employment Tribunal Rules of Procedure 2013.

If a deposit order is made, the employment judge will set out the reasons for doing this in the order which will be sealed and will not be before a subsequent tribunal at either a preliminary hearing or final hearing.

How much is a deposit order?

An employment judge can order a party to pay £1000 for each specific allegation or argument being pursued in a claim or response that the judge considers has little reasonable prospect of success by a specified date.

Before setting the level of the deposit to be paid, an employment judge must make reasonable enquiries into the paying party’s ability to pay the deposit.  The purpose of the deposit order is not  to make it difficult for the paying party to find the sum payable or to make it difficult to access justice or effect strike out or a claim or response via the back door.

If the paying party fails to pay the deposit by the specified date, the specific allegation or argument to which the deposit order relates will be struck out.

A paying party can challenge a deposit order on the ground that it would be in the interests of justice to do so and apply for it to be varied, suspended or set aside.

What are the consequences of continuing to participate in proceedings or pursuing any specified allegations or arguments after a deposit order has been made?

If a deposit is paid in accordance with an order, there may be implications for the paying party if at a final hearing, a tribunal decides the specific allegation or argument against the paying party:

  • unless the contrary is shown, the paying party will be treated as having acted unreasonably in pursuing that specific allegation or argument, should the other party apply to the tribunal for a costs order or preparation time order; and
  • if a costs order or preparation time order is made against the paying party, the deposit will be paid to the other party or, if there is more than one, to such other party or parties as the tribunal orders.

However, if a tribunal does not make a costs order or preparation time order, the deposit will be refunded to the paying party.

Where a paying party has been found to have acted unreasonably in pursuing a specific allegation or argument following a deposit order, it will not automatically follow that a costs order or preparation time order will be made against them. Even where unreasonable conduct has been found, the tribunal has a discretion as to whether or not costs should be awarded, and to what amount, and must consider all relevant circumstances in exercising that discretion (Oni v UNISON).