Industrial Tribunals were originally established under the Industrial Training Act 1964. Their importance grew significantly when the statutory concept of "unfair dismissal" came into existence under the Industrial Relations Act 1971. The idea was that these tribunals would be managed by non-lawyer members with a legally qualified chairman and with proceedings being conducted in an informal way.

The Industrial Tribunals were given, and still have, exclusive jurisdiction in categories of cases specified by Parliament. The originally quite short list has grown longer and longer over the years - a complete list is available on the tribunal service website. The idea was and is that the courts, and the formality associated with them, would not be involved except where there was an appeal on a point of law.

In practice industrial tribunals, renamed employment tribunals in 1998, have found it difficult to combine fairness with informality. In particular it has been difficult for legally qualified chairmen, often with years of experience as advocates in the courts, to operate with the degree of non-legalistic informality which the original proposers of the system intended.

What separates the jurisdiction of the Employment Tribunal and the Employment Appeal Tribunal (EAT) on the one hand, and the jurisdiction of the Court of Appeal on the other is that of costs.

For Employment Tribunals in the former category, it is a ‘no costs’ environment. Its informality is designed to be lawyer-free and the general rule is that no costs order is made, and if one is made it will generally be on the basis that the party concerned, whether winner or loser, conducted his case "vexatiously, abusively, disruptively or otherwise unreasonably”.

It is designed this way because if it were otherwise, there would be no ‘equality of arms’ between an employer with deep pockets and unlimited funds and those he employs who may be minimum-waged, uneducated and inarticulate who have a meritorious claim who can ill-afford the cost of vindicating their employment rights. That they have no costs to meet if they lose safeguards their right to free access to a fair and impartial tribunal.

For courts in the latter category, legal aid is generally not available in civil cases brought before the County Court, the High Court and up through the appellate courts. If an individual wants to bring a case before the court, or is taken there involuntarily on an appeal by the other side up through the appellate courts’ he must fund it himself or find a lawyer who will take it on a contingency fee basis. At worst, the impecunious litigant or involuntary defendant on appeal is faced with having to act as ‘Litigant in Person’ facing the brightest and the best of the legal profession deeper pockets of the other side may bring to bear in a usually one-sided contest in which the man with the deeper pockets wins both his case and the benefit of a costs order made against the losing side all too often met by an enforced sale of the family home.

Thus, outside of employment tribunals, there is, in reality little access to a fair and impartial tribunal for an impecunious litigant to bring or defend an action in the absence of a contingency fee lawyer.

The practical effect of this system is that an individual may enter a no-cost environment of an Employment Tribunal and win. His employer may bring an appeal to the Employment Tribunal and lose, again, in a ‘no cost environment’ At that point, he may decide to appeal the decision to the Court of Appeal. If he does, the employee is brought into a ‘costs’ environment and may well be faced with financial ruin, bankruptcy and the loss of his home if he loses. It is usually at this point that an exploitative employer holds all of the cards!

Or at least it was!

Anthony Neary, was a supply teacher. He brought various claims against St Albans Girls' School and Hertfordshire County Council. An employment tribunal struck out his application because he failed over a quite long period to provide documents and comply with directions.

His application for a review of the strike out order was rejected.

He appealed to the Employment Appeal Tribunal against that rejection and won because the original tribunal had failed expressly to consider "factors" set out in the Civil Procedure Rules which apply when similar applications are made in the Courts.

The School went to the Court of Appeal. The Court of Appeal pointed out that tribunals are not courts. The Civil Procedure Rules may provide useful guidelines for tribunals but no more than that. The Court of Appeal considered that the employment judge had acted properly in the way he exercised his discretion, overruled the EAT and reinstated the original decision.

Mr Neary lost his case on appeal with all the consequences that such a result would entail for him and his family as a result of a costs order being made against him.

The costs issue came before Lady Justice Smith in The Governing Body of St Albans Girls School and Hertfordshire County Council v Mr Anthony Neary [2009] EWCA 1214. Her judgement will no doubt have wiped the smile from the faces of the Local Authority. She said:

“Mr Neary began proceedings in a cost-free jurisdiction. He lost. On the state of authority in the EAT, he was justified in bringing an appeal. Again, he was in a cost-free jurisdiction. He won. Because St Albans (reasonably) wished to overturn that line of authority, the case came to the Court of Appeal. There Mr Neary was pitched against his will into a cost-bearing jurisdiction. It would have been very hard on him if he had had to cave in so as to avoid the risk of costs. In the event he lost but only because St Albans was able to persuade us that the line of EAT authority had developed wrongly.

Had we been minded to make an order for costs against Mr Neary, we would not have ordered payment of the whole amount claimed by St Albans in its schedule. We can see no justification for instructing two counsel on this appeal. Also, we consider that the fees charged by Mr Green are more than an opponent should be expected to pay. That is not to criticise the fees charged as excessive. It is entirely open to St Albans to agree such fees as they think appropriate in order to secure the services of counsel of their choice. However, it does not follow that such fees should be recoverable from the losing party.”

Of course, this judgement is no authority for the contention that successful appeals by employers from the EAT to the Court of Appeal will automatically result in a costs waiver to a losing employee. It is not a binding precedent. All that has happened is that the Court of Appeal has exercised its discretion, probably because it wishes to remind employers that employment tribunals are not and never have been courts within which complex issues of procedure may be argued and appealed against while losing sight of their true purpose in resolving disputes in a non-legalistic and informal judicial forum.

That is not to say that the judgment has no practical value to since an employee may now draw this judgement to the attention of the EAT or the court of appeal when the employer seeks permission to appeal and suggest to that the employer should only be granted permission to appeal on the condition that they should bear their own costs, win or lose.

Mr Neary gets to keep his home.

Merry Christmas Mr Neary.