Fines for employers who lose at tribunal

This year a number of changes have been introduced to improve the tribunal system and to make the process more employer-friendly.

However, one particular change that is due to come into force in April 2014 is certainly not employer-friendly and that is the power for the tribunal to levy a penalty of up to £5,000 on an employer where they lose a case which is deemed to have “aggravating features”.

This piece of legislation will be introduced in April 2014 but it will not apply to claims presented within six months of that date.  The penalty can be levied where the employer’s breach has one or more aggravating features and can be ordered even if a financial award has not been made in favour of the claimant.  Multiple claims in respect of the same set of circumstances and the same employee or worker are treated as a single claim.  The minimum penalty is £100 and the maximum is £5,000.  If a financial award has been made in favour of the claimant, the financial penalty must be 50% of the award (capped at £5,000).

If the employer pays the penalty within 21 days, the penalty will be reduced by 50%.  The tribunal must take into account the employer’s ability to pay.

A number of concerns have been raised about this new piece of legislation because there is a lack of clarity as to what will amount to “aggravating features”.  This is not explained or defined in the legislation.  The Government has suggested that genuine mistakes by the employer will not be penalised but has indicated it will be up to the tribunal to decide in any given case whether the conditions of imposing the penalty are met.

Some commentators are asking why, when it is the employee who has suffered, the Government will benefit from the fine?

As this legislation will come into force in April 2014 employers are advised to keep it in mind and watch for guidance regarding the definition of “aggravating features”.  To lose a tribunal claim and have to pay a financial penalty to the Government would be a double whammy!

For more information, please contact Reggie Lloyd on 01206 217347 or reggie.lloyd@birkettlong.co.uk.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.