New penalty for employers that fail to pay Employment Tribunal awards

According to a recent study, only half of Claimants that are successful at Tribunal actually receive their awards.

The main reason for this is the insolvency of the employer. Even for those that do receive them, the study shows that the smaller the employer is the later the award tends to get paid.

To address this, it’s proposed to introduce a new tier of financial penalties. As well as other steps in the pipeline like naming and shaming employers, or director disqualification. These will apply from April 2016.

The penalties will apply from 42 days after the Judgment was awarded.

An enforcement officer will then send a warning notice to the employer to confirm that unless the Judgment is paid within 28 days then the financial penalty will be imposed.

If it’s still not paid, the penalty will be issued. This is 50% of the unpaid sum capped at a maximum of £5,000.

There will be a chance to reduce it by half if the penalty is paid within 14 days after it was imposed.

The penalty is paid to the Secretary of State. Although, where the penalty is paid but the original Judgment is not, consideration will be given to using part of the penalty to pay the award to the Claimant. That has not yet been decided.

This is a similar process to that made against employers for failing to pay the minimum wage, and it’s designed as a punishment and deterrent rather than to benefit the Claimant.

This goes alongside the power the Employment Tribunal already has to award a penalty against the employer if their breach of the worker’s rights has an aggravating feature. Mainly where an employer has either been negligent or acted towards the employee with malice.

This penalty also is capped at £5,000 and again is payable to the Secretary of State.

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