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Employment Tribunals: Financial Penalties for Losing Employers

Losing an Employment Tribunal Just Got More Expensive

The Enterprise and Regulatory Reform Act 2013 (Commencement No. 5, Transitional Provisions and Savings) Order 2014 (SI 2014/253) was made on 11 February 2014. Paragraphs 3(e) and (h) of the Order bring section 16 of the Enterprise and Regulatory Reform Act 2013 into force on 6 April 2014.
 
Section 16 inserts a new section 12A into the Employment Tribunals Act 1996 to give tribunals the power to order that a losing employer pay a financial penalty in specified circumstances. This will apply in cases presented on or after 6 April 2014.
 

When a financial penalty can be ordered

  • A penalty may be levied where the employer's breach has "one or more aggravating features".
  • A penalty may be ordered even if a financial award has not been made to the claimant.
  • Multiple claims in respect of the same act and the same worker are treated as a single claim.
  • A tribunal cannot review an order to pay a penalty if the tribunal subsequently awards compensation for failure to comply with a tribunal recommendation or a reinstatement or re-engagement order.
 

The amount of a financial penalty

  • The minimum amount of the penalty is £100. The maximum is £5,000.
  • If a financial award has been awarded, the financial penalty must be 50% of the amount of the award.
  • If the claim was considered together with another claim involving a different worker (but the same employer), the maximum amount of the penalty is 50% of the financial award.
  • An employer does not have to pay the full penalty if it pays 50% of the penalty within 21 days.
  • Tribunals must take account of the employer's ability to pay.



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