Penalties for Employers Who Lose At Employment Tribunal

The government has recently announced that from April 2014 there will be penalties for employers who lose at employment tribunal.  This change is part of the reform of the employment tribunal system in accordance with the The Enterprise and Regulatory Reform Act 2013.  The penalty will be paid to  the Secretary of State with a minimum of £100 and a maximum of £5000.  A penalty can be awarded against an employer even if the employee has not been successful in their claim and is separate to financial compensation to an employee who is successful.

The tribunal will have the power to make an order where the employer’s breach has ‘one or more aggravating features’ (a term which is not further defined in the legislation) or where the employer’s breach involves unreasonable behaviour (for example where there has been negligence or malice involved).

The Tribunal can take into account the employer’s size and resource, the duration of the breach of the employment right and the behaviour of both the employer and employee. If a financial award is awarded at Tribunal, then the financial penalty must be 50% of the amount of the award.  If the employer pays the penalty within 21 days they will get a 50% discount. 

Multiple claims in respect of the same act and the same workers are treated as a single claim. 

A  tribunal cannot review an order to pay a penalty if they subsequently award compensation for failure to comply with a Tribunal recommendation or reinstatement or re-engagement order.