New financial penalties for employers who lose Tribunal claims
The Government has confirmed that the new law on financial penalties contained in the Enterprise and Regulatory Reform Act 2013 for respondents who lose Employment Tribunal claims will be implemented in April 2014. Tribunals will have the power to impose a penalty where the employer’s behaviour in breaching an employee’s rights has one or more “aggravating features”. Although this phrase is not defined in the relevant legislation, the explanatory notes set out examples of aggravating features, including where the employer acted intentionally or with malice; where there was repeated breach of an employment right; and where the employer had a dedicated HR team.
The amount of the penalty must be 50% of the amount of compensation awarded to the employee, subject to an upper limit of £5,000 and a minimum of £100. However, the penalty will be halved if paid within 21 days of the Tribunal decision. The penalty will be payable to the Secretary of State.
It remains to be seen how Tribunals will interpret this new power but it seems likely that employees will raise the possibility of a financial penalty in quantifying their claims and in order to exert pressure as part of any settlement negotiations.
06 Jan 2014