Tribunal reform

The Enterprise and Regulatory Reform Act 2013 contains a clause to introduce financial penalties for employers who lose a claim.  The penaly will be payable to the Exchequer not the claimant.  A penalty may be levied where the employer’s breach has one or more aggravating features.

The level of penalty will be subject to a minimum threshold of £100 and a maximum ceiling of £5,000.  If a financial award has been awarded to the employee, the penalty will be half of the total award made by the tribunal, subject to the minimum and maximum thresholds.  A 50% reduction will be applied if paid within 21 days. The penalty is intended to encourage businesses to have greater regard for what is required of them in law.  In particular, the Government states the intention is that penalties are levied where there are ‘aggravating features’ such as malice or negligence, and not where an employer has made an ‘inadvertent error’. It will be for the employment tribunal to decide whether a penalty should be imposed, taking into account any factors that it considers relevant, including: ‘the size of the employer; the duration of the breach of the employment right; or the behaviour of the employer and the employee’.  It is likely that there will be arguments over what constitutes an ‘aggravating feature’.