Financial penalties for employers
Labour & European Law Review Weekly Issue 341 16 October 2013
The government has finally confirmed that, as of April 2014, employment tribunals will have the power to impose financial penalties on employers.
The announcement that section 16 of the Enterprise and Regulatory Reform Act 2013 will come into force was made last week on Twitter by Minister for Employment Relations, Jo Swinson, in response to a tweet asking why the government had not yet set a date for implementation.
Section 16 of the Act adds a new section 12A to the Employment Tribunals Act 1996, giving tribunals the discretion to impose a financial penalty of between £100 and £5,000 on an employer where there has been a breach of a worker’s employment rights and the tribunal considers that, in the circumstances, the employer’s behaviour had one or more aggravating features.
It is not yet clear what will amount to an aggravating factor and tribunals have to have regard to the employer’s ability to pay when deciding whether to order them to pay a penalty under this section.
If the tribunal makes a financial award against an employer and orders them to pay a penalty, the amount will be set at 50 per cent of the award. However, if the award is less than £200, the penalty will still be £100 and if the award is more than £10,000, it will still be capped at £5,000.
If the employer pays half the penalty no later than 21 days after the day on which notice of the decision to impose it was sent to them, it will be written off. The discount depends on payment of the penalty to the government, not payment of the compensation to the claimant.
Although the Department for Business, Innovation and Skills has confirmed that the effective date for implementation is April next year, it has not yet updated its indicative timetable which still states that it has “no current plans to use” the provision.
Neil Todd of Thompsons Solicitors commented: “The government has devised a system whereby some employers are taxed for conduct that causes employees harm, but it does so in a way which does not help that employee. This would appear to be more about boosting government coffers than a desire to improve the rights of working people who have been badly treated at work.”
To view the indicative timetable, go to: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/239011/enterprise-and-regulatory-reform-act-2013-timetable-table4-R1.pdf